How Much Is Real Estate Commission?


When you buy a home, you’ll pay closing costs that include taxes and attorney fees. And when you sell a property, the typical real estate transaction comes with a real estate commission, which is an amount of money paid to your real estate agent and broker in exchange for their services. The size of this fee is usually a point of contention, with many people believing that real estate commissions are too high or that the services provided by agents aren’t worth the price. In fact, the National Association of Realtors recently agreed to change its commission rules in order to settle lawsuits that claimed that the group’s requirements stifled competition and drove up homeowner prices. The settlement, which still needs to be approved by a federal court, includes the payment of $418 million and a change to how brokers offer commission rates on affiliated multiple listing services (MLSs) that populate listings on sites such as Zillow and Redfin. Also read

The average Realtor commission is currently around 6% of the sale price of a property, though that figure varies by region and by the level of experience and expertise of the real estate agent. Typically, the majority of that money goes to the agent’s broker, while the rest is shared between the buyer’s and seller’s agents. The exact split varies by region and is generally set by the brokerage itself, but can be a 50/50 split or a 60/40 split or any other ratio that the agents and brokers agree upon.

One of the biggest reasons why homeowners aren’t clamoring to lower the commission rate is that it can dramatically impact their bottom line. If they accept a commission rate of 5% or higher, it means that they’ll have to make up the difference in their selling price by adding on other costs such as upgrades and moving expenses. And for people on tight budgets, that additional cost can be a major deterrent to buying or selling a home.

While technically real estate commissions are negotiable, the truth is that they’ve remained in a relatively steady range at around 5 percent of the sales price for most of the last decade. This year, however, the number of sellers who are voluntarily reducing their commission rates is up significantly.

The good news is that the recent changes to the way MLS broker databases record real estate commissions, such as the REBNY RLS Broker Database, MLS Long Island or Hudson Gateway MLS, will likely lead to a much more transparent marketplace in which consumers can comparison shop and negotiate. This will likely drive down commission rates in the future, and it’s possible that, with enough time, we might see commission rates below 4 percent in certain regions.


Leave a Reply

Your email address will not be published. Required fields are marked *