National average real estate commission | Can you negotiate realtor fees? | Average real estate commission by state | Who pays realtor commission? | Buyer's agent commission | How to save on commission
Real estate commission is one of the largest transaction costs for home sellers — but many sellers don’t know how commission is calculated, what services the commission is paying for, or even how much commission is.
In fact, when our friends at the Clever Real Estate Data Center surveyed 1,000 U.S. homeowners who are planning to sell their homes in 2022, more than half of respondents (54%) incorrectly guessed the average real estate commission or admitted they were unsure.
On average, real estate commission is 5.49% in 2022 (although it varies by state).
Many home sellers, however, are surprised to learn that realtor commission is always negotiable, no matter what state you’re in. Commission is not “set” or regulated, and home sellers don’t have to pay a specific percentage of the sales price to their agent in order to get their services.
Let’s clear up this confusion, and break down how commission works, how to negotiate commission, who pays commission, and a lot more.
What Is the Average Real Estate Commission in the U.S.?
According to a recent study by Clever Real Estate, the average U.S. real estate commission is 5.49%, which is split between the listing agent and the buyer’s agent.
The Clever study found that listing agents typically collect a commission between 2.27% and 3.29%, for an average of 2.69%. For buyer’s agents, the range was 2.27% to 3.03%, for an average of 2.8%.
The study also found that commission rates vary by as much as 0.88 percentage points between states, meaning you could pay quite a bit more — or less — than the average commission, depending on which state you live in.
Can You Negotiate Commission Rates?
The simple answer is: Yes! Almost everything in a real estate transaction is negotiable — even the retro shag carpet or broken furnace in your next dream home.
In practice, however, it's difficult for individual home sellers to command much negotiating power. For example, if an agent is part of a brokerage that takes a percentage of every commission, the agent may be unwilling or unable to negotiate.
You'll have to agree on a commission rate that you and your agent decide is fair — and because most agents generate their income from commissions instead of a salary, many have grown accustomed to the traditional 5-6% commission model.
That's why we've partnered with Clever Real Estate, a free service that negotiates on behalf of home sellers. Clever can match you with top-rated agents near you — and you'll get full service for just 1% in listing fees. The average home seller who lists with Clever saves approximately $8,800!
Average Real Estate Commissions by State
Who Pays Realtor Commission?
The home seller pays all the realtor fees in a standard real estate transaction.
A quick note on terms:
- A listing agent is a real estate professional who helps homeowners sell their home.
- A buyer’s agent is a real estate professional who helps home shoppers find and purchase a home.
- In some cases, an agent may represent both the buyer and the seller (known as a dual agency).
Use the table below to easily identify how commission works in a variety of circumstances:
Why Should Sellers Pay Buyer's Agent Commission?
Sellers offer buyer's agent commission because it creates an incentive for agents to bring their clients to view their homes.
Think of it this way — when someone buys a home, the commission is the only payment the buyer’s agent receives, since they’re not being paid by the buyer.
It makes financial sense for buyer’s agents to steer their clients to properties that are offering commissions, and away from ones that aren’t.
Are Sellers Required to Work With a Real Estate Agent?
Home sellers are not required to work with a real estate agent — but for many, the benefits of working with an agent are worth paying commission fees.
There’s a huge amount of interest among homeowners in selling without an agent. Recent research by Zillow suggests just over a third of sellers (36%) attempted to sell their home as a For Sale by Owner (FSBO) listing.
This trend is in part due to technological advances that have opened up access to services previously unavailable to home sellers. The promise of saving on commission is also a big financial incentive associated with selling your own home.
However, most sellers who successfully sell their home for sale by owner (FSBO), have experience with the many nuts and bolts of the real estate process. Not only that, but in over half (57%) of successful FSBO sales, the seller knows the buyer personally.
Plus, it's important to note that FSBO sellers struggle to price their homes and often walk away with lower proceeds. According to the National Association of Realtors, a typical FSBO seller receives just $260,000 — 20% less than the typical $318,000 home sellers with agents receive.
The bottom line: Selling a home all by yourself isn’t easy, and most FSBO sellers end up turning to an agent to get their sale across the finish line. Despite widespread interest, in 2021, only 7% of home sales were FSBO sales.
Don't Overspend on Realtor Commission
Although total realtor fees typically add up to 5.49% of your home's sale price, recent disruptions in the real estate industry suggest that the days of standard commission rates may be fading fast.
If you're looking for a real estate agent, our friends at Clever Real Estate have built a network of pre-vetted partner agents. You can meet as many agents as you like until you find the best match, receive full service, AND pay just 1% in listing fees.
FAQs About Average Real Estate Commission
How much does a real estate agent make?
In 2022, the average listing agent earns 2.80% of a home's sale price, while the buyer's agent takes home 2.69%. At these typical rates, each realtor involved in the sale of a $375,000 home would earn around $10,000, which is then split with their brokerage and used to reimburse up front costs. Learn more.
Who pays realtor commission?
Home sellers are responsible for paying realtor commission in a typical home sale, which includes fees for both the listing agent and the buyer's agent. Learn why sellers should always offer buyer's agent commission.
What is the average real estate commission in the U.S.?
The average real estate commission is 5.49%, but costs vary by state. Learn how you can save thousands on real estate commission.
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