Average Commission Rate for REALTORS
As per the National Association of REALTORS, 87% of buyers and 90% of sellers use a real estate agent/broker in America. In 2020, Real estate Average Commission in the USA was 5.66%, and real estate in America agents received 2.83% each.
Most of the time, the commission charged by the Listing Agent in America ranges from 2.5% to 3%. On the other hand, the Buyer Agent Commission can be anywhere between 2.32 and 2.5% of the home’s value.
Tips to Sell for Less Than 3% Commission
If you want to sell your home with a reduced listing agent commission, then you can consider the following alternatives:
Sell with Discount Real Estate Brokers
Discount Brokers are licensed real estate brokers who sell homes for a low commission or flat fee. Most discount realtors charge one fee for the sale. Despite their low prices, they offer social media exposure, a personalized website, and more.
Home sellers can list and sell their houses from the comfort of their homes with a click of a button. Some of the best discount brokers, like Houzeo provide advanced seller dashboards, showings management, and much more.
» Discount Real Estate Brokers: Read to know to best low commission agents.
Sell with Flat Fee MLS Companies
Listing your home with a Flat Fee MLS service saves you thousands of dollars in average real estate commission. Because you are not listing with a traditional listing agent, you won’t have to pay their 3% commission.
You can list on your local MLS with Flat Fee MLS listing services. This way, you will also be in control of your sale.
» Flat Fee MLS Companies: Check out our rankings for the best Flat Fee MLS Listing Services
Who Pays the Real Estate Agent?
Sellers and buyers often keep wondering who pays real estate commission as it involves both the buyer agent as well as the listing agent’s commissions.
The payment is technically made by the seller for both the agents. But there is a catch.
Sellers account for this commission in the selling price. For instance, if a seller wishes to sell their property for $400,000 and they have to pay a 6% real estate commission, they will try to list their house for $424,000. Because this will account for 6% i.e. $24,000 real estate commission.
|Price Comparison||With Realtor||Without Realtor|
|Actual Selling Price||$400,000||$400,000|
|Listing Agent Commission||2.5-3% (~$12,000)||0|
|Recommended Buyer Agent Commission||2.5-3% (~$12,000)||0|
|Total Average Commission for Real Estate Agents||$24,000||0|
|Final Selling Price*||$424,000||$400,000|
So indirectly, buyers end up paying the agent’s commission. This hampers the buyer’s traffic that the seller could have attracted otherwise.
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*You have to offer a competitive buyer agent commission
How does Average Commission for REALTORS Work?
It is a known fact that the average real estate commission is 5-6%, but the entire amount does not go into the agent’s pocket.
The agent’s commission is first split between the buyer’s agent and the listing agent. Real estate agents usually are associated with brokerages and thus generally 50% of the amount earned by them is shared with the broker as a real estate brokerage fee.
For instance, if a house is sold for $400,000 at a 6% commission rate then both the agents get $12,000 each. Then they will have to give around 50% i.e. $6,000 to their brokers.
Thus, even if you shell out 6% on the real estate commission, it entirely does not become a part of the agent’s kitty. It is further distributed among other real estate professionals.
How much do Real Estate Agents make in the US?
The amount earned by a real estate agent in any year depends on a lot of factors. This includes the number of sales carried out, average real estate commission, real estate agent’s specializations, location, etc.
As per the U.S. Bureau Of Labor Statistics, the mean annual wage of real estate agents is $61,480 (as of May 2021). But this varies greatly depending on the location.
The Top Paying States for Real Estate Agents
The wages earned by real estate professionals also depend on the state in which they are based. Below is a table ranking the top paying states for real estate agents:
- 💡 FACT: Real estate brokers earn more than real estate agents. The annual mean wage for brokers is roughly around $ 86,500.
How much is the Buyer Agent Commission?
Buyer agent commission is a fee that a buyer’s agent gets at the end of the transaction. It is usually around 2.5%-3% of the sale price.
Does a Buyer’s Agent get a Commission in the US?
Yes, buyer agents in the US earn a commission when they facilitate a house purchase for their clients. Usually, the buyer’s agent gets 50% of the total real estate commission. This amount is generally paid by the seller.
Even though offering a buyer agent’s commission is optional we recommend you offer a competitive share. This helps in attracting more buyers while selling your house.
Average Buyer Agent Commission by State
Below is the table showing the average buyer agent commission offered by sellers in the top 5 real estate markets:
|State||Average Buyer Agent Commission|
Listing Agent Commission in the US
The listing agent commission is mentioned in the listing contract itself. It is a document signed by the seller and their agent. Traditionally, listing agents charge 2.5-3% real estate commission.
But it is the 21st century and technological advancements have led to newer ways of listing your property. As a seller, you need to know how much you can save by opting for alternative ways of listing your property. Some of them allow sellers to avail of the listing agent’s services for a very low fee.
» Real Estate Commissions Have Fallen Sharply: Will they Continue to Fall?
One of the best ways of bypassing the listing agent commission is to opt for a tech company like Houzeo. With Houzeo, you can list your company for as less as $349!
With Houzeo, instead of paying the average listing rate of around 3%, you’ll only pay a flat fee which will save you not only thousands of dollars but also give you a great buying–selling experience. For a property being sold at $500,000 your savings with Houzeo would be as follows:
|Price Comparison||Houzeo||Traditional Listing Agent|
|Listing Agent Commission / Fee||$349||$15,000 (3%)|
|Recommended Buyer Agent Commission||$15,000 (3%)||$15,000 (3%)|
|Amount spent on Commissions||$15,349||$30,000|
🤚 Skip Listing Agent Commission With Houzeo
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Commission Charged by Flat Rate Realtors
Flat rate brokers/agents charge a flat rate instead of a percentage of the sale price and offer full services. They handle everything from listing to closing. These fees are fixed and do not change as per your home’s services or the selling price.
The flat rate charged by them varies depending on the flat-rate service you choose. For instance, Homie charges a $3,500 flat rate.
» Homie Reviews: Everything You NEED to Know!
Commission Charged by Low Commission Real Estate Brokers
As the name suggests, low commission real estate brokers work on commissions lower than the traditional 5.5%-6% commission. Their fee varies as per the service. For example, a low commission real estate company like Redfin charges 1-1.5% commission.
» Redfin Reviews: The Reality of 1% Fees, Pros & Alternatives
Commission Charged by Traditional In-person Full-Service Agent
A traditional full-service agent would charge you a 2.5%-3% listing fee and offer all the services you will need from listing to closing.
» Real Estate Agents: You NEED To Know
Average Real Estate Commission Split
While referring to real estate commissions in America people think that the entire 6% goes into their agent’s kitty. But this is far from reality. The real estate commission split in America looks something like this:
Commission for Real Estate Agent Breakdown between Buyer Agent and Listing Agent
The real estate commission is split 50-50 between the buyer’s agency and the seller’s agency. This is what this split would look like for the above example where the house is sold for $400,000 at a 6% commission:
|Total Commission||$24,000 (6% paid by the seller)|
|Listing Agent Commission||$12,000 (3%)|
|Buyer Agent Commission||$12,000 (3%)|
Average Buyer Broker-Buyer Agent Commission Split
Real estate agents are often associated with brokerages that are run by licensed real estate brokers. Thus, a part of the commission earned by the buyer’s agent is shared with the real estate broker. This breakdown is as follows:
|Buyer Agent Commission||$12,000 (50% of the total commission)|
|Buyer’s Agent Commission||$6,000 (50% of the buyer agent commission )|
|Buyer’s Broker Commission||$6,000 (50% of the buyer agent commission)|
Average Listing Broker-Listing Agent Commission Split
Similar to buyer’s agents, seller’s agents are also associated with brokerages. Thus the commission received by them is split with the brokers.
|Listing Agent Commission||$12,000 (50% of the total commission)|
|Seller’s Agent Commission||$6,000 (50% of the seller agent commission)|
|Seller’s Broker Commission||$6,000 (50% of the seller agent commission )|
Average Real Estate Commission by State
Know the real estate agent commission split in your state:
Commission Split as per Companies
Commission split in most cases between the agent and the brokerage is 50-50. But it can vary as per the company brokerage policy as well. It also depends on your industry, your market, the broker’s support and resources, and more.
Some brokerages now offer real estate agents a salary and benefits package, thereby affecting the commission split percentage.
Here is an example of a commission split for the 5 companies:
|1. Keller Williams||70 / 30|
|2. RE/MAX||95/5, 80/20, 70/30, 60/40 (capping system)|
|3. Century 21||50/50, 70/30, 8% franchise fee (capping system)|
|4. Coldwell Banker Real Estate||50/50, 60/40, 70/30 (capping system)|
Are Real Estate Commissions Negotiable?
Yes! You can negotiate real estate commissions with your real estate agents. But it may not be very easy. As per a new report from the Consumer Federation of America, nearly 73% of real estate agents refuse to lower their fees.
This aside, real estate commissions in the US are very much negotiable. In fact, Article 16 of the NAR Code Of Ethics facilitates REALTORS to negotiate commissions with their clients.
» How To Negotiate Real Estate Commissions: Read more to find out
Here are a few circumstances under which negotiating real estate commissions can become easier:
|Circumstances For Easier Negotiations||Description|
|High-End Property||Luxury properties help real estate agents earn more dollars, thus they may agree to negotiate real estate commissions.|
|Located in Hot Seller Market||If your house is located at a place where it can sell quickly then the agent might lower their commission. Because it is easier to facilitate the sale in a hot seller's market.|
|Multiple Transactions||Promising repeat business or multiple sales can encourage the agent to lower their commissions.|
|Ready To Move-In||If your house is beautifully staged and ready to move in, then the agent will have less work to do. This can encourage the agent to lower the brokerage/commission.|
|Opting For Fewer Services||If you are an experienced buyer/seller and need only an MLS listing, then you can opt for fewer services for which they would charge lesser.|
What is Included in Real Estate Commissions?
Real estate agents offer the following services by charging a 6% real estate commission:
|MLS Listing||Your real estate agent creates listing documents and lists your property on the MLS. They also help in creating property descriptions, highlighting features that can be leveraged upon, ordering pictures, etc. |
✍️ Pro Tip: Use a for sale by owner website or Flat Fee MLS Companies like Houzeo to list your home.
Houzeo will help you save the hefty realtor commission and get your property maximum exposure. All of this, just for a small flat fee!
» More: How To List on MLS?» How To List on MLS: Read more to Know More
|Marketing your House||To enhance the exposure your property gets and to attract more buyers, your house has to be marketed properly. Your real estate agent can guide you in hiring a professional photographer, get you acquainted with newer marketing tactics in the market, promote your house losing on social media platforms, and a lot more. |
» Creative Ways to Market a House For Sale: Houzeo’s step-by-step guide
|Negotiating Offers||Owing to their years of negotiating experience, agents can help you get the best deal when selling/buying your house. |
» How to Request Highest & Best Offers: Watch to know more!
|Assistance in Pricing||One of the most important factors to ensure a quick sale is pricing your house accurately. A real estate professional’s years of experience can come in handy when pricing your house. |
» How To Price Your House For Sale: Find Out More
|Guide in the Closing Process||During closing real estate agents ensure that all the stakeholders are present on the day of closing. They also set up appointments with title companies and lenders. They also take care that all stakeholders are present on time.|
Is REALTOR Fee included in Closing Cost?
Yes, the REALTOR fee is generally included in the seller’s closing costs, unless the buyer offers to pay some part of it. Apart from this, the closing cost also includes various other costs like an escrow fee, inspection fee, survey fee, home appraisal fee, etc. Most of these are paid by the buyer or can be negotiated, unlike REALTOR commission.
» Seller Closing Cost in America: Check out the closing cost in America
Alternatives To Paying REALTOR Commission
For sellers, it is important to know that they have other alternatives to 5%-6% real estate commission. This includes the following:
Sell as FSBO
One way to bypass the hefty Realtor commissions is to sell your house For Sale By Owner (FSBO). It is a DIY approach with no listing agent involved. Sellers have maximum control over the entire process but have to handle all the paperwork with no oversight.
The idea of selling your home FSBO has its drawbacks. Though you save up on the commission money, you will have to handle everything – listing, marketing, negotiations, closings, etc. – on your own.
🚩 Key Downsides of Selling Your Home For Sale By Owner:
- No MLS Exposure: MLS is the most important tool an agent has. Selling FSBO means limited exposure, so there will be less competition for your property. That will likely reduce the selling price. One study found that homes on the MLS sold for 17% more than homes, not on the MLS.
- No Help If You Need It: If you need help with paperwork, inspections, negotiations, or closing, you’re on your own as a For Sale By Owner.
Sell With Flat Fee MLS Listing Company like Houzeo
The average realtor commission in the USA is around 5%-6%. Listing with a high-tech website like Houzeo.com saves you the listing agent commission. In addition, it gets you maximum exposure to the MLS and helps whenever you need it.
✅ A Flat Fee MLS Listing Service Combines the Best of Both Worlds:
- Save Thousands in Commission: Instead of paying a 5% to 6% listing agent commission, you just pay a $349 listing fee.
- Maximum Exposure: You get full exposure to the MLS, Zillow, Realtor.com, Redfin, and hundreds of other websites.
- Help When You Need It: Services like Houzeo.com offer the “Contract to Close Coaching Package”. So if you need help during the transaction at any time, a licensed broker is there to help you sell!
- Full Control Over Your Sale: You retain full control over when to sell and who to sell. Houzeo captures all leads and displays them on your dashboard. All offers and showings are summarized online, along with the buyer’s or their agent’s contact info. It doesn’t get easier.
- Fast Listing & Changes: Houzeo is 100% online, and allows you to request changes instantly. Contracts are auto-generated, and turn-around times are fast!
- A-la-carte Options: Need a yard sign, ShowingTime, lockbox? You can purchase them easily from your Houzeo dashboard!
What are the Steps to List on MLS via Houzeo.com?
|1.||On your browser, go to Houzeo’s website.|
|2.||Click “Start Free Listing” located in the upper right corner of the home page.|
|3.||On the login page, click “Register Here” located right underneath the login button and it will ask you to create an account.|
|4.||Fill in all the required fields; complete name, email address, phone number, and password, then select “register” to finish creating your account.|
|5.||You will receive an email to verify your account. Open your registered email to complete the account verification. Once your account is verified, you are all set to list your home.|
|6.||Login to your account to access your Houzeo dashboard.|
|7.||On your dashboard, select “Sell A Property”.|
|8.||There are 7 tabs to fill to complete your Houzeo listing. First is Property Address. Enter your property’s complete address, select the correct property type then click continue.|
|9.||The second tab is the Basic Information. Enter your property’s basic information, title, and description, select the buyer’s agent commission then click continue.|
|10.||In the third tab, you need to provide the Property Price. Enter the amount you have set for your home then click continue.|
|11.||Property Photos is the fourth tab. Upload the photos of your property and click continue.|
|12.||The fifth tab is MLS Package. Select the package you like for listing your home and process the payment using a debit or credit card.|
|13.||Next is the Property Agent. Select any available broker. They will be assigned as your listing agent then click continue.|
|14.||MLS Documents is the last tab. Here, you need to complete the tasks assigned to your account to complete your listing order.|
» Houzeo Reviews: Home Selling made easier with Houzeo.com!
Sell Your House To An iBuyer
iBuyers are companies that will buy your home for cash outright. The price is decided with the help of their proprietary algorithm, recent real estate data, and their in-house experts. An iBuyer can offer and close the deal within 24 hours, however, there are certain pitfalls when dealing with an iBuyer.
- Their offer price is many a times way lower than the actual market price
- Their offer price is often non-negotiable
- They charge steep service fees – generally 5%-14% of the purchase price
Hence, iBuyers are only recommended if you want a quick sale rather than save your money.
» Offerpad Reviews: 1% Cancellation & Lowball Offers in 2022
Sell To a Cash Company
Some property owners may find that companies buying houses for cash are a good alternative. They are a good option as they come with a slew of advantages like an easy closing process, no requirement to pass inspections, no need for open houses and you won’t even have to take the efforts to clean and repair your house.
Whether you’re a real estate investor or just a regular home seller, selling a home that requires a lot of work can be a hassle. Most retail buyers will be unable to acquire your home if it is unsightly or requires extensive modifications. Here’s when cash companies can help you.
However, the primary drawback of selling to a cash home buyer is that you might miss out on the open market competition, which you will only see if you list through a Flat Fee Realtor. There are also chances that you might end up selling your house at a lower price than expected.
» We Buy Houses for Cash Companies: Cash Companies Reviewed
Though the average REALTOR commission in the US has been 5%-6% for the past 30 years, a slight decline has been observed recently. This is due to the evolution of newer models of selling houses. This includes the flat-rate model, the low commission model, and the Flat Fee MLS listing model.
Flat Fee MLS listing providers like Houzeo allow you to list your property on the MLS for a very small fixed fee. This not only helps you in overcoming the hefty real estate agent fees but also gives you control over the overall process.
Thus, with the evolution of technology and newer models of real estate transactions, sellers need not depend on a real estate agent’s assistance. They can opt for FSBO websites or Flat Fee MLS Listing services like Houzeo to sell their houses in minimum time for the best possible price.
- How to Sell My House Fast : Selling a house in in America takes approximately 90 days from list to close. And that’s only if you get offers fast and there are no hiccups in home inspection, appraisal, and closing. Here’s how you can sell your house fast and for more cash.
- Selling a House in America: Selling a house in the United States is complex and requires a good understanding of the real estate market.
- Closing Costs: What are the closing costs as a seller? See what’s the real cost and how you can negotiate in your closing costs as a seller.
- Closing Costs for Sellers: What are the closing costs as a seller? See what’s the real cost and how you can negotiate in your closing costs as a seller.
- Closing Costs for Buyers: Check out real costs related to buying a house and see if you can negotiate in your closing costs as a buyer.
- Best Real Estate Websites: The majority of homebuyers and home sellers go through a real estate website before reaching out to a realtor. Read our list of the top 12 real state websites in America.
- Realtors in America: Here is a list of the top 12 REALTORS in America to help you choose one.
- Real Estate Companies: Check out the top real estate companies in the US.
Frequently Asked Questions
What percentage do REALTORS make?
Real estate agents make a commission of about 5%-6% on each house successfully sold by them.
Do buyers pay REALTOR fees?
Generally, the listing agent, as well as the buyer agent's fees, are paid by the sellers.
Who pays Buyer's Agent's Commission?
The seller pays the buyer's agent's commission.
How is the REALTOR commission calculated?
REALTOR commission is around 5%-6%. So if a house is sold for $400,00, then the total REALTOR commission would be around $24,000. This amount is further distributed among listing and seller agents.
Do REALTORS only make commissions?
For most REALTORS their commission is the only income. This in turn would depend upon the number of sales carried outing a year.
Who pays REALTOR commission?
Usually, sellers pay the REALTOR commission in the US. buyer agent commission.
How does real estate agent get paid?
Real estate agents in the US get paid in the form of commission. Typical real estate commission is around 5%-6%.
What is the average real estate commission?
The average real estate agent commission in the US is 5%-6% of the property's final selling price. The brokerage and selling agent each receive a portion of this sum.
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