When selling your home, of course you want to maximize the profit you walk away with. And one way to do it is to minimize the fees and expenses associated with the sale process — including the commission paid to the agent who lists your property. You may even be considering using a low-commission real estate agent who will represent your property for a lower fee than other agents in your area charge.

Before taking this step however, it’s important to consider why low-fee real estate agents charge less than their peers — and how this decision may impact your overall selling experience.

What is the average real estate agent commission?

General wisdom states that the typical real estate commission is 6 percent of the home’s sale price, split down the middle between the buyer’s agent and seller’s agent, with 3 percent going to each.

However, this number has been on a downward trend in recent years. As of 2022, the national average commission for Realtors is 5.37 percent, according to a study conducted by Clever. The study found that these fees can vary widely based on the state in which you live, from a low of 4.85 percent in Massachusetts to a high of 5.81 percent in Ohio.

Not only does the average commission vary from state to state, but it can also vary from sale to sale and agent to agent. In many instances, clients are able to negotiate the commission rate they pay. Even so, these fees will still take a fairly large bite out of your sale proceeds: On a $300,000 sale, 5.37 percent works out to more than $16,000.

What is a low real estate agent commission?

Low-commission agents’ fees may be considerably lower than what you’d be able to negotiate with a traditional agent — as low as 1 percent, in some cases. Companies offering these types of discounted commissions include Clever, which charges a 1 percent “listing fee” on homes over $350,000, and Redfin, which charges 1 percent when you both buy and sell with them and 1.5 percent when you just sell with them.

Using a flat-fee agent is another option to save money when selling your home. Flat-fee real estate agents and brokers charge a fixed rate for their services that’s established up front, rather than a commission that’s linked to the final sale price of your home. When using a flat-fee agreement, the amount your ultimately home sells for does not impact the fee in any way.

How much can I save using a low-fee real estate agent?

Using a low-commission agent can save you several percentage points on the sale price of the home. Their fee typically ranges 1 to 1.5 percent, compared to the national average of 5.37 percent. Continuing the example of the $300,000 home, the savings is more than $10,000. A 5.37 percent commission on the sale would add up to $16,110; but 1 percent is just $3,000, and 1.5 percent is $4,500.

Remember, however, that even if you use a low-fee agent to represent you, as the seller you will still be responsible for paying the buyer’s agent’s commission.

Risk of using a low-commission real estate agent

While you will pay less out of pocket when working with a low-commission agent, there are also some drawbacks to consider.

  • Less attention: Consider the expression “you get what you pay for” when you opt to work with a low-commission agent. Because they are making less from each sale, they must close a higher volume of deals than traditional agents to earn the same amount of money. This means you are not likely to get the same level of attention or service as you would otherwise.
  • Lower profit: The lack of experience you may encounter with a low-commission agent may impact the price your home ultimately sells for. These agents may not be as savvy when it comes to setting an appropriate asking price or attracting buyers. And if they are not very familiar with your specific local market, you lose a large layer of expertise that may result in a lower sale price than you could have gotten.
  • Dual agency: Dual agency, in which a single agent represents both the buyer and the seller in a transaction, is legal in many states. It is not always a problem, but it does come with potential conflict-of-interest risks. And an agent who is only earning a 1 percent commission may be more tempted to represent as many clients as they can to increase their volume.

Alternatives

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

  • Negotiate commission: In many cases, real estate agents or brokerages may be willing to discount or reduce their fee — particularly when the home in question is likely to go for a high price.
  • iBuyers: These online companies, which give speedy offers to sellers, eliminate real estate agents from the process. However, there are downsides to be aware of. Because iBuyers need to make a profit, they typically purchase homes for less than their market value. And they often charge fees that can add up to nearly the same amount you would have paid in real estate commissions.
  • FSBO: Some home sellers opt to skip an agent and sell on their own — called a FSBO or “for sale by owner” listing. This route will save you having to pay a commission, it’s true, but what you save in money you may pay in the time and effort needed to put into it.

Next steps

When searching for a real estate agent or broker to list your home with, it’s always a good idea to do your research thoroughly. This should include interviewing multiple candidates. Ask each one about their commission, as well as their knowledge of your community and their level of experience — both in general and with houses similar to yours. It can also be a good idea to ask friends and family for referrals to agents that they have had a good experience working with.

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