Real Estate Commission: Who Pays and How Much?

Real Estate Commission: Who Pays and How Much?

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If you are ready to sell your house, you’ve likely considered using a real estate agent to list your home. Enlisting the help of a real estate brokerage has its benefits, but it also comes with a price tag.

By using an agent, you can get a professional’s analysis of what your home is worth; have it professionally marketed, including social media platforms; get your listing on the multiple listing service (MLS) in your area; have someone else to handle the showings and open houses; let an agent negotiate offers and requests for repairs on your behalf; and have an agent represent your best interests throughout the home-selling process, from listing to close.

The agent’s knowledge can keep you from agreeing to an offer with too many contingencies or unreasonable requests from potential buyers. He or she can also ensure you are following fair housing laws. But all of that professional help comes at a cost.

calculate real estate commissions

Deciding to sell your home the traditional route may provide you with assistance and support through the process, but it also means you will be paying the real estate brokerage a percentage of your home sale proceeds as real estate commission.

Who Pays Real Estate Commissions?

In a traditional real estate transaction, there are two agents from two different brokerages involved. One agent’s brokerage will represent the seller, while the other will represent the buyer.

The agent from the listing brokerage will help market the property, find qualified buyers and represent the seller throughout the process. The buyer’s agent helps their buyer find properties, negotiates on behalf of the buyer, and represents the buyer throughout the transaction, all the way to the closing table.

Dual agency occurs when the listing agent also finds the buyer so that the buyer and seller are represented by the same real estate agent (or two agents from the same brokerage). Dual agency is not allowed in all states.

The commission is always paid by the seller, unless negotiated otherwise. At closing, the real estate commission is split—typically in half—between the listing brokerage and the selling brokerage. The brokerages then pay a share of the commission to the agents involved.

Are Real Estate Commissions Negotiable?

Just like most other aspects of a real estate transaction, commissions are negotiable. A typical real estate commission in most areas of the country is 6 percent of the sales price, to be split between the listing and selling real estate brokerages. But keep in mind, this can vary.

negotiate real estate commissions

For example, brokerages will often agree to a lower commission on luxury properties due to the higher sales price. In other situations, a brokerage may agree to a reduced commission if the listing agent is only asked to act as a transactional agent, which means the agent will handle the paperwork and ensure you understand all contracts, but in most cases, will not provide marketing or negotiating services. They are also not as likely to offer their professional advice as you navigate the transaction.

But, because it is actually the brokerages that are paid the commission from the transaction, any negotiations for a lower commission will need to have the approval of the listing brokerage’s principal broker, unless the agent you are listing with happens to be the principal broker as well.

Paying commission might not seem like much, but a listing agreement that includes a 6 percent real estate commission, for example, actually costs you $18,000 on a $300,000 sale.

In addition to commission, you may need to shoulder other costs. For example, unless you are selling your home “as-is,” the buyer may request that you make repairs based on the inspection report received from the home inspection. While a request for repairs is not supposed to be used as a “to do” list for the seller, many buyers try to push for as many repairs as possible.

Your agent can negotiate these requests for you, but the bottom line is that the buyer has the right to walk away from the deal based on the results of the home inspection and the seller’s unwillingness to make repairs or lower the selling price.

Can I Sell with an Agent and Avoid Real Estate Commissions Altogether?

With a traditional real estate transaction, there is not a way to get around paying commission at closing other than having your agent negotiate to have the buyer pay the commission. However, getting a buyer to agree to pay the full real estate commission—as cash out of their pocket—is next to impossible. They can simply move on to another property.

However, you can opt for no commission by choosing a different way to sell your home—with HomeGo. HomeGo uses licensed agents with knowledge of your local real estate market, so they can provide you with an accurate analysis of your home and provide one-on-one consultation. HomeGo only uses state-regulated documents, so your interests are protected.

But despite offering professional assistance, HomeGo does not charge real estate commissions and there are no fees or closing. You also never have to put time or money into repairs for a property you’re ready to part with because HomeGo purchases homes in as-is condition, so you can move out and move on quickly and confidently. Ready to learn more? Our agents are ready to discuss your unique needs and help you find the best possible solution.

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