Real Estate Commission Calculator

Is Real Estate Agent Commission Split With Broker?

If you are trying to sell a house and a real estate agent is helping you, 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 to the real estate agent that is helping the future buyer of your home to purchase a house. The total commission is around 5% or 6% of the house’s price. The U.S. national average commission rate is around 5.65%.

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 when the buyer agent can receive a bigger cut. This is because buyer agents must work more 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 negotiate a bigger cut for themselves.

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.

Negotiating Real Estate Commission

The commission paid to the real estate agents can take a lot from the amount you receive when you sell a house. It may be a good idea to look into the options available to negotiate and reduce the real estate 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 advertising 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.

Flat Fee Agents

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's Agent

To attract more clients, buyer real estate agents sometimes offer a buyer cashback or rebate option. This means that once the buyer's real estate agent is paid by the seller, they will give a percentage of the amount they receive back to the house buyer.

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, the house buyer will be refunded for some of the amounts.

FSBO

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. During 2021, FSBO homes had a median price of $225,000, while the median price for properties sold with the assistance of an agent was $330,000.

Dual Agents

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.

New York Real Estate Commission

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 various 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 you can handle yourself, you can negotiate a commission rate different from the standard of 6%. Also, when dealing with high property values, the seller can limit the commission to 4% to 5%. However, if you are a buyer, you don’t have any say in 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.

California Real Estate Commission

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%.

In California, dual agency is permitted if both parties, the buyer and the seller, are aware of the dual agency and consent to it.

Florida Real Estate Commission

The real estate commission 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 fewer agents 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 commission.

In Florida, dual agency is illegal. Therefore, one agent cannot represent both the seller’s side and the buyer’s side.

Texas Real Estate Commission

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 for 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 of which end commission rates lean on. For example, Vermont has the highest commission rate average of 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.