Typically, real estate commission ranges from 5% to 6% of the home’s sale price. In most areas, the buyer’s agent receives 2.5% to 3% in commission, while the seller’s agent receives a similar percentage. However, these figures can vary depending on the agent and location.
Who covers the commission fees?
When purchasing a home, buyers usually aren’t responsible for paying real estate agent commission, although they must still cover closing costs. On the other hand, sellers typically pay commission to both their listing agent and the buyer’s agent upon the sale’s closing.
Commission breakdown based on home sale price with a 5% total commission rate:
- $150,000 home sale price: $7,500 commission
- $200,000 home sale price: $10,000 commission
- $250,000 home sale price: $12,500 commission
- $350,000 home sale price: $17,500 commission
- $500,000 home sale price: $25,000 commission
Can Realtor® commission fees be negotiated?
Commission rates aren’t regulated by U.S. laws, allowing agents to potentially negotiate lower rates based on transaction type, required services, and relationship dynamics. Some agents may reduce fees, especially in cases of dual agency representation.
However, it’s crucial to consider that a lower commission doesn’t always equate to the best option. Part of the agent’s fee covers essential services like marketing, and a reduced budget might impact the quality of home promotion. Therefore, while commission rates are important, it’s essential to weigh the value provided by the agent.
What services does the commission cover?
The average real estate agent commission encompasses various services, including pricing consultation, multi-channel marketing, home presentation to potential buyers, negotiation assistance, attendance during inspections and appraisals, and finalizing the sale.
How is the commission divided between agents?
Typically, the commission is evenly split between the buyer’s and listing agents. For instance, in a $250,000 home sale with a 6% commission, each agent would receive $7,500. Additionally, after this split, the commission might be further divided between the broker and the agent.
What about commission for buyers?
Usually, the home seller covers the Realtor® commission for both the buyer’s and seller’s agents. However, buyers indirectly bear this cost, as sellers might adjust their listing prices to accommodate commission expenses.
Do buyers have to pay commission if they don’t purchase a home?
Buyers typically aren’t obligated to pay agent commission, as sellers usually cover these costs. Nevertheless, if a buyer tours homes with a real estate agent but doesn’t make a purchase, the agent won’t receive compensation unless agreed upon otherwise in a contract.
Is commission part of closing costs?
Technically, an agent’s commission isn’t considered part of a home’s closing costs, which encompass various fees like taxes, insurance, and lender charges. Closing costs typically range from 2% to 5% of the purchase price.
Do sellers owe commission if their home doesn’t sell?
Generally, sellers aren’t required to pay commission if their home doesn’t sell within the contract period. However, some exceptions may apply, such as if the buyer was a prospect during the agent’s contract term or if the seller backs out of the sale after accepting an offer.
What is dual agency?
Dual agency occurs when a real estate agent represents both the buyer and seller in a transaction, subject to full disclosure. While legal in some states, it’s entirely prohibited in others.
In summary, carefully review all contracts and consider enlisting a Keller Williams Agent to maximize your profit when selling.