Buying or selling a home is a big financial decision, and hiring a real estate agent can make the process smoother. But how much do real estate agents charge, and who pays them? More importantly, is there any way to negotiate these fees? Let’s break it all down in simple terms.
Who Pays the Commission?
Unlike salaried professionals, real estate agents earn money only when a deal is successfully closed. Traditionally, the seller was responsible for covering the commission for both their listing agent and the buyer’s agent.
But everything changed on August 17, 2024, when a new rule from the National Association of REALTORS® took effect.
Under the new rule, homebuyers are now responsible for paying their agent’s commission instead of the seller. That said, sellers still have the option to offer compensation to the buyer’s agent as a strategy to make their listing more attractive.
What Does the Commission Cover?
Real estate agents do much more than just list homes. Their commission covers a variety of services including:
- Pricing expertise – Agents analyze market trends and home values to set the right asking price.
- Marketing efforts – Listing the property on multiple platforms, running social media ads and staging the home.
- Negotiations – Agents act as intermediaries to secure the best price and terms.
- Navigating the process – They take care of paperwork, arrange inspections and make sure everything goes smoothly until the sale is final.
Selling a home without an agent is possible but it can be stressful and time-consuming. A good agent earns their commission by making the process easier and maximixing your profit.
Are Real Estate Commissions Negotiable?
Yes. Commission rates are not fixed by law, meaning they can be negotiated. However, a lower commission might mean fewer marketing efforts for your property. Some agents may also offer transactional agreements, where they provide limited services (such as setting a price and handling paperwork) for a flat fee.
If you’re tight on budget, it’s worth discussing options with your agent. Many will be open to finding a reasonable middle ground.
What Else Should You Know?
- Listing agreements – The contract you sign with an agent should specify the commission, terms and length of representation (usually 90 to 120 days).
- Rental agents – Typically, landlords pay rental agents, but this varies by market.
- Vacant lots and auctions – Selling land usually comes with higher commissions (10-20%) due to the extra effort expended. Some auctions charge buyers an additional 5% fee.
Final Thoughts
Real estate commissions are part of buying and selling homes, but knowing how they work helps you make better choices. A cheaper agent might seem like a good deal, but the right one can save you time, stress and even money. In real estate, you usually get what you pay for.
