Real estate commissions, though varying annually by up to one percent, have remained steady in the 5% to 6% range. While the national average was 5.8% in 2022, a recent survey by FastExpert indicates some commissions have dipped as low as 4.9% in Q4 2023. Despite these reductions, the surge in property prices has resulted in higher earnings per sale for agents, making the current market particularly lucrative.
Editor’s note: On March 15, 2024, the National Association of Realtors (NAR) announced a landmark lawsuit settlement that will change the way real estate agent commissions are handled in the future. These changes will “decouple” seller and buyer agent compensation. Industry experts predict that this decoupling will likely lower agent fees and give buyers the ability to negotiate commission amounts directly. Learn more.
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Realtor® fees remain the highest expense for sellers at closing. In May 2024, the national average price for a single-family home in the US climbed 5% to $389,400 from last year. At this price, a seller would pay $19,080.60 at a 4.9% commission or $23,364.00 at a 6% commission. With such high costs, many sellers are seeking ways to keep more of their money.
However, not all of that commission goes to the seller’s agent. While the seller usually pays the full commission, this fee typically is split between the seller’s agent and the buyer’s agent, often in half. Then, each agent also may need to share their portion with their respective brokers. In a 50/50 split with a broker — which is typical — the seller’s agent in the example above may pocket only about $5,841.00 — even with a 6% commission rate.
Let’s explore how agent split commissions operate in more detail.
How the Realtor commission structure works
At closing, the seller’s costs are the highest fees on the settlement statement. However, the Realtor takes home only about a quarter of that amount because agent commissions are split four ways. According to NAR, Realtors receive a fixed commission split.
Typically, a seller’s agent earns a 3% commission on the sale, as they must share the commission with the buyer’s agent. “The seller pays around 6% commission and the buyer’s agent will take roughly half of that, so the total commission price is split between the two agents,” explains Shawn Hartmann, a top-performing real estate agent in St. Paul, Minnesota, who has more than 19 years of experience.
The percentage Realtors and brokers make on a home sale
The table below provides some examples of how the commissions on sales would break down based on a 50% split commission fee at 6%.
| Home sale price | Total agents commission (6%) | Split agent commission (commission for each agent) |
| $300,000 | $18,000 | $9,000 |
| $550,000 | $33,000 | $16,500 |
| $750,000 | $45,000 | $22,500 |
| $950,000 | $57,000 | $28, 500 |
However, the seller’s agent can’t take all that commission to the bank; they must compensate their broker. Agent / broker splits can vary widely, but the standard arrangements include 50/50, 60/40, and 70/30. The percentage amount typically depends on the agent’s experience level, the housing market, and the brokerage agreement.
The 2023 NAR Profile of Home Buyers and Sellers found that the median price for FSBO-sold homes was $310,000, while agent-assisted home sales averaged $405,000 — a whopping $95,000 more.
Most homeowners have limited experience in selling homes and may not fully understand the efforts agents make to ensure their properties sell for the highest value. HomeLight interviewed top agents about the money they invest in marketing, which they only recover if and when your home sells. Some of these expenses include online advertising, professional photos, virtual home tours, and open house flyers.
Experts surveyed unanimously identified vehicle expenses as the largest cost for most agents, averaging $1,460. Consequently, after all expenses, the average Realtor typically takes home between $1,400 and $2,400, translating to about 1% of the commission earned.
How top agents add value worthy of their commissions
Sets a smart pricing strategy
A competitive pricing strategy is crucial to a successful sale. An experienced agent will use statistics, charts, and photos from nearby homes gathered through a comparative market analysis (CMA), or “comps.” This data helps sellers understand their home’s value by reflecting the latest local market trends, ideally focusing on properties within the same neighborhood that have recently sold. By examining similar properties sold recently that are close to the seller’s home, agents can accurately gauge buyer willingness and set an appropriate price.
Creates a solid marketing plan that stands out to buyers
An experienced agent is a proactive marketer who leverages the latest technology and strategic planning to attract buyers. Their responsibilities include:
- Crafting compelling local ads and optimizing property features on the MLS using advanced digital tools.
- Preparing the home for showings through decluttering, deep cleaning, staging, painting, and enhancing curb appeal, often using virtual staging and 3D tours.
- Coordinating professional photography and video shoots, including drone footage for a comprehensive online presence.
- Organizing exclusive broker showings and open houses, often integrating virtual tours and live-streaming options to reach a broader audience.
Provides guidance on presale improvements
A skilled real estate agent will conduct a walkthrough of your home to identify areas needing attention. Following this review, they’ll suggest targeted updates and upgrades designed to boost your home’s value and maximize your return on investment, all within your budget.
Realtors can also save sellers time and money by referring them to a network of vetted service providers, including home inspectors, handypersons, painters, plumbers, and other contractors offering fair pricing. Additionally, agents can help avoid unreliable or unqualified vendors in the area.
You can negotiate commission, but you get what you pay for
Yes, negotiating your agent’s commission is possible. However, opting for a lower commission might result in diminished value. Agents who accept reduced fees often lack the budget to invest in effective marketing strategies that attract more buyers and secure higher offers. Additionally, they may have less incentive to fully represent you, as they need to sell more homes to compensate for the lower fee.
Top agents are dedicated to earning their commission and provide valuable services throughout every stage of the home-selling process.
Elizabeth Weintraub, a leading Sacramento agent with more than 45 years of experience, recounts a client who returned to her after a deal fell through with a lower-commission agent who couldn’t close the sale.
“He wanted me to discount the fee to what this other company was going to charge him,” Weintraub says. The client said,” As far as I can see, they’re going to do everything that you’re going to do.” To which Weintraub replied: “No, they’re not.”
Weintraub says, “Sure enough, when the client got into escrow, everything fell apart. The agent didn’t know how to handle it, didn’t want to deal with it, and cut him loose, and he came back to me.”
Similar to Weintraub’s experience, statistics show that working with a top-performing agent can lead to higher profits and a successful sale.
Words of wisdom
Although commissions are negotiable, the NAR strongly advises its members not to accept less than 5%. The organization believes that the high level of service provided by its members justifies the full commission, highlighting that Realtors offer valuable resources, such as exclusive tools and industry connections.
Limited-service agents charge less but offer less value
Limited-service agents assist sellers by listing properties on a flat-fee Multiple Listing Service (MLS), which exposes the listings to a network of brokers. Some limited-service companies offer fee-for-service options, allowing sellers to select the level of assistance they need. However, marketing costs are additional and typically are included in the fee when working with a full-service agent.
Flat-fee agents don’t have a vested interest in getting you the best price for your property, since they’re paid the same regardless of the final sale price. Some limited-service agents provide sellers with a fixed rate or a limited selection of services, such as:
- Posting a “for sale” sign for your property. However, you’ll have to facilitate the deal on your own if you receive requests from buyers.
- Setting up a lockbox, which includes providing you with a combination lock box and key to your home that allows buyer’s agents to show your house when you’re not available
- Offering advice about marketing, pricing, and negotiating strategies
According to the NAR, limited-service agents generally do not provide several key services, including:
- Scheduling appointments with buyer’s agents to view the property
- Presenting buyer offers to sellers
- Advising sellers on developing, communicating, or presenting counter-offers
- Facilitating negotiations on behalf of the seller
Limited-service agents typically focus on listing the property and may offer additional services at an extra cost, but they often do not handle these more comprehensive aspects of the selling process.
Find a top-producing agent for the best results
Connect with a Top Agent
Top real estate agents will work to really earn their commission, and HomeLight data shows they sell homes faster and for more money than average agents.
Data reveals that partnering with top-performing agents can significantly boost a seller’s financial outcome. Research indicates that the top 5% of realtors sell homes for a median price 10% higher than their peers. To find a top agent, use HomeLight’s Agent Finder. Simply enter your address and answer a few questions, and we’ll calculate and match you with the top three agents in your area.
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