Real Estate Commission: Understanding Costs
From the size of the deposit to the fee breakdowns, learn all about real estate commission costs and what to expect when buying your dream home.
What Is Real Estate Commission?
Real estate commission is a fee the home seller pays to real estate agents for selling their property. The amount of commission paid is typically a percentage of the final sale price of the property, and is split between the seller's agent and the buyer's agent. The amount of commission is negotiable between the seller and their agent, and is often listed in the terms of the selling contract.
What Are the Average Commission Fees?
Real estate commission fees vary from one area to another, but typically fall between 3-7%. Typically, the higher the sale price of a home the less commission is charged as a percentage. For example, a home that sells for $300,000 may have a 5% commission fee, while a home that sells for $600,000 may have a reduced fee of 4%.
Who Pays the Commission Fee?
In most cases, the seller is responsible for the real estate commission fees. The commission is typically deducted from the proceeds of the home sale. However, in some cases, the buyer may be responsible for paying part or all of the commission. This is typically determined by the terms of the purchase agreement.
What Other Costs Are Involved with Selling Real Estate?
In addition to the real estate commission fees, there are other costs associated with selling a home. These may include closing costs, transfer taxes, title insurance costs, and other fees associated with the sale process. Depending on the state and locality of the home being sold, these costs can be significant and should be factored into any sale.
The Bottom Line
Real estate commission is an important factor to consider when selling a home. Knowing the average rates in your area, and being aware of any other associated costs, can help you make a more informed decision when you list your home for sale.