What Percentage Do Realtors Make From A Home Sale?

Editor’s note: On March 15, 2024, the National Association of Realtors (NAR) announced a landmark lawsuit settlement that will change the way real estate agent commissions are handled in the future. These changes will “decouple” seller and buyer agent compensation. Industry experts predict that this decoupling will likely lower agent fees and give buyers the ability to negotiate commission amounts directly. Learn more.

Real estate commissions fluctuate year to year by up to one percent but remain consistent between around 5% to 6%. While the national average of paying a 5.8% commission is the  standard in 2022, some commissions have fallen to as low as 4.9%, according to the National Association of Realtors. Although commissions have dropped  in some regions, the current market prices have translated into higher income per sale for agents.

The realtor fee is the highest expense for sellers at closing. For example, in June 2022, the national average of a single-family home in the U.S. sold for $449,300. This means the seller of this house would pay $21,040 at a 4.9% commission and $25,400 at 6%. At such high prices, many sellers wonder if there’s a way to keep more money in their wallets.

However, not all that is pocketed by the seller’s agent. While the seller typically pays the entire commission for the sale, the seller’s agent splits that fee (typically in half) with the buyer’s agent, and each agent may then have to split their share with a broker. When all is said and done, the seller’s Realtor® in the above example may only be pocketing $6,500 — and that’s at the 6% commission rate.

Let’s dive further into how agent split commissions work.

How the Realtor® commission structure works

The amount a seller pays at closing is the highest fee on the settlement statement. But what your Realtor® walks home with is only a quarter of the fee because agents commissions are split  four ways. Realtors® are compensated by a fixed commission split, according to the National Association of Realtors.

Although the percentages for each professional can vary, typically a listing agent only gets a 3% commission of the sale because they must split the commission with the buyer’s agent.

“The seller pays around 6% commission and the buyer’s agent will take roughly half of that, so the total commission price is split between the two agents,” explains Shawn Hartmann, a top- performing real estate agent in St. Paul, MN who holds more than 16 years of experience.

The percentage realtors and brokers make on a home sale

The table below provides some examples of how the commissions on sales would break down based on a 50% split commission fee at 6%.

However, the listing agent can’t take all that commission to the bank; they must compensate their broker 30% to 50% of their earned commission. The percentage amount typically depends on the agent’s experience level, the housing market, and the brokerage agreement.

The 2021 “Home Buyers and Sellers Profile” from the National Association of Realtors® (NAR) reported that the median price for FSBO-sold homes was $260,000 while agent-assisted home sales averaged $318,000 — around $40,000 more.

Most homeowners lack significant experience in selling homes, and may not be aware of the work that agents do to ensure their homes sell for maximum value. HomeLight spoke to top agents about the money they invest in marketing (which they only recoup if and when your home sells):

Online advertising: $200

Professional  photos: $300

Virtual home tours $300

Open house flyers $60

Experts surveyed agreed that the largest expense category for the majority of agents was vehicle expenses, which was $1,460. At the end of the day, the average realtor walks away with $1,400 to $2,400, which means the agent walks home with around 1% of the commission.

How top agents add value worthy of their commissions

Sets a smart pricing strategy

One of the most critical components of a sale is a competitive pricing strategy. An experienced agent will have statistics, charts, and house photos that they’ve collected after performing a comparative market analysis. Also called “comps,” this data shows sellers the value of their house based on market trends that are extremely recent and local (ideally in the same neighborhood). Looking at similar properties as close to the sellers’ home as possible and as recently sold as possible is the best way to determine how much buyers are willing to pay and for what.

Creates a solid marketing plan that stands out to buyers

An experienced agent is a proactive marketer with a strategic plan to attract buyers. Their job includes:

• Creating engaging local advertisements and highlighting the right features on the MLS.
• Preparing a house for showings that include decluttering deep cleaning, staging, painting, and boosting curb appeal
• Arranging photography and video shoots
• Coordinating exclusive broker showings for open houses

Provides guidance on presale improvements

A savvy real estate agent will do a walkthrough with you to investigate any issues that need attention After the tour, they’ll recommend specific updates and upgrades that can increase home value and deliver the best ROI within your budget.

Realtors® can save sellers time and money by connecting owners to their network of qualified service providers. These home specialists can include home inspectors, handypersons, painters, plumbers, and other contractors who provide a reasonable price. Agents can also steer sellers away from unscrupulous and unqualified area vendors.

You can negotiate commission, but you get what you pay for

Yes, it is possible to negotiate your agent’s commision. While there are some agents out there who might take a cheaper commission, you’re unlikely to receive the same value. Agents who accept a lower commission won’t have the budget to invest in the proven marketing strategies that attract more buyers and get higher offers. They also won’t have the same incentive to represent you, since they’ll have to work harder to sell more houses.

Remember, top agents work to earn their paycheck and add value at every step of the homeselling process.

Elizabeth Weintraub, a top-performing agent in Sacramento who has completed 70% more sales in her area shares her story with a client who returned to her after signing with a lower-commission agent instead of her because the deal fell through when the agent couldn’t make the sale.

“He wanted me to discount the fee to what this other company was going to charge him,” says Weintraub. The client said,” As far as I can see, they’re going to do everything that you’re going to do.”

“I said, no, they’re not; when you get into escrow and when you get to the home inspection, and when you don’t get out of it, give me a call.”

“Sure enough, when the client got into escrow, everything fell apart,” says Weintraub. The agent didn’t know how to handle it, didn’t want to deal with it, and cut him loose and he came back to me.”

Like Weintraub’s story, statistics indicate that selling your home with a top-performing realtor will grant you a higher profit and be able to close the deal successfully.

Words of wisdom

While commissions are negotiable, the National Association of Realtors strongly advises its members not to accept a commission of less than five percent. The organization believes that the high quality of service provided by its members justifies the full commission and constitutes their worth, emphasizing that realtors possess exclusive agent resources such as proprietary tools and industry relationships that provide value.

Limited service agents charge less but offer less value

Limited service agents help sellers list  properties as a flat-fee Multiple Listing Service. This broadcasts listings to a network of brokers. Some limited-service companies offer fee-for-service options where sellers can choose the level of assistance they want. You’ll still need to pay for marketing, which is included in the fee when signing with a full-service agent.

Flat-fee agents don’t have a vested interest in getting you the best price for your property, since they’re paid the same regardless of the final sale price. Some limited service agents provide sellers with a fixed rate or a limited selection of services such as:

• Posting a “for sale” sign for your property, however, you’ll have to facilitate the deal on your own if you receive requests from buyers.
• Setting up a lockbox, which includes providing you with a combination lock box and key to your home that allows buyer’s agents to show your house when you’re not available.
• Offering advice about marketing, pricing, and negotiating strategies

According to the National Association of Realtors, limited-service agents don’t tend to provide the following services:

• Schedule appointments with buyer’s agents to view your property
• Present buyer offers to sellers
• Guide sellers about how to develop, communicate, or present counter-offers to buyers and  buyer agents
• Facilitate negotiations on the seller’s behalf

Find a top-producing agent for the best results

Data shows how working with top-performing agents make a significant financial impact on a seller’s bottom line, concluding that 5% of top-earning realtors sell homes for a median price 10% higher than their colleagues. You can find a top agent on HomeLight’s Agent Finder. Just plug in your address and answer a few quick questions. We’ll crunch the numbers and match you with the top three performing agents in your area.

Connect with a Top Agent

Top real estate agents will work to really earn their commission, and HomeLight data shows they sell homes faster and for more money than average agents.

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