Derek Morgan
Derek Morgan
man looking at smartphone while working on laptop computer in home office
Derek Morgan
Derek Morgan

    How Much Commission To Pay

    The concept of real estate commissions often sounds simple, but more often than not, homebuyers are left surprised by unexpected expenses after working with a real estate agent. Whether you're a first-time home buyer or a seasoned seller, understanding how much commission to pay, who pays it, and what it covers can help you navigate the process with confidence.

    How much is the commission?

    When it comes to commission, the most common figure you'll hear is 5% - 6%. This is the typical rate for most areas, and it is based on the sale price of the home. This can vary depending on the location, the agent, and the circumstances of the sale. In most cases, the buyer's and seller's agents will receive the same amount, approximately 2.5% - 3% of the commission. This means that the commission will be split evenly between the two agents.

    It's helpful to think of commission as a percentage of the sale price because it makes it easy to calculate. Let's say you're selling a home for $250,000 and the commission rate is 5%. The total commission would be $12,500, which would then be split between the buyer's agent and the seller's agent. Each agent would earn $6,250. The commission is paid out of the proceeds of the sale, so you don't have to worry that it will come out of your pocket. 

    It's also worth noting that, depending on your area, the commission rate may be higher or lower. Some agents and agencies may charge lower rates, while others may charge more. It's always worth inquiring about commission rates when considering working with an agent.

    After the initial split, the commission may then be divided between the broker and the agent. The broker, who is typically the owner of the agency, will take a cut of the commission. On average, the actual agent may only get 1.5% of a 6% commission. It's worth asking your agent or broker what the split will be so you can have a clear understanding of how the commission will be distributed.

    Who pays the commission?

    As we discussed earlier, the commission is paid out of the proceeds of the sale. So, who ultimately pays the commission? In most cases, the seller will pay the commission for both the buyer's agent and the seller's agent, as they can afford to after they've made the sale. Keep in mind that the commission is factored into the sale price, so while the seller pays the commission, the buyer likely pays more for the home because of the added cost.

    Can you negotiate real estate agent commission fees?

    The short answer is yes, you can negotiate commission fees. Since there are no laws or regulations dictating commission rates in the US, agents have the flexibility to negotiate rates with their clients, although the commission rates aren't only set by agents. They may also be set by the agency, meaning you could end up negotiating with the agency as well as the agent. 

    The rate you can negotiate will depend on a variety of factors, including the type of transaction, the services required, and the relationship you have with the agent. Some agents may be willing to lower their commission fees if they're representing both the buyer and the seller in a home sale, also known as dual agency. Just because there's a lower commission rater, doesn't mean it's the best option. Commission fees cover a wide range of services, including marketing and other business expenses, so it's important to consider the value you'll be receiving before agreeing to a lower commission rate.

    At Unreal Estate, we offer no-hassle pricing. We'll show you how much you'll pay, and how much you'll save, in every home sale. We believe in being transparent and upfront with our clients, and we're always happy to discuss commission fees and negotiate rates if necessary.

    What does the commission cover?

    As we mentioned earlier, the average real estate agent commission covers a wide range of services provided during a home sale. These services can include:

    • Setting a realistic price for the home 
    • Marketing the home through a variety of online and offline channels
    • Presenting the home professionally to potential buyers
    • Negotiating transaction details
    • Being present during inspections and appraisals
    • And ultimately closing the sale

    Setting a price for a home can be a daunting task, especially if you're not familiar with the current market conditions, so a real estate agent can save you tons of time and headache. An agent will have access to a wealth of data and can help you determine a fair and accurate price for your home. They'll also be able to market your home effectively, reaching a wider audience than you would be able to on your own.

    Do you have to pay commission if you don't buy a home?

    As a buyer, you're not responsible for paying commission whether you buy a home or not. Just remember that agents are paid at the end of the process, so if you tour homes with a real estate agent and don't end up buying, the agent won't be paid for their time. It's a good idea to have a clear understanding with your agent about their expectations for payment, especially if you're unsure about buying a home. Some agents may have a different policy, such as charging a consultation fee or asking for a retainer. Discussing these factors with them before beginning your home search is a great first step.


    In summary, understanding the basics of real estate commission will help you to make informed decisions when working with an agent. Whether you're buying or selling a home, it's important to have a clear understanding of commission, who pays it, and what it covers. By keeping these key points in mind, you can have a smooth and successful home buying or selling experience.

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