Content of the material
- 📝 Editor’s Note
- How Much Is a Real Estate Commission?
- How You Can Reduce Your Real Estate Commission Rate
- Raise Your Home’s Value
- Work with a Flat Fee Agent
- Ask the Buyer to Pay Their Agent
- Negotiate Yourself
- What if the house doesn’t sell?
- Who pays real estate commission fees?
- Find an Agent Worth Their Commission
- 💰 Compare hand-picked agents, sell for $3,000 or 1%
- Are Realtors overpaid?
- Average real estate commissions by state
- What is the Average Real Estate Agent Commission in California?
- Full-Service vs. Discount Brokers
- Top Articles
- Factors that influence commission rates
- How home value affects average real estate commission rates by state
- Why realtors lower their fees for repeat clients
- Rounding Up
- Get free advice from Richr’s Concirege service
- Ready to get started?
📝 Editor’s Note
Lowest real estate commission fees. When selling in real estate, having a low commission agent is a great way to save money. There are several low-cost agencies providing a similar type of top-notch service to what a traditional realtor would.
If you have been looking for one of these realtor agencies, then you are in luck!
This article will look at the lowest real estate commission fee companies with the best real estate commissions, in no particular order. After countless hours of research, we found that these companies strike the right balance between value and savings for customers.
Before we get to the list, let’s provide some clarity and shed some light on a few commonly asked commissions questions.
How Much Is a Real Estate Commission?
Real estate commissions are always negotiable—otherwise, agents would be in violation of state and federal antitrust laws—so they vary. Though 6% has traditionally been regarded as the standard fee, commissions typically fall between 4% and 5% nowadays. The average real estate commission in 2020 was 4.94%, according to research firm RealTrends.
Keep in mind that the commission represents a percentage of the home's selling price—so the exact fee won't be known until an offer is accepted and the house is sold.
How You Can Reduce Your Real Estate Commission Rate
There are a lot of ways to reduce the amount of real estate commission you pay on your home sale that don’t necessarily require you to set out on your own as an FSBO seller. Let’s look at a few of them.
Raise Your Home’s Value
Your agent can help identify cost-effective ways to increase the value of your home— things like new paint, landscaping, staging, and updating kitchens and bathrooms can bring your home’s price tag way up, which increases both the commisson, and your net. An agent’s practiced eye will be able to home in on exactly what areas of your home could benefit from upgrades, and what features have the most appeal to local buyers right now.
Think of it this way: 6% of $250,000 is $15,000, meaning you’ll net $235,000. But if you update and freshen up your home so its value goes up to $325,000, 6% comes to $19,500, and your net is now $305,500. Working closely with your agent to absolutely maximize your home’s value means they’ll make more commission, and you’ll net more money. It’s the definition of a win-win!
Work with a Flat Fee Agent
In the past several years, flat fee agents have become more and more common. These agents sell a home for a flat fee instead of a percentage-based commission, so they represent huge potential savings for sellers.
Companies like Clever Real Estate connect sellers with top local agents who offer a full service sale experience for only $3,000, if your home sells for less than $350,000, or 1% if it sells for more than that. While you’ll still be responsible for paying the buyer’s agent, the commission you pay your own agent will be radically reduced.
How can they offer the same services for so much less money? Well, many of these agents are seasoned professionals who are able to quickly and easily sell a home for maximum value— so they make up in volume what they lose out on in per-sale commission. Once again— a win-win for the seller!
Ask the Buyer to Pay Their Agent
Everything in a home sale is up for negotiation, and in a hot market like Florida, the seller has a lot of leverage. You can ask the buyer to pay their agent’s commission— the worst that can happen is they’ll say no. And if they already have their heart set on your home, there’s a good chance they’ll say yes.
In a seller’s market like Florida, the seller wields a lot of power. If your home is likely to attract immediate interest, and sell for above ask, you certainly have the leverage to ask your agent to work for a reduced commission. After all, if your hot home doesn’t require a lot of marketing, or weeks of showings, your agent won’t have to spend as much time on it as they would on the average home. And shouldn’t less work equal less commission?
Another scenario in which you have a good chance of negotiating a lower commission is if you don’t need the standard suite of agent services. For example, if your home doesn’t need staging, or you’re a lawyer who doesn’t need guidance through negotiating and closing, you can make a sound argument for a lower commission. Remember— it doesn’t cost you anything to ask, so you might as well try!
What if the house doesn’t sell?
Real estate agents only get paid if and when your home sells successfully. Most real estate contracts are “exclusive right to sell” which provides the real estate agent the sole rights to market the property, list the property on MLS, and receive the commission if the sale closes in a determined time frame. If your house remains on the market beyond the time period outlined in the listing agreement, you are not obligated to pay your agent.
Keep in mind, though, that your listing agreement may contain a protection clause, also known as a “brokerage protection clause, “safety clause,” “extension clause,” or “tail provision.” The protection clause states that if a buyer who the listing agent introduced to the property purchases the property after the listing agreement expires, the seller still must pay the agent a commission.
Who pays real estate commission fees?
Typically commission fees are paid in full by the seller in the transaction. As explained by top real estate agent Rachel Moussa of Flower Mound, Texas, in most places, “the standard is for sellers to pay both the listing agent and the buyer’s agent’s commission. The listing agent puts on the MLS what percentage the seller has agreed to pay cooperating brokers.”
Find an Agent Worth Their Commission
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Find an Agent Worth Their Commission We’ll connect you with three top local agents proven to deliver amazing results for their clients. You won’t regret a dime spent! Find Agent
💰 Compare hand-picked agents, sell for $3,000 or 1%
Find top-rated agents from local brokerages, and get pre-negotiated listing fees of just $3,000 or 1%.
Clever’s service is 100% free, with zero obligation. Interview as many agents as you like until you find the perfect fit — or walk away at any time.
Are Realtors overpaid?
Though home sellers may feel that Realtor fees of up to 6 percent are too high, Duffy argues that they’re not high enough. After all, a lot goes into listing a home, such as:
- Performing a comparative market analysis to establish a competitive price
- Arranging for photo shoots, sometimes including aerial shots via drone
- Writing descriptive listing copy to attract interest from other Realtors and potential buyers
- Providing staging guidance
- Showing the property multiple times to prospective buyers
- Hosting open houses on weekends
- Providing yard signage
- Making sure listings are populated on all major property search websites
- Helping the seller review and negotiate buyer offers
When an offer comes in, the listing agent negotiates on behalf of the seller, often presenting one or more counteroffers. And with the volatility of the current market and record low levels of inventory, Realtors frequently deal with multiple potential buyers to help you get the most out of your property.
Average real estate commissions by state
Overall, the national average Realtor commission in 2021 was 5.5 percent, according to data from Clever. In most states, the commission ranged between 5 and 6 percent. But in states like California and New Hampshire, where expensive properties abound, the commission was typically under 5 percent. Find the average commission in your state in the table below:
|State||Average commission rate|
What is the Average Real Estate Agent Commission in California?
The average California real estate agent commission rate is between 5-6%. However, commission on higher-priced home and property sales average 4-5% percent. The seller and agent usually negotiate the commission amount before entering into a listing contract.
The average salary of a California real estate agent is $99,575. However, there is a wide gap in the salary range, with the lowest earners making $24,970 and the highest earners topping out at $123,700 per year.
Full-Service vs. Discount Brokers
Sometimes sellers will call several real estate agents—and without so much as introducing themselves—blurt out, “What is your commission?” as if comparison-shopping the price of milk. A better way to approach the subject, if a seller is shopping solely on price, is to ask if the agent is full-service or a discount broker. If you expect a discount, be upfront and limit the search to only those agents who offer discounts.
There are situations where a seller might prefer to hire a discount broker and not engage the services of a full-service agent, who may charge a slightly higher fee. These sellers typically are unaware of what experienced agents can do for them. Frugality could wind up costing more money in the end.
You can certainly go with a less expensive and most likely less experienced agent. Just don't be penny-wise and pound foolish. The discrepancy between similar competitors comes down to about a 1% difference.
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Factors that influence commission rates
In addition to regional trends, there are a number of factors that influence how much you end up paying in realtor fees when you sell your home.
Most of the factors that affect how much an agent might charge for a given home sale stems from the fact that realtor fees are negotiable. Agents will lower or raise the amount they charge depending on:
- The home
- The client
- The current state of the real estate market
Based on our research,working with repeat clients is the most common reason that real estate agents agree to accept lower rates.
Here's a full breakdown of the most common factors that cause agents to lower their commission rates:
Conversely, our survey showed that the most common reason that listing agents negotiate for higher rates was that home sellers requested expensive marketing.
Below, we've included the full breakdown of all of the factors:
How home value affects average real estate commission rates by state
Typically, realtors will be more willing to accept lower commission rates for homes that have high values.
Our study of commission rates found that in real estate markets where home values were high, realtor fees were typically lower than the national average. For example, commission rates averaged 5.12% across the states with the highest median home values — which is markedly less than the national average of 5.49%.
Based on our survey's findings, homeowners in the five states with the highest property values would pay 11% less in realtor fees when they sell their home than residents in the states with the five lowest home values — as a percentage relative to their home's sale price.
So why would high home values cause agents to lower their rates? Mainly, it's because the work that agents have to do to sell homes is not significantly different for high and low value homes.
Agent's earn commission based on the home's selling price, so they stand to earn a lot more money selling higher value homes — relative to their effort and time investment — than lower value homes.
Furthermore, even if they have to spend more time or money marketing a high cost home, it may be worth it for that agent.
Consider the following example, where the listing agent earns 57% more per hour selling a $500,000 home than they would selling a $250,000 home, even after factoring in the marketing costs and time commitment:
Home sale price $250,000 $500,000 Time to sell 10 weeks 12 weeks Out of pocket marketing cost $500 $1,000 Time spent actively selling (eg showing, marketing, etc.) the home 30 hours 34 hours Commission earned $4,500 $9,000 Net commission earned per hour of time actively marketing/showing the home $150 $235
Why realtors lower their fees for repeat clients
Having steady business is valuable for real estate agents — home sellers can use this fact to negotiate lower commission rates.
For real estate agents, having consistent streams of clients is crucial to their livelihood. After all, real estate agents typically only process around 12 real estate transactions per year— meaning that gaining a deal has a large impact on their income.
To agents, there is more value in having reliable repeat business, than there is in maximizing their commission they earn on any single deal. Because of this, agents often lower rates to attract clients that are likely to use them for future transactions.
Apart from realtor percentages, there are several other factors to look out for before choosing a real estate agency. No realtor company is perfect in all cases; it all depends on the variables involved. You should always consider your unique situation before deciding on a real estate agency.
The key is to take time doing your research and stay patient throughout the selection process so that you can be sure to end up with agency best suited for you!
Get free advice from Richr’s Concirege service
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