Commission Calculator National 2021CASAPLORERTrusted & Transparent
When real estate agents help their clients buy or sell their homes, they receive a commission for their services. The commission is a percentage of the house’s price and typically ranges from 5% to 6%. However, depending on where you live, the typical commission can be a bit higher or lower. This commission is paid by the seller and it is split by the seller agent between the buyer agent and themselves. Use the calculator below to find out how much real estate agents will receive and how much will be left for you, as a seller, on closing.
Real Estate Commission Calculator for All the States
What You Should Know About
- Real estate agents receive a commission for their services when they assist a client to sell or buy a house
- The commission paid to the real estate agents in the U.S. is typically 5%-6% of the house’s sale price
- The seller is the one who pays for both the commission of the seller agent and the buyer agent
- The total commission is split between the buyer agent, the seller agent, and their respective brokerages
- Different U.S. states may have different commissions for real estate agent
- Real estate agents generally share some of the commission they earn with the brokerage they work for, which is usually in a ratio of 60:40
How is the Commission Split?
If you are trying to sell a house and a real estate agent is helping you do so, you will have to pay a percentage of the house’s sale price as a commission to the agent. As a seller, you also have to pay the commission for the real estate agent that is helping the future buyer of your home to purchase a house. The total commission comes up to around 5% or 6% of the house’s price. However, according to NAR, the U.S. national average commission rate for 2020 was 5.656%.
This commission is then split between the buyer agent and the seller agent. The most typical commission split between these two sides is 50 - 50. However, there are times where the buyer agent can receive a bigger cut. This is because buyer agents have to put in more work to find the best house for their clients. It may be weeks, or months until the buyer is convinced of an option. On other occasions, the seller agent may end up negotiating a bigger cut for themselves.
The real estate agents usually do not keep all of the commission they earn themselves. Since agents can only work under brokerages, the brokerage receives a cut of the commission that the agents make. This cut is usually 40% of the agent’s commission. However, it differs among brokerages and states. Moreover, depending on the performance and experience the real estate agent offers, the cut can be bigger or smaller.
Example of Commission Split
Imagine that you want to sell your home and a real estate agent helps you sell it for $350,000. The commission is split evenly between the agents. The broker of the buyer agent receives 40% of the commission earned, while the broker of the seller agent is entitled to receive 50% of the commission earned. How much will each party make on this transaction?
Total Commission = Commission Rate * House Sale Price
= 6% * $350,000
Seller Agent receives = [$21,000 * 50%] * 50% = $5,250
Buyer Agent receives = [$21,000 * 50%] * 60% = $6,300
Broker of Seller Agent receives = [$21,000 * 50%] * 50% = $5,250
Broker of Buyer Agent receives = [$21,000 * 50%] * 40% = $4,200
How Can You Reduce The Commission Paid When You Sell a Home?
The commission paid to the real estate agents can take a lot from the amount you receive when you sell a house. Therefore, it is a good idea to be aware of the options available to you if you want to minimize the amount that you pay for the agents’ commission.
Discount real estate agents
Some real estate agents offer lower commission rates for fewer services. A full-service agent can handle multiple tasks such as preparing the house to host open houses, taking professional photography to advertise the house, and conducting targeted marketing. A discount agent on the other hand has fewer responsibilities. Their services are limited and often do not include preparation of the house, advanced marketing, etc. Some discount real estate agents lower the commission rate they ask for by offering a very small portion or nothing to the buyer agent.
Keep in mind that when discount listing agents advertise that they ask for only 1% commission, they are usually not taking into account the commission you will have to pay to the buyer agent. Therefore, if we add the 2.5%-3% commission that the buyer agent might ask for, the whole commission comes up to 3.5%-4% of the sale price of the house.
Some real estate agents may charge a flat fee for their services. This means that instead of paying a percentage of the home price, the seller only pays a predetermined fee. This fee can range from $3,500 - $5,000. While a flat fee gives you an exact amount of how much you will pay the real estate agent, it also comes with a downside. If the real estate agent is getting the agreed-upon amount no matter how much they sell the house for, they might not be motivated to sell the house at the highest price possible. They are getting the flat fee regardless of the price the house is sold for.
Rebate from buyer agent
In order to attract more clients, buyer real estate agents sometimes offer a buyer cashback or rebate option. This means that once the buyer real estate agent is paid by the seller, they will give a percentage of the amount they receive back to the buyer of the house.
While we said that the real estate agents are both paid by the seller, typically the seller incorporates some of this commission into the sale price of the house. Therefore, technically the seller and buyer of the house both contribute to paying the real estate agents. If the buyer agent offers a rebate, then the buyer of the house will be refunded for some of the amount.
FSBO stands for For-Sale By Owner. Sellers who do not wish to hire a real estate agent to help them in the process of selling their house can put a listing on their own on MLS networks. Usually, they will need to contact a brokerage and pay a flat fee regardless if the house is sold or not. If you choose to go with this option, keep in mind that you will be responsible for everything, from setting the price of the house to advertising the place. This means that you might miss out on a higher price a real estate could have negotiated for. According to the National Association of Realtors, FSBO properties in 2020 sold at a median price of $217,900, while the median price for properties sold with the assistance of an agent was $242,300.
Some real estate agents work with buyers and sellers. Therefore, on some occasions, they can represent both sides in the transaction of a house’s sale. When this happens, the agent is more likely to offer a discounted commission since they won’t be splitting the commission with another agent. However, this practice is illegal in 7 states of the U.S. as it is considered a conflict of interest for one agent to protect the interests of a buyer and seller. The seller will want to sell the house at the highest price possible, while the buyer will want to secure the lowest.
Commission Rates for Different U.S. States
While most of the commission rates in the U.S. range from 5% to 6%, it is useful to know where the commission rates range for each state and what the state average commission rate means for the majority of the rates offered.
Commission Rates - New York State
The state of New York does not have a set real estate commission that real estate agents are legally required to charge. Therefore, the commission is instead decided by market conditions. The average commission rate in the state of New York is 6% and it is split equally between the seller side and the buyer side.
As a seller, you are allowed to negotiate a lower commission rate. The real estate agent can offer a range of services, from hosting open houses to marketing the place online. Therefore based on the services you require your real estate agent to take care of and the ones that you can handle yourself, you can negotiate a commission rate different from the standard of 6%. Also, when we are dealing with high property values, the seller can try to limit the commission to 4% to 5%. However, if you are a buyer, you don’t have any say on the commission rate because you do not pay any agents directly.
The cut of the brokerage for a real estate agent in New York typically ranges from 40% to 60%. The specific cut is determined by the experience and performance of the real estate agent. Some real estate brokerages have a cap on the commission they charge the agent. Once the agent reaches the cap for the year, they get to keep all or more of the commission earned in a transaction.
Lastly, in the state of New York, dual agency is legal. Dual agency happens on the occasion when one real estate agent handles the whole transaction and therefore represents the buyer’s side and the seller’s side. It is obvious that dual agency presents a conflict of interest.
Commission Rates - California
The real estate market in California is one of the most active in the country. With properties in some of the highest price ranges, the real estate commission in California ranges from 4% to 7% for properties less than $1 Million in value and from 4% to 6% for higher-valued properties. The overall standard commission is 6%.
Depending on the conditions of the real estate market, the average commission can change. For example, when we are dealing with a sellers’ market, there are more people looking to purchase a house than houses available for sale. This means that there are higher home values and that less effort is needed to sell homes, so real estate agents can afford to charge a lower commission rate.
On the other hand, when there is a buyers’ market, there are more people looking to sell properties than people looking to purchase a property. This drives house prices down which has a negative effect on the amount of money the real estate agent ends up making from a transaction. Therefore, to offset the effect of lower house prices and to compensate for more effort needed to sell homes or find buyers, real estate agents increase the commission they charge.
In California, dual agency is permitted if both parties, the buyer and the seller, are aware of the dual agency and consent to it.
Commission Rates - Florida
The real estate commission that agents charge in Florida generally ranges from 5% to 7%. The average commission in Florida for 2020 was approximately 5.5%, close to the national average. This average means that there are fewer agents who charge on the upper end of the commission rate range.
The commission split between agents and brokerages in Florida is usually 50-50. This means that if the commission of a transaction earned by the agent is 3%, the broker gets 1.5% and the agent 1.5%. However, different brokerages can take more or less than half, ranging from 30% to 60% of the whole commission.
In Florida, dual agency is illegal. Therefore, one agent cannot represent both the seller’s side and the buyer’s side.
Commission Rates - Texas
Sellers in Texas usually have to pay 5% to 6% of the home’s sale price as a commission to the real estate agents. The seller’s agent typically splits this commission with the buyer agent equally. Data collected by Clever show that the real estate commission in Texas for 2021 is 5.65%, slightly higher than the national average of 5.5% that they report. This rate can be higher or lower depending on where in Texas you are located. Moreover, dual agency is not permitted in Texas and there are legal consequences to one agent representing both parties in a real estate transaction.
Average Commission Rates by State
While for most states the commission rate charged by real estate agents ranges from 5% to 6%, the average commission rates of the state can help you have a clearer idea on which end commission rates lean on. For example, Vermont has the highest commission rate average from all the states at 6%. This means that there are very few agents that charge 5%. On the other hand, New Hampshire has a real estate commission rate average of 4.83%, the lowest state average.
The table below shows the average commission rates by state, the average split between the seller agent and the buyer agent, as well as the average home price in that state. This data can help you understand how much you can expect to pay a real estate agent in different states and how much each agent will typically receive.
|State||Average Rate||Seller Agent||Buyer Agent||Average Home Price|
|District of Columbia||5.25%||52.4%||47.6%||$692,178|
Source: Clever and Zillow