Key takeaways

• Low-commission real estate agents charge less than traditional agents, which could save home sellers thousands of dollars.

• An agent’s typical commission is between 2.5 and 3 percent of a home’s sale price, but discount agents can charge as little as 1.5 or even 1 percent.

• However, because these agents must sell more homes to make the same amount of money as traditional agents, they may provide a lower level of service.

When you sell your home, it’s only natural to want to maximize the profit you get. And one way to do this is to minimize the fees and expenses associated with the sales process, including the commission paid to the agent who lists your property. You may even be considering using a discount or low-commission real estate agent who will represent your property at a lower price than other agents in your area.

However, before you take this step, it’s important to think about why low-cost real estate agents charge less – and how this decision can impact your overall selling experience.

What is the average commission of a real estate agent?

Conventional wisdom holds that a typical real estate agent’s commission is between 2.5 and 3 percent of the home’s sale price for each agent involved in the transaction. This means a total of up to 6 percent on the transaction.

However, the total commission associated with selling a home has been on a downward trend in recent years. As of August 2024, the average total commission in the United States was 5.32%, according to research by Clever, averaging 2.74% for the listing agent (representing the seller) and 2.58%. for the buyer’s agent.

These fees can vary greatly from state to state, as well as from sale to sale and agent to agent. In many cases, clients can negotiate the commission rate they will pay. Even so, these fees will still represent a fairly significant portion of your sale proceeds: On a $300,000 sale, the average listing agent fee of 2.74% is $8,220.

What is considered a “low” commission?

Low-commission real estate agent fees can be significantly lower than what you might negotiate with a traditional agent – ​​as low as 1%, in some cases. Companies offering these types of reduced commissions include Clever, which charges a 1.5% “listing fee” and Redfin, which charges 1.5% when you sell a home with them and reduces that figure to just 1% when you buy and sell with them.

Using a flat-fee agent is another option for saving money when selling your home. Flat-rate real estate agents and brokers charge a fixed rate for their services, established in advance, rather than a commission tied to the final sale price of your home. When you use a fixed-price contract, the final sale amount of your home has no impact on fees.

How much can a low commission real estate agent save me?

Using a low-commission real estate agent to sell your home can potentially save you thousands of dollars. To continue the example of a $300,000 home, where the average listing agent fee of 2.74% comes to $8,220, consider a fee of 1.5%, which amounts to just $4,500, a savings of over $3,700.

Remember, however, that even if you use a low-cost agent to represent you, you may still have to pay the buyer’s agent commission. The details of who pays what will be negotiated in each individual agreement.

Risks of Using a Low Commission Real Estate Agent

Although you’ll pay less when working with a discount agent, there are also some downsides to consider:

• Less attention: Remember the phrase “you get what you pay for” when choosing to work with a low commission agent. Because they earn less on each sale, they must close a higher volume of transactions than traditional agents to make the same amount of money. This means you probably won’t receive the same level of attention or service as you otherwise would.

• Lower profit: The lack of experience you may encounter with a low-commission agent can impact the final sale price of your home. These agents may not be as savvy when it comes to setting an appropriate asking price or attracting buyers. And if they don’t know your specific local market very well, you’re losing out on a lot of expertise, which can result in a lower sales price than you could have gotten.

• Dual agency: Dual agency, in which a single agent represents both the buyer and seller in a transaction, is legal in many states. This isn’t always a problem, but it does carry potential conflict of interest risks. And an agent who only earns a 1% commission may be more tempted to represent as many clients as possible to increase their volume.

Alternatives

Looking for other ways to save money when you sell? Here are some options.

• Negotiate commissions: In many cases, traditional real estate agents or brokerages may be willing to reduce or reduce their fees, especially in the case of higher priced homes.

• Home Buying Companies and iBuyers: These companies quickly make cash offers directly to sellers, eliminating real estate agents from the process. However, they must make a profit, which means they typically buy homes for less than their full market value. And iBuyers often charge fees that can be the same amount you would have paid in agent commissions.

• FSBO: Some home sellers choose not to use an agent and sell on their own, which is called a FSBO or “for sale by owner” listing. This route will save you from having to pay a listing agent’s commission, that’s true, but what you save in money you can pay back in the time and effort it takes to put into it.

Next steps

When looking for a real estate agent, it’s always a good idea to do your research thoroughly. This should include interviews with several candidates. Ask everyone about their commission, as well as their knowledge of your community and their level of experience, both generally and with homes similar to yours. It may also be a good idea to ask friends and family for recommendations of agents with whom they have had good experience working.

FAQs

• Are Low Commission Real Estate Agents Worth It?

  There are pros and cons associated with using low commission real estate agents. Of course, these are always licensed professionals and using one will save you money on commission fees. However, these agents may not have the same level of expertise as a traditional agent and may not have as much time to devote to your interests. Working with an agent may therefore not offer you the same level of service.

• How much is the average commission compared to low commission real estate agents?

  Traditional agents typically earn between 2.5 and 3 percent of a home’s sale price, meaning the more the home sells for, the more they earn. In contrast, low-commission real estate agent fees can be as low as 1 or 1.5 percent. On a median-priced home in the United States – which was $416,700 in August 2024, according to the National Association of Realtors – 3% would equate to $12,501 while 1.5% would equate to $6,250.

• Are real estate commissions negotiable?

  Yes, it is possible to negotiate a commission with an agent; some agents are more receptive to it than others. Agents may also be more willing to lower their percentage for a home that is likely to sell for a higher price. And more recently, thanks to a lawsuit that impacted how real estate agent commissions are paid across the country, it’s even possible to negotiate who should pay the buyer’s agent commission.