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Real Estate Agent Fees 101: Everything You Need to Know


In 2019 alone, 63% of all homeowners who decided to sell their homes without an agent did it to avoid paying the real estate agent fees. While the thought of selling your home on your own and saving that commission may sound appealing, most FSBO homes sell for far less than those sold by agents.

This means that the amount you get when you hire an agent will be enough to cover the agent commission and leave you with a significant amount.

How Much Do Real Estate Agents Charge?

Now, the question is, how much of real estate agent fees will you have to part with? You may have already heard that the real estate agent commission fee takes the biggest slice of the pie. Typically, the real estate agent fees have always averaged at 5% to 6%, but the 2020 Covid 19 had a negative impact on these numbers.

The thing is, real estate agents, don’t charge by the hour or weekly fees but instead choose to get a commission of the final purchase price of the property. For instance, if you sell your property for $200,000, the real estate agent will get a 6% fee of $12,000.

While this may seem like too much, real estate agents don’t get the whole bulk of it. You also have to consider the fact that the agent won’t make any money until they find a buyer for you and close the deal. This could mean weeks, if not months of work without any payments.

Do Both Agents Get 6% Each?

As a seller, you already have your real estate agent, and the buyer may have their own agent as well. In this case, both agents will have to split the commission between them 50-50. Now, even split between the two, 3% is still a significant amount, right?

Technically, yes. However, they don’t keep the whole amount to themselves. They may use a real estate broker, pay marketing expenses, photographers, and other overhead expenses.

Besides, the price is well worth it depending on the amount of work they do, which starts with the comparative market analysis they conduct for your home even before you hire them.

Who Pays the Real Estate Agent Fees?

In general, the sellers pay the real estate agent fees. It’s in this instance where the buyer’s agent and the listing agent split the commission. The experienced agent between the two may get more as they sell more homes or expensive properties.

What If You Have a Dual Agent?

Dual agency is when one agent represents both the buyer and the seller. In this case, the dual agent gets the full commission without having to split it with another agent.

However, this can be quite a tricky maneuver for the agent as they have to work for both parties, which may bring about a conflict of interest. Some states don’t even allow the dual agency, and frankly, most agents don’t practice it.

Are Real Estate Agent Fees Negotiable?

Even though 6% is the norm in most states, it varies on location and on real estate agents. Beyond that, there are no laws governing real estate agent fees, which means you can negotiate with your real estate agent and come to an agreement. Still, understand that real estate agents are under no obligation to agree to this.

Beyond that, you may also expect that they may not offer you their full services if they agree to a lower commission. You see, the marketing expenses come from the agent commission, so if you cut it short, it may translate to lower advertising.

While it’s okay to consider the amount of real estate agent fees you’ll part with, it’s of greater importance to consider the value you’ll be getting. Some people consider the fee and decide to sell house without agent and save the amount, but end up frustrated by all the marketing required and the low price offers.

What If You Don’t Buy the Home?

If you’re a buyer looking for a home through a real estate agent, would you have to pay the real estate agent fees if you don’t purchase the house? No, they won’t be paid for their time. If you’re using a dual agent, you also won’t have to pay because eventually, the seller of that house will pay the commission.

However, if, by any chance, you feel the need to change your agent, it may be complicated because you’ll need to break your buyer’s agency agreement. It’s advisable to understand under what circumstances you can cancel that contract before signing it and hiring the real estate agent.

Are the Real Estate Agent Fees Included in the Closing Costs?

Technically, the real estate agent fees are not included in the closing costs. Closing costs are completely separate from the agent commission fees. They include things like lender fees, appraisal, title insurance, taxes, and other expenses incurred during closing.

In most cases, closing costs amount to 2% to 5% of the total purchase price.

Do You Need to Pay Agent Fees If You Don’t Sell?

Real estate agents only get paid when they close the deal and sell the house. This means that if you don’t sell, you won’t have to pay the commission. However, it’s imperative for you to read the fine print of the contract.

In general, the contract will stipulate a given amount of time where the agent will be committed to selling your house. If the contract expired before they sell the house, you won’t have to pay them unless the contract stipulates otherwise.

Still, understand that there are several exceptions to this rule. For instance, if the real estate agent found a prospective buyer before the contract expires, you may still be required to pay their commission.

If you back out of the sale after accepting an offer, you’ll be required to pay both real estate agents their commission. If the buyer backs out of the deal, you might have to pay the commission. However, in this case, you can sue the buyer for breach of contract.

Understanding Real Estate Agent Fees

There you have it! We hope this post has shed some light on real estate agent fees and how much you may have to part with when selling your home. However, when all is said and done, you still need to discuss everything with your real estate agent and come to an agreement about all these processes.

Be vigilant about the contracts you sign and take your time to write a bio and find a professional, trustworthy, and reputable real estate agent. For more informative and insightful posts about home and real estate, please check out our blog section today!

Andrew Brown
Andrew Brown, an MBA graduate from Columbia University, New York, has been a fixture in the business world for over 20 years. His expertise in strategic management has been a cornerstone of our content since he joined in 2016. Previously, Andrew held executive roles in several Fortune 500 companies, where he led transformative business initiatives. His years of experience in corporate leadership and consulting bring a wealth of knowledge to our readers. Outside of work, he mentors young entrepreneurs and enjoys playing chess.

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