How Much Is Real Estate Commission?

Homeowners pay a real estate commission to the agent who sells their home and to

the buyer’s agent. Those agents in turn earn a percentage of the sale price of the

home. But how much is that real estate commission? And what factors might

influence the amount an agent earns for a transaction?

Commissions are a major part of many real estate careers. Some agents choose to

work in this industry for the flexibility and freedom it offers, while others put in long

hours and grind it out day in and day out to bring in fat commission checks. The real

estate commission rates can vary widely, even among agents within a single broker.

The commission rate can also depend on a market’s overall demand for homes and

the competitiveness of the market.

In general, the commission is set by an agreement between the agent and broker.

It’s common for brokers to offer a commission split of 60/40, but it can also be 50/50

or any number of other percentages. Generally, the higher-producing agents earn a

larger portion of their total earnings from commissions than those who are less

experienced.

The amount of real estate commission can also depend on a home seller’s choice of

listing service and the real estate agency. Many sellers use a real estate board’s

multiple listing service (MLS), which lists properties and gives brokers access to the

information they need to facilitate sales. However, if a seller wants to bypass the

MLS and list their property independently, they can do so. This can save on

commissions, but it may require more legwork on the seller’s part to promote the

Some real estate agents might offer lower commission rates in exchange for repeat

business. This is because they know they’ll be earning commission on two

transactions instead of just one. It’s important for sellers to compare the rates of

different real estate agents in their area before choosing an agent to represent

them.

Real estate commissions can also depend on whether it’s a seller’s or buyer’s

market. In a seller’s market, there are more interested buyers than homes for sale,

and so homes tend to sell quickly at or above their asking price. In a buyer’s market,

it can take longer to sell a home, and the listing price may need to be dropped to

attract more buyers.

While it’s possible to negotiate real estate commissions, a Consumer Federation of

America report found that only about 27 percent of agents are willing to lower their

rates. This is because a reduced commission could impact an agent’s ability to get

the best sale price for their clients, and it might reduce the number of potential

buyers who see their listing.

In a seller’s market, reducing or eliminating real estate agent fees might be possible

by selling the home FSBO (for sale by owner). Alternatively, sellers can save up to

6% in NYC real estate commission by using Hauseit’s flat-fee MLS listing service.