You’re ready to sell your home and ride off into the sunset with a big fat proceeds check. That’s great!
But don’t get too excited just yet…
There are realtor fees you’ll pay when selling your home that will impact your bottom line.
In this article, we’ll break down how realtor costs work, what charges you can expect, and the services you should get in exchange for paying your real estate agent’s commission — including the skills and expertise you’ll need if you want to make the most money.
Let’s dive in.
How real estate agent and broker fees work
Most sellers aren’t aware of how broker and realtor charges work. But educating yourself on this is important to understanding how the fees you pay will be allocated.
Knowing this up front gives you greater insight into how much a real estate agent stands to make from the sale of your home and the services you might get in return.
One thing to note: Realtor fees are typically the seller’s responsibility.
However, you won’t need to worry about paying this fee up front. Your closing costs are deducted from your proceeds at settlement when the sale of your home closes.
How broker fees work
Broker charges are different from realtor costs, so let’s touch on how this works.
A realtor is essentially a salesperson who’s required to hang their professional real estate license “under” a real estate broker (or brokerage). This means a broker can have agents working for them, usually as independent contractors rather than salaried employees.
The broker maintains a broker’s license and facilitates real estate transactions; the real estate agents work under that license.
The listing agent acts as the sales representative for the broker and will be your main point of contact. For example, Coldwell Banker, Keller Williams, and RE/MAX are all brokers, and their agents represent the firm.
So you’re technically selling your house with the brokerage.
For this reason, the total realtor commissions get paid to the broker listing your property.
The broker will then pay a percentage to the buyer’s agent’s broker. This arrangement will be outlined in the agreement you sign with your agent.
Your realtor’s cut from the real estate transaction is based on a predetermined split shared with their broker.
The split between broker and realtor varies with real estate agents earning between 50% and 90% of the commission fees on average. This is often based on experience and past performance.
The brokerage gets the other 10-50%.
So, when you see the realtor fees that make up the bulk of your closing costs, just know your real estate agent doesn’t get every dollar.
How realtor fees work
Realtor costs are usually divided equally between the agencies representing the seller and buyer.
But the real estate agents involved in the transaction take on risk before they get their commission.
That’s because most real estate professionals work as self-employed contractors.
In the case of a listing agent, this means they accrue certain out-of-pocket, upfront expenses pertaining to the cost of a sale, such as:
- Signage
- Photography
- Marketing materials
The fee you’ll pay reimburses your agent for those costs and compensates them for the time they’ve spent to market and sell your home.
But, remember…your realtor only receives their check after your sale closes.
And since the average timeline to sell a house — from hiring your agent to closing — takes two to six months (depending on your area, property, price range, etc.), it could take a while before your realtor gets paid.
How much do listing agents charge?
The fee realtors charge to sell a house typically ranges from 5-6% of the final sale price and is split between the seller’s agent and the buyer’s agent.
Of this 5-6%, here is what each side usually earns…
- Listing agent: 2.5%-3%
- Buyer’s agent: 2.5%-3%
But agent commissions aren’t one-size-fits-all and several factors influence the percentage a real estate professional may charge.
Some might even drop that 5-6% fee to as low as 4%.
If a discounted rate sounds too good to be true, you may be onto something.
More on that in a minute…
Example of agent fees for selling a house
Let’s look at how realtor costs break down on a $300,000 sale:
| Commission charged | Total real estate commission |
| 4% | $12,000 |
| 4.5% | $13,500 |
| 5% | $15,000 |
| 5.5% | $16,500 |
| 6% | $18,000 |
There’s a pretty big difference among these rates. And these various price points usually offer varying levels of service and/or experience.
Real estate commissions are negotiable
The realtor fees you’ll pay aren’t set in stone.
That means you can negotiate what you’ll pay, but you’ll need to do this before you sign your listing agreement.
And while choosing the agent who offers the cheapest rate might seem like a good way to save money, you’ll want to be careful with this.
Why?
A real estate agent who flaunts a discounted price may not be the person best suited to secure you the highest price.
You want someone who’s willing to fight tooth and nail when negotiating with a prospective buyer’s agent.
To pressure test this, I always recommend asking a potential listing agent this question:
“Will you lower your commission?”
You want to hear them put up a fight as to why they’re worth a higher rate. Otherwise, how confident can you really be that they’ll go to battle for you?
Not all realtors charge the same fee
Sometimes you don’t need to negotiate realtor fees. But it’s important to understand why listing agents charge what they do to ensure you’ll get what you want to pay for.
A realtor’s rate will reflect several factors, like their:
- Experience: Are they a seasoned pro armed with a network of top agents and expert negotiation skills? Or are they newer and trying to make a name for themselves?
- Track record: Do they have a history of stellar customer service? (Check out their online reviews and ask for references.)
- Marketing plan: Will they take a strategic marketing approach? Or does their marketing plan include a bunch of tactics without much thought?
- Broker’s business model: Does the firm they represent reward agents with a high volume of sales? This could mean pressure to close deals, which might translate to a diminished ability to focus on the sale of your home.
If a real estate agent is offering a discounted rate, you’ll want to understand the reason for it.
What you should get for paying your agent’s commission
There are certain services you should expect in exchange for compensating your realtor.
Think about the fee a listing agent charges as you would prices in a grocery store.
You know fresh, wild-caught salmon from New Zealand is going to cost more than frozen, farm-raised tilapia from China. You have options, so you’ll choose what best suits your needs.
As someone with industry experience myself, here are several of the more important things you should expect from your realtor in exchange for the fee you’ll pay:
- Expertise in home repairs/upgrades: A listing agent should give you expert guidance on any improvements, repairs or design updates you’ll want to consider, focusing on those that will bring the most bang for your buck.
- Honest price recommendation: A good realtor will share their opinion on what your home is worth; a great one will back up their suggestion with real data they can leverage when fighting to secure the best offer for your home.
- Solid marketing strategy: An agent’s marketing strategy has a big impact on your final sales price. They should develop a marketing plan tailored to your home’s target audience with tactics designed to bring in top-dollar offers.
- The option to cancel if you’re not satisfied: Selling your home is one of the most important financial decisions you’ll make — you want a listing agent who’ll treat your sale like it’s their own. One way to ensure a realtor will prioritize your listing is to have the option to cancel your contract. Most sellers sign an exclusive listing agreement that’s binding for four to six months (at least). Once signed, this contract “guarantees” the realtor’s commission in a way. Knowing a seller can back out of an agreement tends to keep real estate agents on their toes. That’s why we require all SoldNest partner realtors to allow sellers to cancel; this way, there’s no doubt the agent will stay motivated for their client.
- Next-level negotiation skills: A realtor should be a master negotiator who’ll help you obtain the highest possible sale price. This means someone who can expertly navigate buyer’s agents to get you a better price, better terms, and keep your home sale as stress-free as possible.
At the end of the day, not all agents are created equal. Which means that what you get is often what you pay for.
What else you should know about realtor fees
There are a few lesser-known factors that can influence your mindset around realtor costs when selling your home.
Knowing these up front can help you determine how much you may be willing to pay.
- They’re tax-deductible. You’ll want to speak with your tax professional, but generally, you can deduct any realtor costs associated with selling your property.
- They’re only paid when you sell. Buying a home, too? You’ll likely be off the hook for any agent commissions in that transaction.
- They can tempt some agents to drop the ball. Be wary of agents with a track record of representing both the seller and buyer in the same transaction (“dual agency”). Someone with an “I want both commissions” mentality may be accustomed to prioritizing their earnings over their client’s best interests since they technically can’t fight to get their seller the best deal. Working with an agent who primarily only represents the seller in a real estate transaction will put you in a much better position to sell for more money.
- They can sway some agents to prioritize their money over yours. Home sellers pay realtor fees to the brokerage listing their property, which then pays the buyer’s agent’s brokerage — a split that’s typically 50/50. But if the cut the buyer’s broker receives is under 2.5-3%, they may be making less than they should. This can reduce the odds of your home selling for the price it should because some agents won’t want to show your home if they know they’ll be earning less. To avoid this scenario, during your initial meeting with a potential realtor, confirm what percentage they’ll give the buyer’s agent.
So, how much should I pay an agent to sell my house?
Ultimately, the realtor fees you’ll pay when you sell your house come down to you.
If you’re looking for minimal support and/or experience, you should be able to get a real estate professional who’ll charge a lower commission, around 4-4.5% of your sale price.
If, like most sellers, you’re seeking the highest level of support and/or experience, you can expect a cost between 5 and 6% of the final sale price.
Save yourself a future headache by deciding what level of skills and support you’ll need before contacting an agent, so you have a clear idea of how much you’re willing to pay.
The Bottom Line
It can be tempting to start counting those dollar signs once you’re ready to sell your house.
But understanding realtor fees for sellers (and the expertise and skills that come with them) can help you determine how much you’re willing to pay.
Once you’re clear on your commission price point, you’ll be in great shape to find the right agent.