Glossaire
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Real estate commission plays a pivotal role in the buying and selling process. For sellers, it means having a professional advocate who can market their property effectively, negotiate offers, and handle paperwork.
Most realtors charge a commission rate of 5% to 6% of the final sale price. However, this percentage can be higher or lower depending on various factors, including the local market norms and the agent's services.
Real estate commission is the fee paid to a real estate agent or broker for facilitating a real estate transaction. This fee is typically a percentage of the final sale price of the property and is paid upon the successful completion of the sale.
The new real estate commission law is reshaping how commissions are handled, particularly in the U.S. underwent significant changes following the National Association of Realtors (NAR) settlement in August 2024. Here's an overview of the new rules:
Despite these changes aiming to increase transparency and competition, the average real estate commission has seen only a slight decrease.
Reports indicate that the average commission dropped from 5.64% to 4.96% after the rule changes. Buyer's agents earned an average commission of 2.40% in the first quarter of 2025.
The average real estate commission in the U.S. typically ranges from 5% to 6% of the home’s sale price. This amount is usually split between the buyer's and seller's agents. However, with evolving practices and competitive markets, these rates are becoming more flexible.
The different types of real estate commission arrangements are:
Several factors influence the negotiation of real estate sales commission between agents and clients:
For homeowners, real estate sales commissions are not directly tax deductible. However, they can reduce capital gains by being factored into the cost basis of the home. For real estate investors or businesses, commissions may be deductible as selling expenses—consult a tax advisor for clarity.
The seller of the property typically pays the real estate commission. It is deducted from the sale proceeds before the seller receives their net proceeds. However, in some cases, such as for-sale-by-owner (FSBO) transactions, the seller may negotiate directly with the buyer's agent regarding the commission.
The real estate agent sales commission depends on local market norms and property value but generally falls between 2.5% and 3% per agent. This is subject to negotiation and may vary based on experience, service offerings, and regional standards.
To negotiate a real estate commission, you need to:
To negotiate the real estate commission, you must pick up the following strategies:
Real estate commission works on a contingency basis, meaning agents only get paid when a transaction successfully closes. Once the sale is finalized, the agreed-upon commission percentage is calculated based on the final sale price, and the amount is divided between the buyer's agent and the seller's agent according to their brokerage agreements.
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