How much is real estate commission?
Typically, real estate commission is 5%–6% of the home’s sale price. In most areas, the buyer’s agent receives 2.5%–3% in commission and the seller’s agent receives 2.5%-3% in commission. This can vary by agent and location.
Who pays the commission?
If you're buying a home, you usually don’t have to pay real estate agent commission, though you still have to pay closing costs. If you're selling a home, you usually pay commission to both your listing agent and the buyer’s agent when your home sale closes.
Here's how commission costs break down by home sale price with a total commission rate of 5%.
Home Sale Price | 5% Real Estate Commission |
---|---|
$150,000 | $7,500 |
$200,000 | $10,000 |
$250,000 | $12,500 |
$350,000 | $17,500 |
$500,000 | $25,000 |
Can you negotiate Realtor® commission fees?
There are no laws or regulations in the U.S. dictating commission rates, so agents may be willing to negotiate lower rates depending on the type of transaction, the required services, and the relationship. Some agents will also lower their commission fees if they are representing both the buyer and the seller in a home sale (also known as dual agency; see below).
Keep in mind that a lower commission is not necessarily the best option. Part of the agent’s fee covers the marketing budget and other business expenses for the home sale. A smaller budget could mean your agent can’t properly market your home. So while it’s important to consider an agent’s fee, it’s also important to consider the value you will be receiving.
Redfin offers no-hassle pricing. We show you how much you will pay—and how much you will save—in every home sale. Talk to a Redfin Agent to learn the exact amount you can save.
What does the commission cover?
The average real estate agent commission covers a wide range of services an agent provides during a home sale. These services can include: working with the seller to set a realistic price for the home, marketing it through a variety of online and offline channels, professionally presenting the home to potential buyers, negotiating the transaction details, being present during inspections and appraisals, and ultimately closing the sale.
How is the commission divided between agents?
As mentioned above, the commission is typically split evenly between the buyer’s agent and the listing agent. So if a home sells for $250,000 with a 6% commission, the seller's agent and buyer's agent will split the total commission of $15,000, with each agent receiving $7,500.
It’s important to also note that after the initial split, the commission may then be divided between the broker and the agent. On average, the actual agent may only get 1.5% of a 6% commission.
How does commission work for buyers?
The home seller usually pays the Realtor® commission for both the seller’s agent and the buyer’s agent, though they are not required to. That doesn’t mean there is no cost to the buyer. Sellers sometimes account for the fee they’ll be paying and pass costs along by raising their listing price.
Do you have to pay commission if you don’t buy a home?
As a buyer, you likely won't have to pay agent commission whether you buy a home or not, since sellers usually pay the commission. But keep in mind that agents are paid at the end of the process, so if you tour homes with a real estate agent and don't end up buying, the agent won't be paid for their time.
If you've signed a contract known as a buyer’s agency agreement, it may be difficult to break up with your agent later if you decide you don’t like them and want to work with someone else. Make sure to ask questions before signing a contract.
Is commission included in closing costs?
Technically, an agent’s commission is not included in a home’s closing costs. Closing costs are an assortment of fees, separate from agent commissions, that must be paid at closing. Closing costs typically include things like taxes, title insurance, appraisal, lender fees, and other services carried out during closing.
Closing cost amounts vary depending on the buyer's loan program, but they usually total 2%–5% of the home's purchase price.
Do you have to pay commission if your home doesn’t sell?
Short answer: Probably not. Real estate agents are paid when you sell your home, so if your home doesn’t sell, you shouldn’t owe them a commission.
Long answer: Read the fine print. Generally, your contract with your agent is bound to a certain time period. Unless your contract says otherwise, you are typically not required to pay your selling agent if the contract expires and your home doesn’t sell. However, there may be some exceptions, such as:
- Your agent found the buyer: Some contracts state that you still owe your agent commission after the contract period ends if your buyer was a prospect during the term of the agent’s contract.
- You back out of the sale: After an offer is accepted, you are responsible for paying commission to both real estate agents immediately. If you decide to back out of the sale last minute, you still have to pay both real estate agents their commission. If the buyer backs out, you may still be responsible for paying the commission — but can potentially sue the buyer for breach of contract.
What is dual agency?
Dual agency is when a real estate agent represents the buyer and a seller. Dual agency is only legal if full disclosure is given to both parties. It is completely illegal, however, in several states.
Bottom line
Read all contracts carefully. To save on commission when you sell, or get money back when you buy, find a Redfin Agent in your area. We're in more than 80 markets, including Denver, Austin, Raleigh, and Fort Lauderdale.
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