5 Steps to Negotiating Realtor Fees in 2024

Many homeowners believe settling for an average realtor commission of 5-6% is the best they can get when selling a home, but you can negotiate realtor fees for a better price.

Successful commission negotiation can dramatically impact your profits when selling a home. The average home's selling price is around $442,000, meaning you could save nearly $2,500 by successfully negotiating a mere 0.5% off of your commission rate.

Sellers typically cover all commissions on closing and can negotiate for lower realtor fees, but industry research found that:

• Only 22% of home sellers successfully negotiate for a lower fee
• 12% of sellers knew they could negotiate but opted to avoid it
• 15% of sellers didn’t realize commissions were negotiable

Even with the recent settlement of a NAR lawsuit that makes buyers responsible for handling buying agent commissions — which will lower total commission costs for sellers — negotiating real estate commissions is challenging for many.

How to negotiate realtor fees in 5 steps

1. Do your research

The first step to successful negotiation is interviewing agents about the local market. Speaking to multiple agents gives you a better understanding of average commission rates and whether it’s a buyers' or sellers' market.

You can leverage this information as a talking point during commission negotiation. For instance, selling in a buyer’s market that drives more competition may make your realtor more willing to negotiate.

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 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. Identify your negotiating leverage

Before you initiate the negotiation, take stock of what you can offer to sweeten the deal or justify your lower rate request. 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 sell 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 number of active listings is just under 900,000, as of August 2024, up more than 10% from last year but still well below pre-pandemic levels.
• 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 remember that 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 connect your realtor with other sellers (and buyers) seeking representation? If so, that’s a solid bargaining chip.

3. Build rapport with your agent

When you meet an agent, asking for a discount could lower your chances for effective negotiation. Rather than demanding a lower rate right away, take some time to connect with them.

Finding common ground helps you and your real estate agent understand each other's perspectives before negotiating commission. This mutual respect will facilitate better communication during the negotiation process.

4. Clearly communicate your position

It’s crucial to clearly articulate what you want from your agent before asking for a lower rate. Outline your budget and discuss why a lower rate will help you achieve your financial goals.

You should also point out anything that makes your property worth selling, such as a high property value in a more desirable part of town. Many agents are willing to take a commission cut on homes with a higher-than-average fair market value.

5. Negotiate the rate

Asking for a reasonable commission drop — like 0.5-1% off of a 3% rate — is essential to securing a better rate from your real estate agent. You may want to pay less than that, but aggressive negotiation may end your working relationship.

Discussing a tiered rate with variable commission may incentivize a higher sale price on your home.

For instance, you could negotiate for a percentage that increases or decreases in relation to fair market value. Selling above value would net a higher commission rate, while selling below would result in a lower commission rate.

Who pays realtor fees?

Home sellers typically pay a combined commission rate that the buying and selling agents split when the home sells.

The national average for total commission rates is between 5-6%, and the commission is usually split evenly between both parties unless they agree upon different circumstances beforehand.

If your home sells for the median $442,000 listing price, the total commission would be around $24,000, with $12,000 going to each agent.

Are commission changes coming soon?

The recent NAR settlement could significantly impact how commission looks by changing how buyers and agents interact. Key changes include:

• Buyers will be responsible for paying agents for their services
• Service agreements between buyers and agents will happen before showings
• Listing agents will no longer share buying agent rates on the MLS

These changes will remove sole responsibility from the seller and could change commission structure entirely.

Research from the Federal Reserve Bank of Richmond suggests a new by-the-service model in which buyers pay agents for individual services rather than a large commission. If agents adopt this framework, it could cut buyer commissions by nearly $30 billion, according to the research.

The bottom line

Negotiating realtor fees is possible. It just requires upfront research, clear communication, and a willingness to compromise on your total commission discount.

With revamped commission structures on the horizon, negotiation might become more common for future home buyers and sellers.

If you want a discounted rate without negotiation, you might want to work through a service like Clever. Agents on the Clever platform offer work for leading brokerages at a discounted rate without negotiation.