How To Negotiate Real Estate Commissions

xavierarnau/ Getty Images; Illustration by Austin Courregé/Bankrate

In a real estate transaction, there’s always some level of negotiation. Homebuyers and sellers face haggling not only with each other, but also with the person they’re working with to seal the deal: their real estate agent.

Thanks to a federal lawsuit that was settled in 2024, the way real estate commissions work has changed. If you’re looking to save some money, here’s what you need to know about how commissions work, and how to agree on a rate that both you and your agent can feel good about.

How real estate commission works, and who pays for it

Traditionally, a home’s seller paid the commission fees of both agents involved in the transaction — their own and their buyer’s — out of their sale proceeds. The total amount often came to 5 or 6 percent of the home’s final sale price, split more or less down the middle between each agent. This could amount to a hefty chunk of change: On a $400,000 transaction, which is around the median sale price nationwide, 6 percent amounts to $24,000. (So that’s 3 percent, or $12,000, for each agent.)

While the fees were technically paid by the seller, the amount was often “baked into” the home’s price, so that the cost was actually passed on to the buyer indirectly. However, as a result of a lawsuit involving the National Association of Realtors (NAR) and several major brokerages, new commission rules are now in place and sellers no longer have to cover the cost of the buyer’s agent’s fee (though they still can, as a concession). Depending on the details of your particular deal, each party may be responsible for paying their own agent directly.

Discounts and “for sale by owner”

There may be opportunity to save on the cost of selling your home, or buying a new one. Agents and brokerages can offer a variety of commission structures and incentives, including flat fees rather than percentages.

“There are agents and brokerages that reduce, discount or coupon their services,” says Kevin Van Eck, principal at Maverix Advisory Group. “Each agent, along with their brokerage, can determine where they set commissions based on the value and success created.”

You may even be considering skipping the commission conversation entirely and selling your home yourself. If so, be aware: While an experienced house-flipper might be skilled enough to list a home without an agent, for most homeowners, the for sale by owner route can be more challenging, more costly and more time-consuming in the long run.

Can you negotiate Realtor fees?

Yes, there is often room for bargaining.

Your success at negotiating often depends on an individual agent’s circumstances, says Dave Liniger, chairman and co-founder of RE/MAX Real Estate. “Some agents are dead-set,” he says. “Other agents need the business so bad they’ll readily negotiate.”

As you prepare to list your home for sale, it’s smart to meet with a few listing agents to find the right one for the job. Ask each agent about their commission rate and what exactly you’ll be getting for that price. Consider not only how the agent plans to market your home, but also their skill in pricing it, experience, resources and track record.

“It’s OK for a seller to ask about the commission, but the best time is after talking with the agent and understanding their experience, how they will create exposure for the home and the value they bring to the table,” says Van Eck.

Liniger suggests that sellers invite three to five agents to make their pitches. The competing proposals will let you see how much agents charge, and give you leverage to bargain for a better deal. “You don’t get if you don’t ask,” he says.

You might also consider weighing what you learn from full-service agents against the services of a discount broker. Just keep in mind that the discounter’s offerings may be limited compared to those of a traditional agent.

How to negotiate real estate commissions: 3 pro tips

Once you understand exactly what you’re paying for, you will be in a better position to ask for a discount. Here are a few tips from experts who’ve been there:

• Offer multiple opportunities: If you plan to buy a new home while selling your current one, use that in your favor. An agent who can represent you on both the sale and the subsequent purchase will likely be willing to cut their fee, Liniger says. Similarly, “if [you’re] a real estate investor who is looking to offload several properties, I would definitely talk about the commission,” says Dana Bull, an agent with Compass in the Boston area. Most agents welcome repeat business, she says.
• Help drum up more business: If you don’t have another opportunity of your own to offer, try leveraging your ability recommend the agent to others in your neighborhood or network. This might be especially impactful if you know they are looking to build their business. “I can’t just slash my commission, but I might be willing to give a slight discount if the client offered some sort of other strategy to get more business after the sale,” Bull says.
• Make their job easy: If you’re selling a home in a highly sought-after area, or you have a buyer already interested, or your home is unusually high-priced, a listing agent may not need to do as much to earn their fee. “If an agent is coming in to basically just do some hand-holding, keeping the transaction on schedule and assisting with paperwork,” Bull says, that can be another good reason to propose a slightly lower rate.

Bottom line

Negotiating your agent’s commission down a bit can save you thousands of dollars, but remember that in any negotiation, both parties must be willing to give and take. Are you able to offer anything in return? Might you be better served with a discount or flat-fee agent instead? Depending on your situation, it might even make sense to pay more in exchange for higher-end marketing services or more personalized attention. It’s important to find an agent you can speak with openly about cost, and who you trust to do the best job for your circumstances.