The cost of hiring a realtor isn’t the same for every homeowner selling a house.
Fees charged by a listing agent can vary for numerous reasons.
Sometimes those reasons have to do with the realtor (or what’s considered “industry standard”).
But sometimes it has to do with the seller.
Here’s what’s important…
It’s crucial to have clarity about the costs of selling with a realtor.
It helps you understand how your bottom line can be impacted when selling your property.
That’s exactly what this article will do.
Here’s what we’ll cover:
- Standard commissions
- Factors that influence realtor fees
- Additional costs of selling
- Negotiating the fees
- Deciding on a realtor
- Alternatives to traditional real estate agents
Let’s dive in so you have a complete grasp of the fees you pay a realtor when selling a home.
Understanding realtor commissions
The commission paid to a real estate agent is almost always the biggest expense when selling a house.
However, that fee isn’t paid up front — it’s deducted from your proceeds at closing.
And most home sellers can write off that cost on their taxes.
The typical fees a seller pays a realtor range from 5-6% of the final sale price (you’ll see this in your listing contract).
That total percentage is usually split between the seller’s agent and the buyer’s agent.
However, the commission structure isn’t always an even split.
Sometimes one agent will earn a higher percentage than the other.
The listing agent might take 3%, while the buyer’s agent receives 2%.
Or the buyer’s agent might receive a bigger split at 3%.
And the listing agent takes a smaller percentage at 2%.
This scenario isn’t common but can happen as part of a strategy to attract more buyer interest and speed up the sale of your property.
Here’s what you need to keep in mind…
Any realtor you meet with should be fully transparent about the fees and how they work.
You should know the total commission being charged and what percentages are being paid to each agent — before you sign the listing agreement.
Factors influencing realtor fees
There are certain factors that can impact how much realtors charge for selling a house.
Understanding these from the outset can provide you with a clearer insight into the reasons behind a prospective listing agent’s quoted commission rate.
Let’s break them down…
- Home value: Your estimated selling price can impact the total commission rate. Higher-priced homes often see lower commission percentages, thanks to the larger payout.
- Market conditions: In a seller’s market — high demand, limited inventory — real estate agents may be more incentivized to reduce their commission. But a buyer’s market — low demand, higher inventory — reduces the chances of real estate agents charging a lower-than-standard commission.
- Realtor experience: A seasoned realtor with a reputable track record may command a higher commission. Their skills, expertise, and integrity can add significant value to selling your home.
- Unique property features: Agents are less inclined to discount the fees if a property has characteristics that can make it take longer to sell. These can be things such as abnormal zoning, an odd layout, location on a busy street or in a rural area, and more.
- Services provided: The services a listing agent offers can impact the commission costs. Some agents charge more for non-standard services such as home staging, while others might charge less for minimal services and effort.
- The agent’s brokerage: Some real estate brokerages won’t allow their agents to charge a lower fee. So there are some realtors who can’t lower their commission, even if they wanted to.
Additional selling costs beyond realtor fees
There are additional costs of selling a house beyond the real estate commission.
Some are optional but can maximize your return on investment.
Anticipating these expenses up front can help you make an informed decision about the amount you’ll pay in realtor fees.
Plus, knowing how much money you might spend can save you from sticker shock when your net proceeds hit your bank account at closing.
Here are the extra charges you should consider:
- Pre-listing inspections: Pre-listing inspections (home, pool, roof, etc.) can uncover any underlying issues before listing your home. Costs vary by area and the size of the home, but generally range from $150-$600 for each.
- Repairs and improvements: A move-in ready home will attract more buyers. However, the cost to get your property to this stage depends on the scope of work needed. Major home improvements, like replacing the roof or modernizing the kitchen, average ~$4k to $23k. Basic home preparation such as painting, lawn care, and/or flooring updates run much less.
- Home staging: Staging boosts your home’s chances of making a great first impression. The cost fluctuates based on your area, the size of your home, and whether you need to hire a professional and/or rent furniture. The average national charge is around $1,700 and can range anywhere from $1,000-$5,000+.
- Closing costs: There are charges associated with transferring your property to the buyer. They can include things like escrow fees, attorney fees, title insurance, transfer taxes, prorated property taxes, notary fees, HOA transfer fees (if applicable), and more. These vary by state, county, and city. You can get an idea of the total estimated cost for these during your initial meeting with a prospective realtor.
- Potential buyer concessions: Concessions work in two ways. Sometimes sellers agree to cover part (or all) of the buyer’s closing costs before accepting an offer. Or they may offset specific property repairs after accepting a buyer’s offer. Both are much less likely to happen in a real estate market that favors sellers.
Negotiating realtor fees
Real estate commissions aren’t set in stone.
You can negotiate the fees you pay a realtor when selling your house.
But before you do…
There are four things you need to consider.
First, understand if you have leverage.
Are you selling a property that’s an “easy sale?”
Is it the typical suburban/urban home, in good condition, and without any negative property characteristics?
If it is, and if you’re in a seller’s market, you’ll be in a better position to negotiate the fees in your favor.
Next, evaluate the real estate agent’s experience, expertise, and services.
A listing agent who doesn’t possess the ideal resume and home selling plan will be more open to negotiating with you.
Whereas a top selling agent who is well connected may not want to take you on as a client if you ask them to reduce their commission.
Then, make sure you understand that a realtor who is earning a lower-than-standard fee may not be as motivated as you need them to be.
Realtors earning a higher fee from other clients are more likely to prioritize those listings.
Lastly, pay attention to the response you get when negotiating the commission with a realtor.
And I don’t mean whether the agent is willing to lower their fee.
What I mean is this…
A realtor who doesn’t put up a fight for their money is more likely to not put up a fight when negotiating for yours.
Deciding on a realtor
Should you consider the fees when deciding on a realtor to sell your home?
Should you make it the primary factor when deciding who to choose?
Because a real estate agent with a cheaper rate might cost you much more in the long run.
There are other realtor qualifications that will have a bigger impact on how much money you make.
You should avoid realtors with a history of representing both the buyer and seller in the same sale (aka dual agency).
These are the agents who aren’t focused on getting the maximum price when selling a home.
Instead, they prioritize earning two commissions from a single transaction.
That’s why, at SoldNest, we believe this is the single most important listing agent qualification.
But it’s not the only one.
You should also seek a realtor who’s familiar with your local market.
They should have experience selling similar properties in your area and in your price range.
Checking feedback from previous selling clients is also important.
This can give insight into a listing agent’s professionalism, reliability, and ability to deliver.
And look for a savvy agent who knows how to position your property for a successful sale.
You want an agent with the right marketing plan that pulls in the right buyers.
Finally, consider the value they bring.
Weigh their commission against their track record and the support they provide to understand their true value.
Carefully evaluating these factors will guide you toward choosing the right listing agent.
Alternatives to traditional realtor fees
Working with a traditional real estate agent is the go-to for most (86%) home sellers.
But maybe it’s not the right option for you.
There are less conventional routes that can save you money on realtor fees.
Here are four agent alternatives to consider:
- For sale by owner (FSBO): Selling on your own increases your legal risk and demands more time, effort, and knowledge to navigate the complexities of selling a home. But you’ll save the cost of paying a listing agent (you’d still pay a commission to the buyer’s agent).
- Discount brokerages: Think of discount brokerages as budget-friendly realtors. You’ll pay a lower-than-standard fee to a listing agent going this route. The trade-off? You decrease your chances of selling for the best price because discount agents are usually desperate for business and will rush your sale to quickly get a check — or they handle a high volume of transactions and are focused on scoring their next listing.
- Flat-fee MLS services: The MLS (Multiple Listing Service) is a database where real estate agents list properties for sale. You can pay a one-time fee to list your house on the MLS without full broker representation. This means you’ll reach a wider audience while retaining more control and responsibility over the home-selling process.
- Limited or à la carte realtor services: Some agents offer customizable packages where you can choose services that match your needs. This can be a cheaper route.
You should consider one of these options if you don’t see the value in working with a traditional realtor to sell your home.
But you should also consider your financial goals and what you’re comfortable with.
Are you okay with a realtor who might not prioritize your sale?
Can you market your property effectively?
Navigate real estate laws and regulations?
Manage a complex closing process?
The path you choose should reflect your needs and financial goals.
Now, you’ve got a handle on the costs of hiring a realtor.
You understand typical realtor commissions.
You know the factors that can influence these fees.
You’re ready to negotiate those rates if needed.
You’re aware of the extra costs associated with selling a house.
And you’re informed about alternatives to traditional real estate agents.
Your next step in selling your home?
Knowing when to contact a realtor.