How Much Are Realtor Fees and Who Pays, Buyer or Seller?

Here is an illustration showing how Realtor fees would typically get divided in the traditional seller-funded commission model:

Sale price: $422,600
Realtor fee: 6%
Seller pays: $25,356

Listing agent receives: $6,339
Listing broker receives: $6,339

Buyer’s broker receives: $6,339
Buyer’s agent receives: $6,339

In this simplified example, the selling agent takes home 1.5% of the home’s sale price or 25% of the total Realtor’s fee. Using the national median sale price, a listing agent makes $6,339 on the average home sale.

If you are only covering your listing agent commission, the Realtor fees would be about half the starting amount in our example ($12,678). Your total will depend on the rate you negotiate and whether you offer to pay the buyer’s agent’s commissions.

Let’s take a quick look at how your Realtor fees might be split out on a variety of different priced homes, including what you might expect under the new NAR settlement rules. We’ve broken it out in three ways:

1. If you, as the seller, agree to pay both the listing and buyer agent fees
2. If you only pay a typical 3% listing agent commission
3. What the buyer might pay if they negotiate a 3% buyer’s agent fee

Here again, for simplicity, we’ll use a rounded-up 6% commission and show the decoupled buyer and seller fee rates.

Realtor fee examples by a home’s price

What do Realtor fees cover?

An experienced agent brings a lot to the table. Top agents will provide:

• Guidance on pre-sale improvements
• Pricing strategy
• Marketing services
• Offer management and negotiations
• Market knowledge and neighborhood expertise

The Realtor fee makes your money work hard for you so that you potentially sell your home for your asking price or more. In 2023, Realtors helped people sell their homes for a median sales price that was 100% of the final asking price.

Where does a Realtor’s commission go?

A significant portion of the Realtor’s fee goes to selling your home. As top real estate agent Elizabeth Weintraub of Sacramento, California, explains, a significant portion of the money agents earn from commissions goes into marketing. Weintraub, who has 45 years of experience, estimates that she dedicates about 30% of her fee share to marketing.

Marketing includes professional photographs, videos, full-color online and newspaper ads, and an active online presence. You might think of the real estate fee as an investment that enables your agent to make your home more attractive and sell it for more money.

Why should you care?

Discount brokers may not be able to devote ample time or resources to the marketing or sales efforts your home deserves.

You may save money on the broker fees, but you might lose money when a low-commission agent uploads shoddy photos that look like fuzzy mess shots from a shaky cell phone camera. Doesn’t your home deserve to let its beauty shine?

Or you may get a discount agent who only works in real estate part-time and does not have sufficient experience in negotiations, credits, concessions, contingencies, inspections, or know how to market your home to the right buyers.

What could be at risk?

Money is at risk. Based on median sale prices, sellers who use an agent to sell a home typically make $95,000 more on the deal than someone who sells a For Sale By Owner (FBSO) home. This is one reason why only about 7% of home sales are FSBO transactions. Of those sales, 57% of sellers already knew the buyers, such as a family member or friend.

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Can I get good service from a low-cost brokerage?

There are several low-cost brokerage companies that offer discounted real estate commissions or fees. Depending on your market, the type and condition of your home, and your selling objectives, a discount brokerage may be able to achieve satisfactory results. However, top-performing agents take pride in delivering not only a higher sales price for your home than average agents but also a higher level of service.

Weintraub shared an anecdote about the time a client chose a low-cost brokerage company over her to save money on Realtor fees.

“He wanted me to discount my Realtor fee to what this other company was going to charge him. And he said, ‘They’re going to do everything that you’re going to do.’ And I said, ‘No, they’re not. But I’ll tell you what; when you get into escrow, and you get to the home inspection part, and you’ve got an old home — it was built in the 1920s — you’re not going to get out of it. And when you don’t get out of it, you can give me a call, and I’ll come back and list the property.'”

“He hired that company, and sure enough, they got into escrow, and the home inspection came around, and the whole thing blew up, and he came back to me and said, ‘I want you to list this and put this into escrow!'”

The client’s house did not sell with the discount brokerage. In the end, it cost the seller time and money that could have been avoided had he used an experienced, full-service agent or real estate team from the start.

Can a discount agent really save me money?

It might initially appear that you can save money using a low-commission or discount agent, but appearances can be deceiving. Szakaly explains, “You can certainly ‘save money’ by hiring a lower commission real estate agent. But if you look beneath the hood and do the research, you will see that those agents commanding that full commission are categorically more valuable.”

Put simply, a top real estate agent typically sells homes for more money than a bargain agent does. Without a top agent working for you, you may sell your home for less than its worth, struggle through an agonizing transaction, or be stuck without selling your home.

Can I make more money selling FSBO?

You will most likely lose money without an agent guiding you during the transaction.

“There is a guarantee that you will see a lower profit,” Szakaly says. “And the reason I say that is because right now, the real estate market is dictated by a shortage of inventory, and when you go For Sale By Owner, it reduces the number of eyeballs that find your home, it reduces the amount of showing, and has a detrimental impact on the price you ultimately receive.”

According to recent data compiled by the NAR, the typical median-priced FSBO home sold for $310,000 compared to $405,000 for agent-assisted home sales.

What about selling to an iBuyer?

iBuyers (instant buyers) like Opendoor and Offerpad are financial technology companies that buy properties online, usually without a physical inspection. Larger iBuyers traditionally buy homes in good condition, do light repairs, and then sell the house. It’s a volume business that often operates on razor-thin margins.

iBuyers do not make up a majority of cash buyers compared to the more prevalent “We Buy Houses” groups, but these companies all exist for a reason. That reason is convenience. If you need cash quickly or are desperate to sell your home because of a life event, an iBuyer or investor-buyer might be right for you.

Keep in mind, with house-buying companies, you will get less than what you could have received if you sold your home on the open market with an experienced real estate agent. This means you could potentially leave tens of thousands of dollars on the table. However, for some sellers, the convenience of an all-cash offer and fast closing can be the solution they need.

HomeLight’s Simple Sale platform could be another option to consider. Simple Sale provides cash offers for homes in almost any condition nationwide. Just answer a short questionnaire with some basic questions about your home’s condition, how much work it needs, and your selling timeline. You can receive a no-obligation offer within 24 hours and close in as little as 10 days.

Are Realtor fees negotiable?

Realtor commissions have always been negotiable, and the recent NAR settlement has made negotiated fees more common. However, think about how much money your agent is receiving when negotiating. When you bargain away your agent’s commission, you may impede your agent’s ability to do the great work necessary to sell your home.

“If you are hiring a professional, qualified real estate agent, it should not cost you one penny to have them represent you,” Szakaly says. “They should be able to bring more to you and the home’s value through their marketing expertise and negotiation skills than you’d ever pay them in real estate fees.”

Buying and selling at the same time?

If you’re buying and selling at the same time and you have equity in your current home, HomeLight offers an innovative Buy Before You Sell program that streamlines the entire process. Here’s how HomeLight Buy Before You Sell works:

To learn more, see House Hunting: How to ‘Buy Before You Sell’ With HomeLight.

Realtor fees translate to more money and better service

Sellers pay real estate fees to their listing agent. It’s an exchange of the payment for the listing agent’s expertise, local knowledge, and negotiation skills. The cost of the commission may seem off-putting, but – on balance – the agent’s skill and expertise can far outstrip the price of a fee.

The most important aspect is to find a solid agent who provides you with the most value. Our transaction data reveals the top 5% of agents in the U.S. sell homes for as much as 10% more than the average agent.

If you’d like to take a confident next step, try HomeLight’s agent matching service that matches you with top agents who have experience and knowledge specific to your needs and your market. HomeLight’s network agents will happily and openly answer your questions about Realtor fees and ease your real estate journey.

Writer Dwayne Vega contributed to this story.

Header Image Source: (Ján Jakub Naništa / Unsplash)