Realtor Fees: Are Realtor Fees Negotiable?


The standard rate in real estate is a 3 percent commission for the buyer’s agent and a 3 percent commission for the seller’s agent. But are those Realtor fees negotiable? Like almost anything else in life, the answer is a big yes. But if you want a break on fees, you need to bring something to the table yourself to show why you should get a cut.

Standard Realtor fees

Traditionally, real estate agent fees are 6 percent for the sale of a residential property. The 6 percent is divided equally between the buyer’s and seller’s agents. For agents, this fee structure works best on more expensive homes. However, the opposite is true for buyers.

The average home in the United States is worth around $250,000. At sale time, that means $15,000 in commissions, $7,500 for each agent. In Southern California, the average home price is nearly double the national average at $465,000. Rounding to an even $500,000, a home sale would result in $30,000 in commissions, or $15,000 per agent.

Agents do work hard to earn their commissions but they have to split that commission with lots of people. Those commissions pay for all their office expenses, staff, overhead, and brokerage commissions, advertising expenses, etc.  So the commissions they earn on a sale often pays for all the expenses They may also undertake direct expenses to market the property in addition to the time spent showing and preparing listings. But is one home sale worth as much as many people make in a year? And is a $500,000 home worth $15,000 each in commissions when a home a few miles away would yield a commission half as valuable? If you think no, you may have some options.

Discount agencies lowering costs

Agencies around the nation have noticed this misalignment of costs and incentives in the market and are attempting to disrupt real estate industry fees. They did so by setting a new, lower fee structure for all clients who choose these discount agencies.

Redfin is arguably the best know in the lower cost Realtor fees space. If you list a home with Redfin, you pay only 1.5 percent, half of the standard 3 percent. Other agencies are also testing out the 1 percent to 2 percent fee range to bring in new business. Buying through Redfin also comes at a discount based on the value of the home. In some markets, including the red hot Denver market, Redfin is testing a 1 percent home listing fee.

But you don’t necessarily have to go with an agency like Redfin to get a discount. Your favorite AgentHarvest agent may be willing to cut you a deal, as do others in the industry in some cases.

Strike a deal with an independent agent

My wife is a licensed real estate agent in California, but is not an active practicing agent. With no brokerage license or affiliation to a broker, she can’t represent clients wanting to buy or sell a property, but that doesn’t mean her skills go to waste in a home search.

When we bought our last home a couple of months ago, my wife found the home online and we did most of the work in the transaction. Knowing that this would be the case, the agent we used for the transaction was happy to give a portion of his 3 percent back to us in closing. Across the industry, the typical discount offered to others in the industry is 1 percent.

If you are doing much of the work for the agent, it’s worth attempting to get a discount. The worst thing the agent will say is no, after all. Even if you have no connection to the real estate industry, you may still be able to negotiate a discount in your Realtor fees.

Plan to pay, but it’s worth a try to ask for a discount on Realtor fees

In most cases, agents won’t want to give a cut of their earnings back to a client. But that doesn’t mean it isn’t worth asking. In some cases, an agent would be happy to give a small piece of the pie back to the client, as has happened for my family in nearly every real estate transaction I have ever been a part of.

If you feel lost in the world of real estate, don’t worry. We have you covered. AgentHarvest features listings of top agents around the country. From coast to coast and border to border, the most important member of your team when buying a home is the right agent. To find the best agent, you can trust to AgentHarvest.

If you are buying or selling a house and are looking to hire a successful real estate agent to help you through the process, take a look at AgentHarvest's list of top-ranking local Realtors in your area. We found these agents by examining their sales track records, awards, rankings, client testimonials and by conducting personal interviews.