Do Closing Costs Include Realtor Fees?
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Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
If you’re making plans to sell your home, it’s likely you’re calculating your closing cost expenses so you can estimate your final proceeds. A common question many sellers ask is: Do closing costs include Realtor fees?
While closing costs and Realtor fees are both part of selling a home, they are separate expenses that cover different aspects of the transaction. What’s more, a recent court settlement has changed the way Realtor fees are handled and who pays them.
In this guide, we clarify the separation between closing costs and Realtor fees and provide examples of how much you might pay in agent commissions.
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Do closing costs include Realtor fees in a home sale?
The short answer: No, closing costs do not typically include Realtor fees.
Closing costs refer to expenses associated with finalizing the sale of a home, such as title insurance, escrow fees, and transfer taxes.
These are separate from the commission paid to the agents involved in the transaction. Realtor fees, or commissions, are paid directly to the agents and are usually calculated as a percentage of the home’s sale price.
However, both closing costs and Realtor fees come out of the proceeds from your home sale, so they’re important to account for when determining your net profit.
What are Realtor fees?
Realtor fees, also called commissions, are compensation paid to real estate agents for facilitating home sales.
Historically, the combined fee has been around 5%–6% of the home’s sale price, with the seller paying both the listing agent and buyer’s agent commissions. The two agents would then split the money and pay their brokerages a percentage. However, this traditional model is changing.
A recent court settlement by the National Association of Realtors (NAR) has decoupled Realtor fees. Under the new commission rules, buyers are now responsible for their own agent commissions. This means that under the new model, sellers are paying about half of what they used to pay in Realtor fees — unless they offer to pay the buyer’s agent commission as part of the home sale. (More on this in a minute.)
Curious what agents make annually? According to the NAR salary data:
- Average real estate sales agent salary: $46,014
- Typical range for most agents: $44,951 to $58,528
For Realtors with 16 years or more experience, the range can be as much as $100,000 or more.
Who pays Realtor fees?
As noted above, under the old commission model, sellers paid the Realtor fees for both their listing agent and the buyer’s agent. Under the new NAR commission rules, buyers are now expected to pay their own agent’s commission.
Despite this change, many sellers still offer to pay the buyer’s agent’s commission as a seller concession to attract more buyers, especially in competitive markets. Buyers may also request this as part of their negotiation strategy.
The new rules also require buyers to sign a buyer-broker agreement before touring properties so they are fully informed about the Realtor fees they are expected to pay.
How to estimate Realtor fees
Realtor fees can vary based on how commissions are negotiated and who is responsible for paying them. Let’s break it down with two examples:
Example 1: The traditional model (seller pays both agents)
In the old model, the seller typically paid a 5%–6% commission on the home’s sale price, split between the buyer’s and seller’s agents.
For a home sold at the U.S. median price of $420,000, this would amount to:
- Total commission: $21,000–$25,200
- Split: $10,500–$12,600 for each agent
This cost was deducted from the seller’s proceeds at closing.
Example 2: The new model (seller pays their agent, buyer pays their agent)
Under the new commission rules, the seller may only pay their agent’s fee, while the buyer is expected to pay their agent directly. Let’s assume each agent negotiates a 2.5%–3% commission:
- Seller’s agent fee: $10,500–$12,600
- Buyer’s agent fee: $10,500–$12,600 (paid by the buyer)
In this scenario, the seller’s costs are essentially cut in half because they no longer pay the buyer’s agent’s fee. But again, many sellers still choose to offer to pay some or all of the buyer’s agent’s commission as a seller concession, depending on the market dynamics.
Seller concession limits: Lenders place limits on the amount a seller can contribute to help a buyer. These concession caps vary by loan type and deposit amounts but can range from 3%–9% of the home’s price. For example, if a buyer offers $420,000, and the seller’s concession limit is 3%, the seller can only offer to contribute up to $12,600 toward the buyer’s closing costs. Restrictions help ensure seller contributions don’t negatively impact the loan’s integrity or the home’s market value.
More Realtor fee examples by a home’s price
In the table below we’ll illustrate how your Realtor fees might look based on your home’s selling price. We’ve broken them down in three ways:
1. Seller agrees to pay both the listing and buyer agent fees
2. Seller only pays their listing agent commission
3. Buyer pays their own buyer’s agent fees
For simplicity, one column shows a straight 6% combined seller-paid Realtor fee, and another shows the decoupled buyer-seller Realtor fees.
| Selling price | Combined 6% fee | 3% listing agent fee | 3% buyer’s agent fee |
| $100,000 | $6,000 | $3,000 | $3,000 |
| $200,000 | $12,000 | $6,000 | $6,000 |
| $300,000 | $18,000 | $9,000 | $9,000 |
| $400,000 | $24,000 | $12,000 | $12,000 |
| $500,000 | $30,000 | $15,000 | $15,000 |
| $600,000 | $36,000 | $18,000 | $18,000 |
| $700,000 | $42,000 | $21,000 | $21,000 |
| $800,000 | $48,000 | $24,000 | $24,000 |
| $900,000 | $54,000 | $27,000 | $27,000 |
| $1,000,000 | $60,000 | $30,000 | $30,000 |
| $1,500,000 | $90,000 | $45,000 | $45,000 |
| $2,000,000 | $120,000 | $60,000 | $60,000 |
What do Realtor fees cover?
An experienced Realtor brings a lot to your home-sale table. Top agents will provide:
- Guidance on pre-sale repairs and improvements
- The most effective pricing strategies for your market
- Marketing services from the MLS to photos and social media posts
- Purchase offer management and negotiations
- Local market knowledge and neighborhood expertise
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What are closing costs?
Closing costs are the fees and expenses associated with finalizing a real estate transaction. These costs cover various services, taxes, and administrative processes required to transfer ownership of the home. Closing costs typically amount to 2%–5% of the home’s sale price, depending on the location and complexity of the sale. Both buyers and sellers incur closing costs.
Who pays closing costs?
Both buyers and sellers are responsible for certain closing costs, but the breakdown depends on local customs and the terms of the purchase agreement.
Buyers typically pay for:
- Loan origination fees
- Appraisal and home inspection costs
- Title insurance for their lender
- Prepaid property taxes and homeowners insurance
Sellers typically pay for:
- Title insurance for the buyer
- Transfer taxes or recording fees
- Outstanding mortgage balance or liens
Negotiations can also play a role in who pays for what. For example, buyers might request that sellers cover some of their closing costs as part of the deal.
How to estimate closing costs
To estimate closing costs, use the 2%–5% guideline based on your home’s sale price.
For a home priced at $420,000, the estimated closing costs might range from:
- 2%: $8,400
- 5%: $21,000
Review your settlement statement (HUD-1 or closing disclosure) carefully to see the exact breakdown of fees, which will vary by state and transaction.
While the estimates in this post can give you a ballpark idea of your Realtor fees and closing costs, the exact amount you pay will depend on the specifics of your home sale. An experienced listing agent can provide you with a seller’s net sheet that will help you get a clearer picture of what to expect.
Settlement statement vs. seller’s net sheet: A seller’s net sheet is not the same as a settlement statement. While both outline costs associated with a home sale, a seller’s net sheet is an estimate provided by a real estate agent, whereas a settlement statement is a legal document with final figures generated by the title company at closing, representing the exact amount a seller will receive after all costs are deducted.
What do seller closing costs cover?
Closing costs encompass a wide range of services and fees, including:
- Title services: Title insurance and search fees to confirm legal ownership of the property.
- Escrow fees: Fees for managing the funds and documents during the transaction.
- Recording fees: Charges for officially recording the property transfer with local authorities.
- Transfer taxes: Taxes imposed by state or local governments when a property changes hands.
- Prorated costs: Adjustments for property taxes, HOA fees, or utilities paid in advance by the seller.
- Attorney’s fees: In some states, sellers are required to hire an attorney for the closing.
- Home warranty: In some situations, the seller might decide to offer a home warranty to entice buyers, covering certain repairs the first year after purchase.
- Homeowners’ association fees: If the home is part of an HOA, sellers must cover any owed dues up to the final closing date.
- Seller concessions: To close the deal, sellers may agree to pay some of the buyer’s closing costs.
How can I reduce Realtor fees and closing costs?
Reducing these costs can help you maximize your net proceeds. Here are some strategies:
- Negotiate Realtor fees: Discuss commission rates with your agent, and consider working with an agent who offers flexible fee structures.
- Use a discount service: There are discount real estate companies that offer lower fees, but you’ll want to weigh the pros and cons.
- Use a flat-fee broker: These limited-service agents still charge a fee but agree to a lower flat rate.
- Shop for services: Compare rates for title services, home inspections, and other closing-related costs to find the best value.
- Offer incentives strategically: If you’re a seller, only offer to cover the buyer’s agent’s fee or closing costs when it makes sense for market conditions.
- Time your sale: Selling during a seller’s market may reduce the need to offer concessions, keeping more money in your pocket.
When is the best time to sell? HomeLight’s Best Time to Sell Calculator uses housing market data for your area to reveal the best and worst months to sell your home. See when is the best time to sell a house if you want to make the most money and which months are best to sell your house fast.
Bottom line: Do closing costs include Realtor fees?
While they are often combined in budget planning and conversation, closing costs and Realtor fees are distinct expenses in a real estate transaction. Closing costs cover the administrative and legal aspects of transferring ownership, while Realtor fees compensate agents for their services. However, both costs impact your bottom line as a seller or buyer.
If you’re preparing to sell your home and want to work with a top agent who can minimize closing costs and sell your home for the highest proceeds, HomeLight’s Agent Match platform can connect you with the right expert. Take the first step toward a smooth, cost-efficient home sale today!
Header Image Source: (Roger Starnes Sr/ Unsplash)
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