What’s the Average Colorado Real Estate Commission Rate?

Does the agent get to keep the full commission?

Although the seller pays the entire commission, the listing agent, who is representing the seller in a transaction, doesn’t keep it all.

The commission is typically split (often 50/50) with the buyer’s agent to compensate them for bringing a buyer to the sale and coordinating the buy-side of the transaction. So, around 2.5% to 3% goes to the listing agent, and the other 2.5%-3% goes to the buyer’s agent.

Both the listing agent and the buyer’s agent will then share a percentage of their commission with their sponsoring broker.

Part of their commission will go toward marketing your property with professional photography, open houses, offline marketing, and more.

In Hryniewich’s experience, a standard commission scenario involves the buyer’s agent getting 2.8% of the commission proceeds and the listing agent getting 3.2%. The percentages can be adjusted based on negotiations during the listing agreement. The listing agent often gets a higher share of the proceeds due to the extra leg work that they contribute to the transaction, including handling the MLS (multiple listing service) listing and getting the property ready for sale.

“Commissions are always the elephant in the room,” says Hryniewich. “It’s all about full disclosure to the seller on what commission you’re charging and what the co-op needs to be to the other agent.”

These split rates can vary; however, it’s common for the listing agent to give their broker anywhere from 30%-50% of their commission, depending on the agent’s level of experience, their market size, and brokerage agreement.

How is the commission divided between agents?

The commission that’s paid by the seller will typically be split among each agent and the brokerages through which they hang their real estate license. Let’s say you sell your home for $500,000 with a 6% commission rate. You pay a commission of $30,000, and each agent has a 70/30 split agreement with their brokerage. Here’s how that might look:

• Listing agent: $10,500 (70% of their $15,000 commission share)
• Listing broker: $4,500 (30% of their $15,000 commission share)
• Buyer’s agent: $10,500 (70% of their $15,000 commission share)
• Buyer’s broker: $4,500 (30% of their $15,000 commission share)

Are Colorado commission rates negotiable?

You can negotiate real estate agent commission rates, but don’t be surprised if your agent holds firm on how much they charge. A Consumer Federation of America report found that only 27% of agents are willing to negotiate the commission.

One reason agents often don’t lower their rate is that it may reduce their ability to negotiate a higher sale price for the seller. An agent’s services often include photography and pricing analysis, so a lower commission could also translate into a smaller marketing budget for your property, an inaccurate list price, fewer home promotions, and a lower likelihood of selling.

Hryniewich emphasized that higher commission rates often equate to a better quality of service. “Some shoppers will always want the button of the barrel, but it’s a ‘you get what you pay for’ type of thing,” he says. “The least expensive way is actually the most expensive way.”

Overall, commissions in Colorado are negotiable but do your research first. When asking an agent to lower their pay, you’re limiting the pool of agents willing to work with you. And the downsides to working with a low-commission agent can be steep. Without a top Colorado agent in your corner, you could dramatically undersell your home, have a rough selling experience, or fail to sell the home at all.

In terms of competition, Hryniewich explains that discount brokerages might charge as low as 1% commissions, but that the marketing services might be limited, and such outfits don’t tend to stay in business for long.

“You can’t keep a shop open charging 1%,” he says. “Those types of brokerages don’t bode well. A lot of people come into the business, and a lot of people get out because I firmly believe that twenty percent of the agents do eighty percent of the business.”

What is included in a real estate agent’s commission?

A full-service real estate agent in Colorado will provide a high level of offerings that go toward giving you a great selling experience and boosting exposure to your home.

An agent’s services fall into a few main categories:

Guidance on pre-sale improvements

Agents see a lot of houses in their Colorado markets. They will have an eye for the small but impactful improvements you could make to help it sell for more. The best agents will go above and beyond to help their clients get the job done.

Hryniewich advises that sellers should get input from their agent before making home improvements prior to the sale because there’s a risk that they might make less impactful improvements and waste money in the process.

“We do a lot of reconstructions of houses,” says Hryniewich. “We have a list of contractors that usually run about a third of the cost of what sellers can find in the Yellow Pages or online.”

Pricing strategy

An agent will put together a comparative market analysis (CMA) in the form of a thick packet featuring charts, facts, figures, and photographs of houses. The analysis will show you what your home is worth based on comparable sales in the neighborhood, market trends, and local price per square foot. This key tool helps you set a realistic price that can attract offers right off the bat in a fraction of the time it would take a non-professional to determine.

Marketing services

As part of their commission, at a minimum, Colorado agents should offer expert home prep and staging, professional photography, marketing flyers and pamphlets, direct mail, automatic postings of your listing on major home search sites, local advertisements, exclusive previews for other brokers, and open house coordination. Advanced agents may also offer the development of a virtual tour.

Marketing services, along with things like property staging advice, regular market updates, and a comparative market analysis, are a key aspect of what the commission fee pays for, according to Hryniewich.

“The money goes to the agent’s time and effort marketing the property,” he explains. “The agent’s expertise, digital marketing like social media campaigns — all that has to be paid for.”

Offer management and negotiations

When you receive one or multiple offers, an agent will help you determine the strength of the offer and work with you to proceed with responding to buyers. They’ll advise on whether to accept, reject, or make a counteroffer while putting together offer spreadsheets to identify the best offer in bidding war situations.

If a buyer requests repairs after the inspection, an agent will help you push back where appropriate and advise on when to concede. Should the appraised value be lower than the contract price, an agent can help you determine whether to ask the buyer to make up the difference or if you should lower your price.

Market knowledge and neighborhood expertise

Great Colorado real estate agents know what local buyers seek in homes and which of your home’s attributes to highlight. An agent will skillfully incorporate key features into your home’s listing description and immediately be able to recognize what makes your house or the surrounding area special.

What is a fair real estate commission in Colorado?

As noted above, the average commission rate in most Colorado markets is between 5.6%-6% to hire a full-service real estate agent. This rate should mean you have an agent who is dedicated to selling your home for the best possible price, who is available and communicative, and who is willing to shepherd the transaction from start to finish. If an agent isn’t willing to offer all or the majority of services listed above, you should interview more candidates.

“6% is standard, but I think 5.6% is a fair rate,” says Hryniewich. “You may have to reduce it a little bit, it just depends on the circumstances. How much marketing are you going to have to do? I think the listing agent should be compensated as much as, if not more, than the buyer’s agent because the listing agent has to do all the marketing, all the photo shoots — a lot of money comes out of the listing agent’s pocket.”

What if my Colorado house doesn’t sell?

Real estate agents only get paid commissions if and when your home sells successfully. Most real estate contracts include an exclusive right to sell, which gives the real estate agent the sole rights to market the property, list the property on MLS, and receive the commission if the sale closes in a determined time frame. If your house remains on the market beyond the time period outlined in the listing agreement, you are not obligated to pay your agent.

However, keep in mind that your listing agreement may contain a protection clause, also known as a “brokerage protection clause,” “safety clause,” “extension clause,” or “tail provision.” The protection clause states that if a buyer who the listing agent introduced to the property purchases the property after the listing agreement expires, the seller still must pay the agent a commission.

According to Hryniewich, regular agent-seller communication is crucial for a house that’s sitting on the market to stay ahead of real estate trends through market analysis updates.

“I keep my clients informed on what the market’s doing,” says Hryniewich. “Market conditions are changing quickly. The last thing you want to do is to be chasing the market, especially if it’s going down. You’re never going to catch up if you try to chase the market, so it’s always best to be an informed seller and stay in contact with your agent.”

How can you avoid paying Realtor fees?

There are two main ways to avoid paying Realtor® fees. You can either sell your Colorado home without an agent’s help, or sell it directly to a cash buyer without ever going on the market.

For Sale By Owner

Without a real estate agent, you’re responsible for preparing your home for sale, marketing, negotiating, and navigating legal and financial documents. When selling a house on your own, you’ll need to hire an attorney, at a minimum, to make sure the paperwork is right.

Typically, For Sale By Owner (FSBO) makes the most sense if you already have a buyer. As of 2022, 50% of FSBO sellers knew their buyer.

This indicates that while the FSBO route is rare, making up just 10% of sellers, it’s even more rare to forgo a real estate agent’s help when you don’t already have a buyer lined up and ready to go. In addition, according to a 2022 National Association of Realtors report, the median FSBO house sold for $225,000, compared to a median of $345,000 for agent-assisted sales. That’s a significant loss of proceeds in an effort to save 6% on commissions.

Sell to a cash buyer

Cash buyers — including iBuyers, investors, and house-buying companies — are individuals or entities that purchase your home outright, without the need for lender financing. These buyers typically make off-market purchases and can provide speed and convenience to sellers.

Just be aware that the price offered by most cash buyers may not match what you could receive on the open market with the help of a top agent.

If you’re interested in a cash sale, you can receive a no-obligation offer through HomeLight’s Simple Sale platform, with no hidden fees or agent commission. Simple Sale connects you to the largest network of cash buyers in the U.S.

Now you know how Colorado agent commissions work

Sellers pay real estate commissions in exchange for an agent’s expertise and services throughout the sale process. If you’re worried about the cost of the commission, consider that targeted upgrades, stellar marketing, and savvy negotiations can help you maximize your sale price. With a performance-proven Colorado agent to guide you, you also avoid the stress of navigating this complex process without professional oversight.

The key is finding a quality agent who provides the highest amount of value for their commission fee. In fact, our transaction data shows that the top 5% of agents in Colorado sell homes for as much as 10% more than the average agent.

HomeLight can connect you with top Colorado agents with experience tailored to your needs. Whenever you’re ready to get started, HomeLight would be happy to put your commission worries to rest by introducing you to several agents in your area who are well worth it.

Writer McCoy Worthington contributed to this story.

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