Real estate agent commissions take the biggest cut of your house sale. Is it worth it then to even hire an agent or realtor? Or should you sell your house for sale by owner (FSBO)? Here is a rundown of real estate agent fees to help you decide.
What Are You Paying a Real Estate Agent to Do?
Seller agents may do the following:
- Assign a fair, accurate price to your house.
- Market your house across the MLS, social media, and print marketing.
- Schedule walkthroughs.
- Advocate for you when dealing with house inspectors and appraisers.
- Help negotiate terms of sale between you, the buyer, and buyer’s agent.
How Much Does a Real Estate Agent Get Paid?
An agent earns commission upon sale of the house. Typically, their cut is 6% of the sale price, though a recent survey shows the national average is 5.45%. This downward trend is attributable to competition and a shortage of houses for sale in certain markets.
You can negotiate agent fees by arguing these points:
- Time it takes to sell: if the house sells fast (in less than a month).
- Anticipated sales price: if your house is priced high (e.g., $500,000s and up), a low rate is still a good chunk of change.
- Buyer’s agent: if there is no buyer agent for the commission to be split with.
- Agent’s workload: if you take on some responsibilities in the home sale process.
 An Agent Does Not Keep What They Earn
An agent does not keep all of the commission because they do not act alone. Most agents work under a real estate broker. The broker, then, takes half of the agent’s commission.
The seller agent then splits the commission with the buyer agent, and they with their brokerage. If we do a quick calculation, as an example, here is how it might play out:
- Your house sells for $250,000;
- 6% of the sale price is $15,000;
- each brokerage gets $7,500; and
- the brokers each pay their agents $3,750.
Once paid, your agent has to cover expenses. These include membership dues to real estate institutions and technology, but also money spent to market your house. You can see then that an agent does not make a huge profit. That is why they handle multiple house sales at a time.
Who Pays the Real Estate Agent?
You, the seller, pays both the buyer and seller agents. True, the buyer is purchasing your house, but it is out of your profit that the 6% is paid to these agents.
Instead of an Agent, Sell to an Investor
If you want to forgo agents and commission rates, consider selling to an investor. Most investors will make a cash offer on a house, regardless of how it looks and without a buyer agent. You, then, only pay your share of closing costs. You enjoy a quick closing and a profit which you then use as a down payment on your next house.
