Understanding Your REALTOR’S® Commission

REALTORS® play a critical and helpful role in the home buying and home selling process. When you put your home on the market, you, your REALTOR®, and their broker agree to a price for their services in securing a ready, willing, and able buyer. This commission is a percentage of the final sale price of the home. While the services, resources, and expertise of a knowledgeable, professional REALTOR® are invaluable, it is also important to understand how their payment structure works. Let’s take a closer look real estate commission.

How are REALTOR® Commission Rates Set?

Local real estate markets set their own commission thresholds based on service levels, client preferences, and cost tolerance. The listing broker and their client agree on the commission rate for the sale, as well as the commission rate for the buyer’s brokerage. Commissions tend to fluctuate over time based on market trends.

Can a REALTOR’S® Commission be Negotiated?

It is important to know that the commission rate is always negotiable. There is no set minimum or maximum, and this rate can be renegotiated at any time during the transaction. Typically, a commission rate for both the selling and buying brokers is established at the beginning of an agreement. However, this can be revisited based on different circumstances and scenarios.

Are There Different Commission Models for REALTORS®?

Depending on the specifics of your transaction, along with your wants and needs, there are different service levels and expectations that can be negotiated, along with corresponding compensation structures. From a full-service model that allows for commission rate negotiation to a reduced service/discounted fee approach with more flexible offerings, there is a compensation agreement that can be determined for your needs.

REALTORS® are bound by the NAR’s Code of Ethics which always places a priority on their client’s best interests. This level of service is what separates REALTORS® from other real estate agents. Understanding how their compensation is determined, as well as your options as a seller, can make your next partnership and transaction a smooth one.