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REALTOR® Fees: What Are They And Who Pays For Them?

Sidney Richardson5-Minute read
June 08, 2022

When buying or selling a home, you’ll encounter various costs involved with closing, including REALTOR® fees. If you hire a real estate agent or REALTOR® to help you buy or sell a house, you’ll have to pay the real estate agent a commission, so it’s important to know how much you might be paying and why.

Let’s explore a few key details you’ll need to know about REALTOR® fees – including more on what they are, who pays them and how much they cost.

What Are REALTOR® Fees?

A REALTOR® fee, also known as a real estate commission, is the price you pay to work with a real estate agent or REALTOR® to buy or sell a house. These fees cover the cost of many services that your real estate agent or REALTOR® may provide you, from marketing your home to walking you through various other processes involved with selling or buying a house.

In some markets, real estate agents and REALTORS® (real estate professionals who are members of the National Association of REALTORS®) work for a flat fee. Typically, though, they work on commission, which means you generally won’t have to pay your agent unless they successfully sell your home or help you purchase a new one.

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Who Pays REALTOR® Fees: The Home Buyer Or Seller?

The home seller usually pays REALTOR® fees by subtracting the agent’s commission costs from the total sale price of the real estate transaction. The fee then goes to the seller’s agent – also known as the listing agent – who splits the commission with the buyer’s agent.

How Much Are REALTOR® Fees?

Rather than an upfront fee, real estate commission is usually calculated as a percentage of your home’s final sale price. This percentage varies, but 6% is a common rate.

While this might seem like a lot – especially if your home is worth a lot of money – think of it as an investment opportunity. You’re investing in a real estate agent to assure you get the best price possible when buying or selling your house. The guidance of a professional can turn the negotiations in your favor, and it’s often more than worth the cost.

Average Cost Of REALTOR® Fees

The commission rate can vary from one transaction to another. Estimating what 6% of your home’s sale price will be can give you a good idea of how much you might pay in real estate commission.

For example, if a house sells for $200,000, you can expect to cut around $12,000 out of the purchase price for the REALTOR® fee. If you’re the homeowner, you should take this into consideration when determining the listing price of your home.

Other Associated REALTOR® Fees

Remember that a lot of fees are involved with closing – and the fee paid to real estate agents will not cover all these costs. The REALTOR® fee typically only covers the work your real estate agent does to market your home, negotiate on your behalf and take care of the details throughout the deal.

Depending on your situation and what costs you may have incurred along the way, expect to pay your real estate agent extra for various items, including:

  • Home inspection and appraisal
  • Photography and videography when listing a home
  • Virtual or in-person staging
  • Arranging, advertising for and hosting open houses
  • Scheduling and conducting showings

Negotiating REALTOR® Fees

You can sometimes negotiate the cost of real estate commission fees, though you should be aware that you get what you pay for. Negotiating for a lower REALTOR® fee could mean less money that would go toward marketing your home to buyers and other tasks your real estate agent might take on for you.

Your agent may be receptive to lowering their compensation fees if your home sells for considerably lower than the listing price. In the case of dual agency – when one agent represents both the buyer and seller – your REALTOR® may be willing to reduce their fee rate because they’re not splitting the commission with another agent. Some states don’t allow dual agency representation due to the conflict of interest.

Are REALTOR® Fees Included In Closing Costs?

While real estate commission is paid when a home closes, it isn’t technically included in closing costs. Closing costs consist of other expenses that are usually related to your loan and not your real estate agent or REALTOR®'s work. Closing costs typically include expenses like legal and loan processing fees. Costs will vary, but on average, they were $6,837 in the U.S. in 2021 (taxes included), according to data gathered by ClosingCorp.

Here are a few items you can expect to pay for at closing besides your REALTOR® fee:

What To Look For When It Comes To A REALTOR® And Their Fees

You’ll have a lot to consider during the process of buying or selling a home, so it can be very advantageous for you to have a real estate expert with lots of experience on your side. No one expects you to tackle buying or selling all on your own – it’s OK to ask questions, and real estate agents and REALTORS® can usually answer them.

When looking for the right real estate agent or REALTOR® to work with, it’s a good idea to shop around a bit. Buying or selling a home is one of the biggest financial commitments you can make, so it’s important to work with someone you trust.

When looking for a real estate agent, keep the following in mind:

  • Be transparent and let them know exactly what you’re looking for. Plenty of agents are out there, so chances are you’ll be able to find one who can meet your buying or selling needs.
  • Ask any questions you may have. It’s always better to be informed than confused.
  • Be upfront about not yet knowing what real estate agent or REALTOR® you’ll choose.
  • Try to negotiate the fee with the real estate agent, but also expect only so much wiggle room since your real estate commission fee will depend largely on the price of your home.

The Bottom Line

Essentially, REALTOR® fees are the investment you make if you decide to work with a real estate agent or REALTOR® to get the best home sale price possible. Whether you’re buying or selling, it’s important to take into account how much you might pay in real estate commission fees and closing costs, so you won’t encounter any surprises when it’s time to close.

Whenever you’re ready to take the next step in home buying or selling, it’s important to choose a real estate agent you trust. Visit Rocket HomesSM today to get matched with one of our Verified Partner Agents

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Sidney Richardson

Sidney Richardson is a professional writer for Rocket Companies in Detroit, Michigan who specializes in real estate, homeownership and personal finance content. She holds a bachelor's degree in journalism with a minor in advertising from Oakland University.