Why do realtors charge so much?

If commission rates seem high, there are a few reasons why. For starters, realtors don’t pocket their full commission fee—their brokerage takes a cut, and that cut can be significant, with brokers usually charging 20% to 40% of the agent’s commission. Agents also pay expenses out of their own pocket—think photography costs, marketing fees, and more—and put in a lot of time before they get paid. And they have operating expenses, such as licensing fees, Realtor association dues, MLS membership costs, and continuing education. In addition, professional industry groups, like the National Association of Realtors (NAR), do a ton of lobbying to preserve commission norms. But there are some silver linings. Several lawsuits brought by home sellers, brokerages, and the U.S. Department of Justice are challenging high broker commissions in court. Also, new real estate services with low commission fees are helping curb commission rates.

What do you get in exchange for the commission fee?

A good listing agent does a lot to earn their commission. Their services usually include calculating your home’s list price, arranging showings, hosting open houses, soliciting and negotiating offers, handling home inspection repair requests, and ushering your home’s sale to the closing table smoothly. And that buyer’s agent commission fee? It compensates the Realtor for bringing a qualified buyer and playing a role in getting the deal closed.

Do you have to tip your realtor on top of their commission fee?

No, realtors get paid their commission with no tip. But of course, there’s nothing stopping you from giving your agent a little extra dough if they exceeded your expectations.

Steve Nicastro

Managing Editor

Steve Nicastro is the Managing Editor at Anytime Estimate, a premier resource for accurate and up-to-date real estate and homeownership information. With a background as a successful real estate agent and a seasoned writer, Steve brings a wealth of knowledge to homeowners and investors navigating the real estate market.

Before joining Anytime Estimate, Steve achieved impressive milestones in the Charleston, S.C. real estate market, closing $6 million in transaction volume between 2020 and 2021. His deep understanding of the industry is further enriched by his extensive experience as a personal finance writer for NerdWallet, where his insights were featured in USA Today, The Associated Press, U.S. News, and The New York Times.

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