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What is the Going Commission Rate for Real Estate?

What is the Going Commission Rate for Real Estate?What is the Going Commission Rate for Real Estate?
by Kevyn Pitts - May 6, 2021

What Is Real Estate Commission?

When your house goes on sale, your agent gets a percentage of the final price that accounts for their commission. If there are two agents involved—the realtor agent who helps the sellers sell the house and the buyer agent who gets the buyers to close the deal—then the commission is usually split between the two of them. It could also be accomplished by a single real estate agent, which could mean them keeping the entire commission.

While a handful of realtors might work on salary, the majority of them work on the more popular commission model.

Average Realtor Commission 2021

The CFA’s analysis shows that the going estate agent commission rate averages between 5 to 6% of the home sale price. This has remained the average, in the U.S, for nearly a century. The percentage rises or drops slightly year-to-year. 

Last year (2020), saw an unusual trend with increased sales and more tech use, the average realtor commission rate dropped from 6% to 5%.

Average Realtor Commission Rate by State

The average rates may vary from state to state for real estate commissions. Determined by state-to-state variations, the lowest to the highest rate difference could be as much as one whole percentage point. For example, 4% in some states compared to 6% in others.

Where does the Commission Come in?

The homeowners don’t have to be concerned with this amount. Normally, the estate agent’s commission is taken out of the final sale price. The seller would be the one paying this percentage.

How are Real Estate Commissions Set

The commission percentage is normally negotiated and set between the seller and the real estate agent. Realtors usually carry out the entire process without payments, with their payment coming only with the closing of the deal. 

In case there are two agents—the buyer agent and the seller agent—the total percentage would be divided between them. For instance, if the total commission is 5%, the buyer agent would be getting half (i.e., 2.5%), and the seller agent would be getting the other half.

Some other factors work to determine the exact commission percentage, such as the house, the time, and the current position of the market.

Are you looking to buy or sell a piece of real estate? Do you have the professional consultation of a real estate agent?

Author

  • Kevyn was Rory's first protege and has proved himself worthy of his title as a real estate expert through his years of working in the company. He makes sure we get the latest real estate updates and shares his insight to our readers on which investments they should keep an eye on.

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