UPDATED: Mar 28, 2024
When buying or selling a home, you’ll encounter various costs associated with closing, including REALTOR® fees. If you hire a real estate agent or REALTOR® to help you buy or sell a house, that agent will be paid a commission in exchange for their services. Who pays this commission and how much it is are important to know as you make this important financial decision.
Let’s explore a few key details you’ll need to know about REALTOR® fees, including more on what they are, who pays them and how much they cost.
A REALTOR® fee, also known as real estate commission, is the price you pay to work with a real estate agent or REALTOR® to buy or sell a house. These fees cover the cost of many services your real estate agent or REALTOR® may provide, from marketing your home to walking you through the various processes involved with selling or buying a house.
In some markets, real estate agents and REALTORS® – real estate professionals who are members of the National Association of REALTORS® (NAR) – work for a flat fee. They typically work on commission, though, so in most cases you won’t have to pay your agent unless they successfully sell your home or help you purchase a new one.
The home seller usually pays the REALTOR® fees. They’re calculated by subtracting the agent’s commission costs from the total sale price of the real estate transaction. The fee goes to the seller’s agent (also known as the listing agent) who splits the commission with the buyer’s agent.
Home buyers don’t directly pay REALTOR® fees, but the buyer’s money – usually in the form of a mortgage loan – is what the seller uses to cover both agents’ commission costs. In that way, both the buyer and the seller contribute to this expense.
When buying a for sale by owner (FSBO) home, the buyer’s agent will often negotiate directly with the homeowner for the payment of REALTOR® fees. If the seller agrees, they’ll pay the commission of the buyer’s agent.
Real estate agent commissions are usually calculated as a percentage of your home’s final sale price. This percentage varies, but typically real estate agents are paid 5% – 6% of the final sales price of the home.
That total commission percentage is split between the buyer’s and seller’s agents. On a 6% REALTOR® fee, each agent would receive 3% of the sale price. If a real estate broker assists in the sale, agents will often further split the commission with the brokerage.
Though the REALTOR® commission rate can vary from one transaction to another, estimating 6% of your home’s sale price can give you a good idea of how much you might pay in real estate commissions.
For example, if a house sells for $200,000, you can expect to pay around $12,000 for the REALTOR® fee. If you’re the homeowner, you should take this into consideration when determining the listing price of your home.
Here are some examples of the average commission you might pay for different home prices.
Home Sale Price |
Seller's Agent Commission (3%) |
Buyer's Agent Commission (3%) |
Total Dollar Amount |
$100,000 |
$3,000 |
$3,000 |
$6,000 |
$250,000 |
$7,500 |
$7,500 |
$15,000 |
$500,000 |
$15,000 |
$15,000 |
$30,000 |
Buyers and sellers pay real estate agent fees in exchange for that agent’s experience, expertise and professional connections in the real estate industry. This can be particularly valuable for first-time home buyers and sellers who aren’t as experienced in the processes.
Some of the home selling services covered by an agent’s commission include:
You can sometimes negotiate the cost of real estate commission fees, though this may affect how much your agent is able to do to help sell your house. Negotiating for a lower commission could mean less money going toward marketing your home to buyers and other tasks your real estate agent may take on for you.
If you want to negotiate REALTOR® fees, it’s best to ask an agent upfront if they’ll be willing to reduce their commission.
Dual agency is when one agent represents both the buyer and seller. Since a dual agent is working both sides of a real estate transaction, they’ll receive the full commission percentage after the sale closes.
Dual agency is rare as it’s often seen as a conflict of interest. Some states don’t allow dual-agent representation because of this.
While the real estate commission gets paid when a home closes, it isn’t technically included in your closing costs. Closing costs are made up of other expenses that are usually related to your loan, not your REALTOR® or real estate agent’s work, and typically include expenses like legal and loan processing fees.
Closing costs will vary, but on average may cost 3% – 6% of your home’s sale price.
When looking for the right real estate agent or REALTOR® to work with, it’s a good idea to shop around a bit. Buying or selling a home is one of the biggest financial commitments you can make, so it’s important to work with someone you trust.
Here are some other common questions about REALTOR® fees.
Home sellers typically pay REALTOR® fees with proceeds from the sale of the home, which is paid for by the buyers. Buyers pay indirectly when they take out a mortgage for the home.
The average total real estate commission is 5% – 6% of a home’s final sale price. Commission rates can vary between states, cities and even brokerages. As you search for the right real estate agent, it’s common to see different rate quotes.
When you hire a real estate agent or REALTOR®, the agent fees and commission should be detailed in your listing agreement, which serves as the employment contract between the agent and the property owner.
Working with a real estate agent or REALTOR® to sell your home can take a huge load off of your responsibilities. It’s important, though, to take into account how much you might pay in real estate commission fees and closing costs so you won’t encounter any surprises when it’s time to close. Keep in mind you may be able to negotiate REALTOR® fees upfront, but make sure it won’t affect the help your agent can provide you.
If you’re ready to take the next step in home buying or selling, visit Rocket Homes℠ and match with an agent today.
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