Maggie Titus | December 15, 2022
Who pays commission on a home sale, the buyer or seller? In almost all cases, the seller pays the entire commission fee for the listing agent and the buyer’s agent.
You work hard for your money, and the cost of agent fees is a concern. Thus, you want to make sure the money you spend on real estate agent fees is well spent. For instance, you would like to ensure that your agent sells your house for the most profit possible.
According to the most recent trend report from the National Association of Realtors (NAR), most home sellers worked with a real estate agent, sold their homes for a median of $66,000 more than they purchased them, and were “very satisfied” with the selling process.
The $66,000 gain and satisfaction with the selling process are a function of agent fees. You get a top-tier marketer, negotiator, and advocate for your best interests in exchange for paying an agent’s price.
Let’s dig deeper to discover everything you get when you pay Realtor® fees.
Real estate agents and Realtors® are not the same, even though people use the terms interchangeably. As explained by a top real estate agent, Randi Szakaly of Snohomish County, Washington, “A real estate agent simply holds a real estate license whereas a Realtor® subscribes to a code of ethics that holds them to a higher standard.”
While some Realtors® are brokers and others are licensed real estate agents, not all real estate agents are Realtors®. To be designated a Realtor®, an agent must undergo more education and is bound by a strict Code of Ethics & Standards of Practice.
The fee is not pure profit for the real estate agent. Here is an example of how a Realtor® fee works for you.
As of February 2022, the median sales price of a house sold in the United States was $357,300. According to our Commissions Calculator, the national average for a Realtor® fee is 5.8% – let’s round it up to 6% to get nice, round numbers to analyze.
Pro tip: To find out your city’s average commission rate, you can use HomeLight’s Agent Commissions Calculator, which has access to real estate transaction data from thousands of home sales each year.
Here is an illustration showing how the Realtor® fee typically gets divided:
Sale price: $357,300
Realtor® fee: 6%
Seller pays: $21,438
Listing agent receives: $5,359.50
Listing broker receives: $5,359.50
Buyer’s broker receives: $5,359.50
Buyer’s agent receives: $5,359.50
The selling agent in this example takes home 1.5% of the home’s sale price, or 25% of the Realtor® fee. Using the national median sale price, a listing agent makes $5,359.50 on the average home sale.
According to the most recent real estate statistics from the NAR, here is a breakdown of what agents make annually:
That’s not much in Realtor® fees, after all.
An experienced agent brings a lot to the table. Top agents will provide:
The Realtor® fee makes your money work hard for you so that you potentially sell your home for your asking price or more. In 2021, Realtors® helped people sell their homes for a median sales price that was 99% percent of the final asking price.
A significant portion of the Realtor’s® fee goes to selling your home. As explained by top real estate agent Elizabeth Weintraub of Sacramento, California, some of the money agents earn from commissions go into marketing. Weintraub estimates that she dedicates about 30% of her fee share to marketing.
Marketing includes professional photographs, full-color online and newspaper ads, and an active online presence. You might think of the real estate fee as an investment that enables your agent to make your home more attractive and sell it for more money.
Discount brokers may not be able to devote ample time or resources to the marketing or sales efforts your home deserves.
You may save money on the broker fees, but you might lose money when a low-commission agent uploads shoddy photos that look like fuzzy mess shots from a shaky iPhone. Doesn’t your home deserve to let its beauty shine?
Or you may get a discount agent who only works in real estate part time and does not have sufficient experience in negotiations, credits, concessions, contingencies, inspections, or know how to market your home to the right buyers.
Money is at risk. When sellers use an agent to sell a home, they typically make $58,000 more on the deal than someone who sells a For Sale By Owner (FBSO) home.
You’ve got questions and we can’t wait to answer them.