For decades, real estate commission rates have hovered around 6%, with sellers typically paying 3% to their agent and 3% to the buyerâs agent. But thatâs changing.
Increased competition, the recent National Association of Realtors (NAR) settlement, and the rise of discount brokerages have opened the door to lower fees. Many agents now work for 4% total commission, which can save sellers thousands without giving up full-service support.[1]
Hereâs what a 4% commission structure looks like â and how to find agents who offer it.
Want to pay 4% commission and keep more of your proceeds? Dropping from a 6% commission to 4% can save sellers thousands. On a $500,000 home sale, thatâs $10,000 back in your pocket.
Put those savings toward your next down payment, moving costs, or upgrades â not agent fees. With a 4% commission, you still get full-service support from a trusted local realtor. Compare local agents and see your savings!
What is 4% real estate commission?
| Rate | Total | Sellerâs agent | Buyerâs agent | Savings |
|---|---|---|---|---|
| 6% | $30,000 | $15,000 | $15,000 | None |
| 4% | $20,000 | $10,000 | $10,000 | $10,000 |
A 4% real estate commission currently represents a significantly lower rate than the traditional 6% rate, and can mean big savings for sellers.
Typically, the total commission is split between the listing agent and the buyerâs agent. A 4% commission often means each agent earns 2%, though splits like 3% and 1% are also possible depending on the agreement.
The National Association of Realtors (NAR) implemented major rule changes on August 17, 2024, reshaping how agents get paid and how buyers work with them.
- No commission shown on MLS: Agent pay is no longer published with listings.
- Buyer agreements required: Buyers must sign a written contract before touring homes.
- More MLS flexibility: Agents arenât required to subscribe, potentially reducing costs.
Together, these changes are expected to make commissions more competitive and expand consumer options.
Source: NAR Settlement FAQs
Why would agents accept 4% commission?
Agents might accept a 4% total commission rate for various reasons.
For one, lowering commission rates in competitive markets can attract more clients. This can help agents secure more listings so they can close more deals. By taking a volume-based approach, agents can compensate for the lower rate per transaction.
Certain markets, situations, and property locations and conditions can also impact rates:
- Some properties may not require as much effort to sell, allowing agents to work for lower rates.
- In some areas, agents can represent both the buyer and seller, a practice called dual agency. The agent may accept a lower commission rate since they arenât splitting it with another agent.
- Finally, agents helping clients sell their current homes and buy new ones may also offer reduced rates for handling multiple transactions.
Agents representing high-value properties may also be able to provide lower commission rates since commissions can still be significant even at a lower rate. For example, a 4% total commission on a $1 million property is $40,000, with a 50/50 split providing each agent $20,000.
Pros and cons of a 4% commission realtor
Pros
- Save on agent fees
- Price your home more competitively
- Attract more buyers, leading to quicker sale
Cons
- Smaller marketing budget
- Limited agent availability
- Less experience (if you get newer agent)
Hiring a 4% commission realtor provides several benefits. Perhaps the most significant advantage is the savings on your agent fees, allowing sellers to keep more proceeds. Sellers may also be able to price their home more competitively, helping them attract more potential buyers. The increased competition from buyers may also lead to a faster sale.
But youâll also want to consider potential drawbacks. Agents with lower rates may operate with closer margins, such as a reduced marketing budget. This could potentially limit the exposure your property receives.
Agents who take a volume-based approach may have less time for each client due to managing a more extensive client list. Also, some agents may offer lower rates to build up their practice. These newer or less experienced agents may not have as much local market experience or connections, potentially impacting service quality.
How to get a 4% total commission rate
Use a discount broker
A discount broker or low commission agent is a company or agent who sells your home for less than the average real estate agent commission rate in your area. Discount brokerages provide an alternative to traditional agents, often providing essential or full services at a lower rate.
Rates can vary, but are generally significantly lower than traditional rates. For instance, some low commission agents and companies may offer listing services for as low as 1.5-2% instead of 3%.
When researching discount brokerages, pay attention to their services compared to traditional agents. Additionally, make sure their services provide the assistance you need. Some companies may offer a comprehensive service, while othersâ services may be more limited due to the reduced rate. Before signing, talk with the agent or broker to ensure they fit your needs well.
Top discount broker picks
1. Clever Real Estate
What Clever offers: Lower commission without cutting service. Take a short quiz, get matched with vetted local agents, and choose the best fit to sell your home.
What customers say: Reviews are overwhelmingly positive with praise for service quality and experienced agents. A small minority report poor service or rude agents.
Best for: Sellers who want a lower listing fee without giving up full service.
â Editorâs take: Clever is the best pick for most sellers. Pay a simple 1.5% listing fee and still get full service from conventional realtors at name-brand brokerages like Keller Williams and RE/MAX.
Clever Real Estate offers a service to find high-quality agents who offer a lower commission. Clever matches you with vetted agents in your area who sell for only a 1.5% listing fee. This service is advantageous because it connects you with multiple agents, so you can select the person who best fits you and your situation. Furthermore, you can request more matches if you donât initially find an agent.
2. Redfin
Redfin is a legitimate discount brokerage that provides a 1.5% listing fee to sellers or a 1% listing fee for clients who buy and sell. Their agents provide the typical services youâd expect from a traditional service.
Redfin offers lower rates because it uses a team-based service model. This means you'll work with multiple team members at different stages of your real estate transaction instead of one agent or contact, allowing Redfin to take on a higher volume of clients.
Redfin is one of the largest brokerages in the United States, with coverage in most major cities. This service is a good fit for people who want to save on fees and donât mind a team-based approach. Redfin also makes it easy to manage your listing online or through the app.
However, you may not receive the same one-on-one time with agents. Also, Redfin does have minimum fees, which can vary between markets. So, itâs important to verify the minimum fees to ensure you donât end up paying more than 1.5%, especially if you sell a lower-priced home.
3. Ideal Agent
Ideal Agent is an online platform that matches clients with full-service, low-commission agents. This company matches you with top agents who will work for a 2% listing fee. While this is lower than industry standards, there are other similar services whose agents will work for less.
Ideal Agent does charge a $3,000 minimum fee. But this will only affect people selling homes for less than $150,000.
Ideal Agentâs free matching service is available nationwide. The company reports matching with top brands like Keller Williams. This service is great for people seeking help finding a quality agent willing to work at a lower commission rate. However, similar services will provide lower pre-negotiated fees than those offered by Ideal Agent.
Research your local market
Understanding your local market and average commission rates is essential to effectively negotiating realtor commission rates. When researching, identify the average rates for your market. This can serve as a benchmark for your negotiations and help set realistic expectations.
"Buyers and sellers should talk with agents," recommends Lorelie Abedes. "Ask about their services, experience, and market knowledge." You can also gather information by checking online resources and looking at recent home sales data in your area. Be sure to look for recent sales that are comparable to your home.
Negotiate a lower rate
Before negotiating realtor commissions, consider what you can offer potential agents to help support them working for a lower rate.
For example, highlighting your propertyâs strengths can help you justify a lower commission. Properties in excellent condition, in a sellerâs market, or a prime location are easier to sell and likely to sell faster, giving you more room to negotiate. You may also be able to justify reducing the rate if youâre buying and selling with the same agent.
When shopping around for agents, be sure to interview several realtors. This will allow you to compare commission rates and services and create competing bids for your listing. Use your research of local market rates and your stateâs average commission rates to help justify a lower rate if an agent asks for a higher rate.
Lastly, consider initially asking for a rate slightly lower than what youâre comfortable with. This allows room for negotiation without exceeding the rate you want.
