How Much Is A Real Estate Agent’s Commission?

Selling your property is not an easy task, especially with the competitive real estate market today. To find tips on selling your home, check  MoneyGator. If you experience difficulties in closing a deal at your desired price, you can always hire a real estate agent for help.

What Does A Real Estate Agent Do?   

A real estate agent arranges the renting, buying, and selling of real estate properties for owners. It is their task to organize open houses, appointments, and meetings with clients. They also plan marketing campaigns, such as posting listings and distributing fliers, newsletters, and similar promotional materials to help sell your property much faster.

 As the real estate agent can get all the work done for your property, such as handling all the necessary paperwork, you need not worry about renting or selling your property. 

For the generous assistance provided by a real estate agent, they get compensated through commissions. Before paying your agent, you should consider the average real estate commission to guide you about the appropriate amount.   

Real Estate Agent Commission  

As a real estate agent earns through commission, you can be confident that they will do their best to convert your properties into cash. The commission rate your real estate agent gets vary depending on different factors such as the current property valuation and your agreement.   

There are two parties entitled to commissions in selling a property–the buyer’s agent and the seller’s agent. The agents would each be getting 2.5% to 3% of the property price as commissions, totaling 5% to 6%.   

The amount will vary on the sale price. For example, if the seller’s agent has sold the property for USD 250,000, he would be getting USD 6,250 to USD 7,500, depending on the agreed commission rate.

Who Pays for the Commission?   

A buyer need not pay a commission to a buyer’s agent. However, buyers are responsible for reimbursing the real estate agent for the closing costs, which are expenses and fees to close down the house. The costs can run for around 3% to 5% of the property price, which includes attorney fees, insurance, appraisals, taxes, to name a few.  

Furthermore, sellers are responsible for providing commissions to the selling and buying agents once the house has been closed.   

Can Agents Negotiate Their Commissions?   

If you were to ask if real estate agents can negotiate their commissions, the short answer would be yes. There are no regulations or laws in the U.S that states standard commission rates for the agents. In light of this, agents can negotiate their commission rates, depending on their expertise and the required services.   

Moreover, agents can get lower amounts if they’re acting as both the buyer’s and seller’s agents, also known as dual agents. In this way, the property owner gets to save money while being spared from the inconvenience of dealing with two parties.   

Bear in mind that skimping on commission rates may work against you. While you may be offering lesser fees, there’ll be a lesser chance of selling the property as the marketing budget comes from the commission. With a smaller allocation, the agent would have trouble advertising your property and might not convert sales on time.  

Do You Have to Pay for Commission Without a Sale?   

Generally, real estate agents only get commissions when they were able to make a sale. However, there are other situations when you need to provide your agent with commissions, such as:   

  • The contract states that your agent should receive their commission even after the bond’s effectivity if they found a prospective buyer for your property.   
  • You backed out of the sale at the last minute. If a buyer had already accepted the offer, you’re already obliged to pay your agents their commissions.   
  • If the buyer backs out, you still need to pay for commissions. To recover damages, you could sue the buyer for breach of contract.  

Before exempting yourself from paying commissions, check if it is allowed by your contract.


Since no law or regulation determines the standard commission rate, you are free to negotiate the commission fee with your real estate agent. However, remember that lower rates compromise the quality and speed of service. You have to consider a lot of factors before setting a rate with your agent.   

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