How to Negotiate Realtor Commission

Written by Daniel BortzJune 8th, 20227 minute read

Jump to section: How to prepare | 6 negotiating tips | FAQ | Article summary | Why trust us

Realtor commission rates are completely negotiable, although it’s not always easy to get real estate agents to budge. But the good news is commission rates are trending down: sellers have more leverage in today’s market and more real estate companies are emerging that offer pre-negotiated rates with top-tier realtors. [1]

Negotiating a lower commission rate can significantly reduce how much money you need to fork over at closing. Total commission is typically 5–6% of a property’s final sale price, making it the largest expense of your home sale. Negotiating a realtor commission that’s even just a few percentage points lower than the standard 5–6% can save you thousands of dollars.

» SAVE: Top local agents, pre-negotiated rates, save up to 50% (learn more).

Negotiating realtor commission: How to prep

  1. Know the average realtor commission in your area.
  2. Identify your negotiating leverage.
  3. Set a realistic target commission rate.

Know the average realtor commission in your area

Commission rate practices vary by area, but your state’s average is a good benchmark. Find the average commission rate in your statebefore you talk to your realtor. Knowing that number will equip you with hard data that you can use when negotiating a lower rate.

</p><p><strong>💡 Quick tip:</strong> The average commission rate in your state is the total commission for both agents involved in the transaction. With your realtor, you’ll set a commission rate for both the seller agent and the buyer agent when you sign a listing agreement. Commission is usually divided equally, but your negotiation with your realtor will ultimately determine the final split. <a href="https://anytimeestimate.com/home-seller-costs/real-estate-commission-calculator/#how-commission-works" rel="noopener noreferrer" target="_blank">Learn more about how real estate commissions work</a>.</p><p>

Identify your negotiating leverage

Take stock of what you can offer to sweeten the deal or justify your ask for a lower rate before you initiate the negotiation. Here are some factors that could potentially give you more leverage when negotiating a rate reduction.

  • Your home’s price: Agents are more likely to accept a lower commission rate if you’re selling an expensive home. The higher your home price is, the fatter the agent’s paycheck will be. For instance, a 3% seller’s agent rate for a $1,000,000 home equals a $30,000 commission; when dropped to 2.5%, the listing agent still nabs $25,000.
  • The number of listings in your area: Fewer listing opportunities spurs competition between real estate agents for clients, giving you a leg up in commission negotiations. Most likely, inventory is scarce. Nationally, the stockpile of homes for sale at the end of April stood at only 1,030,000 units, down 10.4% from a year ago.[2]
  • Buyer demand: If there’s pent-up demand in your market and homes are flying off the market, an agent can expect to make a fast sale—something worth pointing out when negotiating a potential agent’s commission rate.
  • Dual agency: Dual agency can potentially give you more room to negotiate since one agent will earn both sides of the commission. But keep in mind a dual agent doesn’t have only your best interests at heart—they represent both parties. Note: Dual agency is not permitted in all states. It’s illegal in Alaska, Colorado, Florida, Kansas, Maryland, Texas, Vermont, and Wyoming.
  • Buying with the same agent: When you agree to buy and sell your house with the same agent, they’re getting two commissions for the price of one. So they may be more willing to secure their listing fee rate to secure both deals.
  • Referrals: Can you put your realtor in touch with other sellers (and buyers) that are seeking representation? If so, that’s a solid bargaining chip.

🎯 Let Clever negotiate lower rates for you.

Top local agents, 100% full service, built-in 1% listing fees. Try Clever Real Estate today for free with no obligation.

Set a realistic target commission rate

Don’t expect a seasoned agent that usually charges a 3% listing fee to provide the same services for a significantly lower commission rate — unless you go through an agent matching service like Clever or UpNest, who have more leverage because of the volume of repeat business they send the agents in their networks. Commission is negotiable, but expect small reductions when you try to haggle on your own.

That being said, be persistent! Even a small reduction in an agent’s commission rate (think a quarter to a half of a percentage) can make a notable difference for your bottom line. Use our commission calculator to visualize what you could save by lowering your commission rate:

6 pro tips for negotiating realtor commission

Jump to a negotiating tip:

  1. Interview several real estate agents.
  2. Be the first to bring up commission rates.
  3. Lowball your initial commission rate ask.
  4. Recognize your agent’s wins.
  5. Rely on real estate data to make your case.
  6. Practice your commission pitch.

1. Interview several real estate agents

Interviewing several real estate agents allows you to compare commission rates and create competing bids for your listing. We recommend interviewing agents in person. This will give you a better feel for whether they’re a fit and help you cement a strong relationship from the start. Selling your home is one of the biggest financial moves you can make, so talk to several agents before you commit.

2. Be the first to bring up commission rates

Say what commission rate you’re willing to offer instead of waiting for an agent to tell you what they charge. Once a figure is on the table, it creates the “anchoring effect,” which causes all further negotiations to be based within that bargaining zone.[3]

3. Lowball your initial commission rate ask

If you’re willing to pay a listing agent a 2.5% listing fee, start out by proposing a 2% commission. If the agent is flexible, they’ll probably meet you in the middle. Leaving a little room to negotiate when you throw out a number will make achieving your ideal commission rate more likely. That said, it’s important to also be respectful of your agent’s time and skill—don’t suggest an initial commission that’s outlandishly low.

4. Recognize your agent’s wins

People tend to be more open to negotiating when they receive positive feedback. Do some research on the agent’s work history and find something you find impressive. Be sure to bring it up in your negotiations. Ex: “I noticed you just sold a house well above list price. That’s impressive!”

5. Rely on real estate data to make your case

If you prepped for your negotiation, you looked up the average commission in your state. Use it to your advantage if an agent is trying to upcharge you. Ex: “I know that listing agents typically charge a 2.5% commission in Nevada, not the 3% you’re asking for.”

6. Practice your commission pitch

Prepare what you’re going to say, especially if you’re not accustomed to negotiating. Run lines with a friend so you can receive feedback on your performance. Or you can write down your pitch. The more familiar the words feel, the more likely you’ll sound confident during your agent interviews.

FAQ about negotiating realtor commission

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.

Article summary: How to negotiate realtor commission

  • Commission is usually 5–6% of a home’s sales price. However, norms can vary by state and even by town.
  • Sellers typically pay the listing agent and buyer agent’s commissions. These fees get distributed at closing.
  • Commission is negotiable. And, fortunately for home sellers, rates are trending down.
  • Several factors affect your negotiating power. Your property’s price, buyer demand, local inventory, and other factors have an impact.
  • Do your homework. Research what agents get paid in your area before you ask an agent to lower their commission.
  • Make the first move. Be the first person to throw out a number. Once a figure is on the table, it serves as an anchor for the negotiations.
  • Demonstrate your value as a potential client. The more you can offer an agent, the more receptive they’ll be to reducing their commission fee.
  • Interview several listing agents before hiring one. Shopping around allows you to compare commission rates and pit agents against each other for your listing.

✅ Skip the negotiating. Get built-in savings from top local agents.

List with the best agents in your area, get 100% full service, save thousands at closing. Try Clever Real Estate for free with no obligation.

Why trust us

Daniel Bortz is a real estate agent in Northern Virginia, where he’s been selling homes for almost a decade. He’s also covered the housing market for The New York Times, The Washington Post, Money Magazine, Consumer Reports, Realtor.com, and other national publications.

ARTICLE SOURCES
[1]

RealTrends. "Real Estate Agent Commissions Continue to Drop." Accessed May 2022. Updated February 6, 2022.

[2]

National Association of Realtors. "Existing Home Sales Retract 2.4% in April." Accessed May 2022. Updated May 19, 2022.

[3]

Harvard Law School. "What is the Anchoring Effect?." Accessed May 2022.