Average Real Estate Commission | 5 Important Things to Know

The average real estate commission is something that both buyers and sellers want to know about when considering a real estate transaction. Generally speaking, buyers are not responsible for paying the commission.average real estate commission The commission is paid by the seller when the home is sold.  The average real estate commission is one of the closing costs.

When you are buying a home or selling a home, one of the most important decisions you will make is who to hire as your real estate agent. One of the factors you will need to consider is how much your agent will be paid.

The average real estate commission is between 2 and 3 percent of the sale price per side (listing agent and buyer’s agent).  Part of the agent’s commission will cover the marketing budget and other expenses for the home sale.

A smaller budget for the agent could translate into the agent can’t properly market your home. While it is important to consider an agent’s fee, it is important to consider the value you will be receiving from the agent.

The commission is usually a percentage of the sales price and can vary depending on the location, time of year, and other factors. Generally speaking, agents receive a higher commission for properties in higher-demand areas.

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What Is The Average Real Estate Commission?

There is no definitive answer to this question as it can vary depending on the location, the property you are purchasing, and the agent. However, in general, agents typically earn a commission of around 2-3% for each sale. It is not uncommon for a seller to negotiate with a real estate agent on the amount of the real estate commission.

The realtor commission is one of the closing costs on the home. Having a Realtor guide you through the home selling process is invaluable.  The average real estate commission by the state may vary. We are seeing lower commission rates at this time. Many sellers are offering between 1.5% to 2.5% for the sale of a home.

Factors That Affect The Price Of A Home

There are a number of factors that can affect the price of a home, including location, size, amenities, and the condition of the property. If there is deferred maintenance, then it is a good idea for the seller to address deferred maintenance prior to listing for sale.

average real estate commissionUltimately, the price you are able to negotiate is based on a number of factors, including the commission your real estate agent is paid.

The Real Estate agent will have a split with their broker, so even if the commission is 2.5% of the sales price, the broker will get a portion of that commission.  So the broker can get up to 20% of the total commission.

How To Negotiate A Lower Commission Rate

If you are interested in negotiating a lower commission rate, there are a few steps you can take. First, be sure to discuss your expectations with your agent. Next, ask for specific examples of how the commission can be lowered. Finally, be prepared to offer a lower commission rate if your agent is willing to negotiate.

Keep in mind that real estate agents work very hard for their commission. They may be unwilling to lower their commission rate unless they feel that it is a fair deal for both you and them. Be sure to discuss this with the agent. Agents do not work for free, although sometimes buyers or sellers will ask agents to greatly reduce their commission. The average commission rate for real estate agents will vary with each transaction.

Agents do need demonstrate their value to both home sellers and buyers. A buyer’s agent will guide the buyer through the home buying process to avoid home buying mistakes.

Real Estate Marketing

Agents will market the property to ensure that the seller will obtain the highest and best price for the home. Marketing the property will include professional photography to ensure the home is presented in the best possible light. The listing agent is also responsible for writing an appealing listing description so that the property is inviting.

Other marketing includes an internet and social media campaign to ensure the home is marketed to the masses. Agents may also want to stage the home, and this is a fee that can be paid when the property closes escrow. Bloggers may include information about the home on their website and post to various social media sites including Twitter, Instagram, Facebook, Pinterest, and many more.

Is it Common to Negotiate Realtor Commission?

It is not always common to negotiate a real estate commission. However, there are buyers and sellers that are trying to squeeze every last penny out of a transaction and may not see the value of an agent. Agents work hard to market the property and ensure that the seller will obtain the highest offer on the property. Real estate agents also ensure that the seller stays on the negotiated timelines with the buyer to stay in contract.

Buyers May Negotiate with a Buyer’s Agent

average real estate commissionMany buyers choose to work with a buyer’s agent when purchasing a home. Buyer’s agents are real estate agents and are entitled to a commission for representing a buyer with the purchase of a home.  The commission percentage varies, but typically it is around 1% to 3%.  This means that the buyer’s agent will receive a commission as stipulated in the multiple listing service.

Even if a buyer is buying new construction, there will still be a commission for the real estate agent. The fee may be a fixed rate for a buyer’s agent.

If you are going to negotiate with your real estate agent, it is a good idea to wait until you are in the transaction. There may be repair requests that come up, and the seller may not be willing to agree. So if the agent has already discounted their fees, then there is no more room to provide any additional fees or costs.

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Final Thoughts

When choosing a listing agent, it is important to understand what the average commission rate is and how that affects the price of a home.  By negotiating a lower commission rate, you can ensure that you are getting a fair deal on your home. You can also negotiate lower commissions with your agents.

About the Author

The article “Average Real Estate Commission | 5 Important Things to Know” was written by Sharon Paxson, one of the best Newport Beach Real Estate agents. With experience beginning in 2005, representing buyers, sellers, and landlords, we welcome the opportunity to share our expertise with you and guide you through your real estate transaction.

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Sharon Paxson is a full-time REALTOR® with EQTY | Forbes Global Properties and has been specializing in residential real estate throughout the Newport Beach area since 2005 assisting Buyer’s, Seller’s, Landlords, and Tenants with their real estate needs.

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