How much is the average real estate commission?

To deliver home sellers the most accurate information on average realtor commission rates in each state, we conducted a comprehensive survey of active agents across the U.S.

We found that typical realtor commission rates were in the range of 4.54% to 6.32%.

Remember: these rates only represent averages. Commission rates aren't standardized in any official capacity and you can always negotiate realtor fees with your agent or sell with a discount brand that offers pre-negotiated low commission rates.

Average realtor commission for listing agents

According to our research typical commission rates for listing agents nationwide are in the range of 2.27% to 3.29% (2.80% on average).

For a home sold for $340,000 (which is around the national median home value), this translates to $7,654-$11,120.

We also found that listing commission rates can vary by as much as 45% depending on where you live. Here's how listing commissions differ in states with the highest and lowest typical costs.

📖 Listing agent commission is portion of the total real estate commission that is paid to the agent that represents the home seller (also called the listing agent). This is often around half of the total commission that is paid out. » MORE: Learn how to save money on listing fees.

Average buyer's agent commission rates

Nationwide, buyer's agents typically collect 2.27% to 3.03%, or 2.69% on average. This translates to $7,657-$10,218 in buyer's agent commission costs for a home sold for $340,000.

These figures represent the national average, though we found that buyer's agent commission rates varied by 0.88 percentage points depending on which state you live in — which is a significant cost difference.

Below, we've included a breakdown of how buyer's agent commissions compare across the country:

📖 Buyer's agent commission is the amount paid to the agent representing the home buyer during a home sale. This is paid from the proceeds generated by the home sale and is often half of the total realtor fees.

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How the real estate agent commission is set

Realtor Kevin Deselms says the commission percentage is based on several factors. This can include local real estate market conditions.

“But the amount is often based on negotiation between the seller and the listing agent or the agent’s brokerage,” he says.

In other words, the commission is negotiable. And some agents are willing to give discounts, either within the listing agreement or later.

In fact, about three out of five sellers get a discount on their agent’s commission.

“Commission rates have been trending down in recent years,” says real estate broker Matt Buttner.

“This is mostly because of the internet and technology,” he says. “The MLS now automatically syndicates the listing out to real estate websites like Zillow and Realtor.com. So a listing agent’s job is easier.”

Discounts are given for many reasons.

“Say, for example, a client is selling one house and buying another using the same agent. In this case, the agent is more likely to offer a discount,” says real estate attorney and Realtor Bruce Ailion.

“Or say the property is in a hot market and competitively priced,” Ailion says. “It might take less work to sell. That could lead to a discount.”

What is a ‘fair’ real estate commission?

A commission rate between 5%-6% is standard for most markets to hire a full service real estate agent. This rate should translate as having an agent who is dedicated to selling your home for the best possible price, who is available and communicative, and who is willing to quarterback the transaction from start to finish. If an agent isn’t willing to offer all or the majority of services listed above, you should interview some more candidates.

What is a fair commission for a real estate agent?

Commissions vary by market conditions and geographic regions, so there isn't a lot of government data on the issue. The government's last thorough report on commission rates (back in 2009) shows an average broker commission of 5% or 6%, but each brokerage will decide how much of that to share with agents. The government keeps better data on overall real estate agent pay, and in 2020, the median real estate sales agent salary was roughly $49,000.

How Much Realtors Make FAQs

How Are Real Estate Fees Paid?

Real estate commissions are deducted directly from the sale proceeds at closing. The amount is then paid directly to real estate brokerage firms, which split them with the agents involved.

Do Real Estate Agents Get Paid a Base Salary?

Most real estate agents are paid on a commission-only basis. But certain agents—including those who are employed by companies like Redfin—get a base salary plus bonuses.

Are You Supposed to Pay Your Real Estate Agent?

Consumers don't pay real estate agents directly. Brokers receive the commission, which is taken from the total proceeds of the sale. This amount is then split between the agency and the agent.

Do Real Estate Agents Get Paid Weekly?

Real estate agents do not get paid weekly. Instead, they work for commissions on the sales they make. These commissions are split between the agency and the agent and are paid following closings.

What Percentage Do Most Real Estate Agents Charge?

Real estate commissions typically range anywhere between 4% and 6% of a property's sale price. This amount is further divided between the agency and the agent who worked on the sale.

Average Yearly Realtor Commission

Do you know the average Realtor commission? Many people think they know how much real estate agents make in commission for some odd reason. Most people think that real estate agents make money hand over fist.

The national average for real estate agent commission is, in fact, not what you think.

While the top agents make an excellent income, the average agent does not. In fact, the average income is lousy!

According to The National Association of Realtors, in 2020, the average yearly commission was $43,330. Real Estate agent commission was down from the year before, which was $49,700. So the average commission was not very good for making a great living.

Income was generally in line with experience. REALTORS® with sixteen years or more experience had a median gross income of $71,000, while REALTORS® with two years or less experience had a median gross income of $9,300.

It is essential to note that unlike most businesses with an 80/20 rule, whereby 80 percent of the business is done by 20 percent of their members, it is 93/7 in real estate. Yes, you read that correctly – 93 percent of all real estate transactions are done by 7 percent of the agents.

The other thing that should be understood is that real estate commissions are usually split in four ways. The listing firm, the listing agent, the selling firm, and the selling agent typically split the commissions.

Consumers should also understand that there is a difference between a Realtor® and a real estate agent.

Commissions as a renter (tenant)

There are some instances when the renter pays a real estate agent to find them a place to rent. This is more common in cities with a higher renter demand and limited housing supply, such as SF and NYC.

In these instances, a tenant might pay a commission equal to half the first month’s rent.

Before you agree to pay any real estate agent commission, confirm whether it’s customary in that city.

And if it’s customary for the tenant to pay, discuss the commission rate before agreeing to work with that realtor.

Companies like Blueground list their SF and NYC apartments online in one easy-to-use database.

So, you can find yourself a fully equipped, move-in-ready home without having to pay a realtor commission.

Example Commission on Selling a House

Let’s look at what a seller would pay to sell their home using an average real estate agent commission.

The home’s sales price is $500,000, and the commission rate is 5%. Under this example, a seller would pay $25,000 in real estate commission.

The commission paid is based on the final sales price of the home.

There is No Set Commission on Real Estate

As mentioned already, Realtor’s fees are one hundred percent negotiable between a real estate agency and its client. While there may be typical rates that arise in a particular area, there is no set commission rate, Realtor fee, or standard percentage.

Some people may wonder why that is the case, and it boils down to what’s known as the Sherman Antitrust Act. The act was put in place to prohibit businesses from getting together and barring competition.

Real Estate commission fees should not be fixed.

In essence, all the real estate agencies in a given area cannot get together and agree to set commission rates. Doing so would amount to collusion and setting real estate commission income. However, that does not mean a real estate brokerage cannot mandate that their agents charge a specific rate when listing a home for sale. Doing so is legal and at the discretion of the real estate agency.

In 1979 a lawsuit, United States v. P Foley, tied up real estate agent commissions with antitrust law. The case put real estate agent fees under a microscope and changed how real estate brokers conduct themselves related to clients’ compensation.

Due to the Sherman Antitrust Act, agents need to be careful about what they say about how much they charge for commission.

For example, a real estate agent should not say real estate fees in my town are X percent. Realtors’ commission rates should not be discussed among agents.

Seller’s Agents Will Often Split The Commission With a Buyer’s Agent

So how is the commission divided between agents?It is worth remembering that the seller’s agent will often share the commission with another agent – like when another Realtor® finds a buyer for the property.

So how is the commission divided between agents?

The listing broker will usually split the commission with the buyer’s agent fifty-fifty.

However, there are times when a commission split between the listing agent and buyer’s agent could be different. It is a mistake to discount the buyer’s agent commission when you sell a home in most situations.

Home Buyers Can Pay Real Estate Commission Fees Too

One of the popular questions consumers ask is who pays real estate commission. It’s not just the seller who pays Realtor fees.

It is also possible that a buyer’s agent could be paid directly by the potential buyers. There are a few common circumstances where prospective buyers could pay their buyer’s agent.

For example, if a buyer’s broker locates a home for their client for sale by owner. The FSBO may not be willing to pay a buyer’s agent. In this circumstance, the buyer pays their agent an agreed-upon commission.

Sometimes a buyer’s agent will have a buyer’s agency agreement that says they will get paid a minimum amount of Realtor fees. The buyer will make up the difference if the seller offers a lower commission rate than this amount.

When you sell a house, it is an intelligent move not to discount the commission that the buyer agent will be paid. Doing so could make your home harder to sell and net you less money, not more.

Who pays real estate commission fees?

Typically commission fees are paid in full by the seller in the transaction. As explained by top real estate agent Rachel Moussa of Flower Mound, Texas, in most places, “the standard is for sellers to pay both the listing agent and the buyer’s agent’s commission. The listing agent puts on the MLS what percentage the seller has agreed to pay cooperating brokers.”

Find an Agent Worth Their Commission We’ll connect you with three top local agents proven to deliver amazing results for their clients. You won’t regret a dime spent! Find Agent

What do real estate agents and Realtors do?

Whether acting on behalf of sellers or buyers, the duty of a real estate professional is to maximize the benefits his or her client gets from the home transaction.

Agents do this by having:

  • An intimate knowledge of the local housing market, including expertise in appraisal
  • Negotiating skills to secure the best or optimum price for the client
  • Local contacts in the marketplace who can help with the rapid acquisition or sale of a home
  • A close knowledge of the legal and mortgage processes involved
  • Troubleshooting skills that keep a transaction on track when issues arise
  • Interpersonal skills that allow clients to feel comfortable and in control throughout the process

If you pick a good one, your agent can be highly valuable.

Ideally, your agent will have several years of experience in your local real estate market. But new agents can offer a lot of skills and insights, too.

Whats a normal real estate agent commission?

While there’s no set standard of real estate commission rates for an agent and broker, in MA and CA you typically see 4-6% split between the listing agent and buyer’s agent. Again, there’s no STANDARD for this, but agents over the years (and years. and years) have just kind of stuck with the number of 4-6%. This varies by location, property type, and market conditions.

Some real estate companies have come in over the past 10 years and offered a discounted listing fee, but that could also require that you buy a house with them (at the typical 2.5-3% fee). Regardless, you should know that there isn’t a standard commission by law.

Here’s an example of what a real estate agent commission could look like:

123 Main Street is on the market for $600,000. The seller has agreed (in their listing contract) to pay 5% of the selling price to their agent, to be split with the buyer’s agent.

5% of $600,000 = $30,000 total commissions agreed uponThe buyer would get $570,000 ($600,000 – $30,000)

123 Main Street actually sells for $650,000 (remember, we’re in a hot market)

5% of $650,000 = $32,500 in total commissions paid to the real estate agentsThe buyer keeps $617,500 ($650,000 – $32,500)

$32,500 is split between the seller’s agent and buyer’s agent, so each agent walks away with $16,250 (and if the listing agent also brings in the buyer, that agent is eligible for “dual agency” – or double commission, getting all of the commission set aside for the buying and selling agents)

That doesn’t mean on every sale of $650,000, a real estate agent takes home $16,250. The real estate agent typically will have to pay fees to their brokerage, whatever marketing costs they spent on the listing or to acquire the buyer who bought the house, etc.

Factors that influence commission rates

In addition to regional trends, there are a number of factors that influence how much you end up paying in realtor fees when you sell your home.

Most of the factors that affect how much an agent might charge for a given home sale stems from the fact that realtor fees are negotiable. Agents will lower or raise the amount they charge depending on:

  • The home
  • The client
  • The current state of the real estate market

Based on our research,working with repeat clients is the most common reason that real estate agents agree to accept lower rates.

Here's a full breakdown of the most common factors that cause agents to lower their commission rates:

Conversely, our survey showed that the most common reason that listing agents negotiate for higher rates was that home sellers requested expensive marketing.

Below, we've included the full breakdown of all of the factors:

How home value affects average real estate commission rates by state

Typically, realtors will be more willing to accept lower commission rates for homes that have high values.

Our study of commission rates found that in real estate markets where home values were high, realtor fees were typically lower than the national average. For example, commission rates averaged 5.12% across the states with the highest median home values — which is markedly less than the national average of 5.49%.

Based on our survey's findings, homeowners in the five states with the highest property values would pay 11% less in realtor fees when they sell their home than residents in the states with the five lowest home values — as a percentage relative to their home's sale price.

So why would high home values cause agents to lower their rates? Mainly, it's because the work that agents have to do to sell homes is not significantly different for high and low value homes.

Agent's earn commission based on the home's selling price, so they stand to earn a lot more money selling higher value homes — relative to their effort and time investment — than lower value homes.

Furthermore, even if they have to spend more time or money marketing a high cost home, it may be worth it for that agent.

Consider the following example, where the listing agent earns 57% more per hour selling a $500,000 home than they would selling a $250,000 home, even after factoring in the marketing costs and time commitment:

Home sale price $250,000 $500,000 Time to sell 10 weeks 12 weeks Out of pocket marketing cost $500 $1,000 Time spent actively selling (eg showing, marketing, etc.) the home 30 hours 34 hours Commission earned $4,500 $9,000 Net commission earned per hour of time actively marketing/showing the home $150 $235

» MORE: How to negotiate realtor commissions with your agent

Why realtors lower their fees for repeat clients

Having steady business is valuable for real estate agents — home sellers can use this fact to negotiate lower commission rates.

For real estate agents, having consistent streams of clients is crucial to their livelihood. After all, real estate agents typically only process around 12 real estate transactions per year— meaning that gaining a deal has a large impact on their income.[1]

To agents, there is more value in having reliable repeat business, than there is in maximizing their commission they earn on any single deal. Because of this, agents often lower rates to attract clients that are likely to use them for future transactions.

Get Your Real Estate License in Texas

Real estate agents in Texas earn an average income of $93,000 per year, according to 2021 data from Indeed. However, those with over 10 years of experience average around $111,000 annually. Plus, you get other benefits like the ability to work from home, have a flexible schedule, and get professional development assistance from your broker. Ready to get selling? Start the process of getting your license online!

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