How Much Is Real Estate Agent Commission

Who Pays a Real Estate Agent’s Commission in Texas?

On occasion in some real estate transactions, one agent will work for both the buyer and the seller in Texas. Other times, the homeowner may handle the sale of their house – called “for sale by owner“.

However, most of the time, sellers and buyers both have their own real estate agents in Texas. Each agent is tasked with looking out for their respective client’s best interests while also working together toward the common goal of finalizing the sale of the home.

You already know that a seller’s agent charges his or her client a commission once the home is sold.

However, many homebuyers in Texas hear this and assume that means they don’t have to pay their agent. Many agents even market themselves by explaining to potential clients that their services are free.

As it turns out, that’s not completely true.

Instead, it’s probably more accurate to say that both the buyer and the seller end up paying the real estate agents, albeit in a fairly roundabout way.

Put yourself in the shoes of the seller’s agent for a minute.

If you knew you had to split your commission with someone else before you had to then pass along another large percentage to your broker, what would you do?

Like most other agents, you’d factor that cost into your total price.

So, while technically the seller pays the real estate agent’s commission in Texas, the buyer is contributing their fair share, as well. It’s just baked into the price they’re paying for the home.

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How Much Do Real Estate Agents Make if the House Doesnt Sell?

If the house doesn’t sell, the realtor isn’t usually paid. This can depend on your contract between the real estate agent and their contract with their broker. 

In most cases, the seller would only need to pay cancellation fees for the listing. On the other hand, you may need to pay the brokerage a commission.  

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Who pays real estate commission fees?

Typically commission fees are paid in full by the seller in the transaction. As explained by top real estate agent Rachel Moussa of Flower Mound, Texas, in most places, “the standard is for sellers to pay both the listing agent and the buyer’s agent’s commission. The listing agent puts on the MLS what percentage the seller has agreed to pay cooperating brokers.”

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Is Hiring an Agent Worth the Cost?

Okay, now let’s answer the question you’ve been waiting for: Are real estate agents worth the cost? Well, as we covered earlier, sellers cover the commission for both agents. So, buyers have nothing to lose! But how about you sellers out there? If you’re considering not using an agent or going the “For Sale by Owner” (FSBO) route, first take a look at the stats. The latest data shows the typical FSBO home sold for $217,000 compared to $242,300 when sold by an agent.2 That’s a $25,300 difference!

If you’re considering not using an agent or going the “For Sale by Owner” (FSBO) route, first take a look at the stats. The latest data shows the typical FSBO home sold for $217,000 compared to $242,300 when sold by an agent.2

Sure, around $16,000 of that would go toward the agent commissions. But that’s still almost $50,000 more in your pocket than you would have gained by selling solo! And, even if that difference ($65,000) is only half right in your particular market, you’d still potentially come out ahead by $18,500 by using an agent.

Realtors Do A Lot For The Money

In reality, though, real estate agents tend to makWhen you first look at an agent’s fee, it can present sticker shock. After all, it is your house you are selling, and you want to get as much from that sale as possible.

In reality, though, real estate agents tend to make less than you think after all the splits and agent fees are calculated.

The money you pay for an excellent real estate agent is an investment. The agent is motivated to sell your home for a great price because that means more income. Many people wonder what a real estate agent does all day. It is a lot more than you think.

Here is a quick summary of what a real estate agent does to earn their real estate commission.

How commissions have changed over the years

Since the early 1990s, Realtor commissions have seen a fairly steady decline. In 2021, the average commission was 5.5 percent — down from more than 6 percent in 1991.

This isn’t to say the total amount Realtors earned decreased, however. In strong selling markets, home prices are high and sellers receive multiple offers. This allows more room for negotiation on the commission, so Realtors may accept a lower commission to earn a higher amount overall.

As the market slows down, Realtor commissions may rise again and become less negotiable. Even so, a seller with a  high-priced listing may still be able to negotiate a lower commission more effectively.

Are You Supposed to Pay Your Real Estate Agent?

Consumers don't pay real estate agents directly. Brokers receive the commission, which is taken from the total proceeds of the sale. This amount is then split between the broker and the agent.

When Are Real Estate Fees Paid?

Real estate commissions are deducted from the sale proceeds at closing and paid directly to the brokers, who split them with the agents involved.

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When Does Real Estate Commission Get Paid?

Real Estate commissions are paid at the closing. The fees come out of the seller’s proceeds and are shown on the HUD Settlement Statement.

The commission check will be given to the listing agent at the closing table. The listing brokerage will pay any balance of the commission owed to the co-broke if there is one.

Who pays realtor commission in Oklahoma?

In Oklahoma, the home seller typically pays the realtor fees for all agents involved in the sale. This is the standard nationwide.

» MORE: Who pays realtor fees?

Realtor fees are baked into the price of the home and gets paid out of the proceeds when it sells. So home sellers don’t have to pay real estate commission up front; the agents get their cut when the deal closes. Here’s how that breaks down for a typical sale in Oklahoma:

CategoryAmountPercentage
Sale price$176,300NA
Realtor fees$10,4005.89%
Seller closing costs$1,800-5,3001-3%
Mortgage payoff$20,89012%
Seller net$139,700-143,20079-81%

Alternatives to using a real estate agent or Realtor

Many sellers think real estate agents’ commissions as too high and try to avoid them.There are three main ways of selling a home without such high costs:

  • For sale by owner — At its most basic, this might involve putting up a yard sign, printing and distributing some flyers, and telling everyone you know your home’s for sale. It’s cheap and sometimes works, especially in hot real estate markets. But the risk of undervaluing or overvaluing your home is high
  • Flat-fee MLS listing by owner — The MLS is the Multiple Listing Service. It’s the online resource that real estate agents use to let other agents and buyers know that a home is available. Owners can add their listings (which may appear on Realtor.com and Zillow, too) by paying a flat fee — or a smaller flat fee with a success charge on sale
  • Trimmed-down services — Some agents offer lower commissions for a more basic service. You might get a menu — from MLS alone through increasingly complete levels of service — from which you choose what you want and how much you’re willing to pay

Are these better ways to sell? That will depend on many factors, including:

  • How strong your local property market is
  • How good you are at appraising your own home’s value
  • How much effort you’re prepared to put into finding a buyer
  • How confident you are in your ability to shepherd your sale through to closing

If you’re sure you can handle all those as well as an agent, feel free to sell without enlisting one.

But for many people, working with a real estate agent, broker, or Realtor gives them peace of mind they’re getting the best price on their home from the most qualified buyer.

What do real estate agents and Realtors do?

Whether acting on behalf of sellers or buyers, the duty of a real estate professional is to maximize the benefits his or her client gets from the home transaction.

Agents do this by having:

  • An intimate knowledge of the local housing market, including expertise in appraisal
  • Negotiating skills to secure the best or optimum price for the client
  • Local contacts in the marketplace who can help with the rapid acquisition or sale of a home
  • A close knowledge of the legal and mortgage processes involved
  • Troubleshooting skills that keep a transaction on track when issues arise
  • Interpersonal skills that allow clients to feel comfortable and in control throughout the process

If you pick a good one, your agent can be highly valuable.

Ideally, your agent will have several years of experience in your local real estate market. But new agents can offer a lot of skills and insights, too.

What is a fair commission for a real estate agent?

Commissions vary by market conditions and geographic regions, so there isn't a lot of government data on the issue. The government's last thorough report on commission rates (back in 2009) shows an average broker commission of 5% or 6%, but each brokerage will decide how much of that to share with agents. The government keeps better data on overall real estate agent pay, and in 2020, the median real estate sales agent salary was roughly $49,000.

How to avoid paying Realtor fees

In 2019, just 11 percent of home sales were sold by owners without the help of an agent, according to the National Association of Realtors (NAR). In addition, NAR says, for-sale-by-owner homes (FSBOs) typically sell for less money than homes sold by Realtors. In many instances, FSBO sellers already know the buyers who end up purchasing their homes. Buying without a Realtor is also doable, but the jury is out about whether it’s a wise move — especially in this market.

When you shop around for Realtors, ask them from the outset what their commission is and compare the terms of each person you talk to. If you think the fee is too high, talk to them about lowering it.

“In certain situations where there’s a competitive environment for a prime or trophy listing, Realtors sometimes will negotiate the commission upfront,” Duffy says. “For example, if I’m listing a $4 million home at 6 percent, that’s a lot of money. In a situation like that there is greater flexibility to negotiate the commission — if you get $100,000 or $80,000 instead of $120,000, it’s still a good payday.” If the transaction is being handled on both sides by agents from the same brokerage, you might have more leverage as well.

Who Pays the Real Estate Agent?

It can be argued that the buyer always pays the commission. Why? Because it's typically part of the sales price. If you are a buyer, you can combine closing costs like commissions into your mortgage.

Here are ways commissions are typically structured.

The Seller Pays the Buyer's Commission

Under a buyer's broker arrangement, the named brokerage and agent represent the buyer. The fee paid to the broker is most commonly paid by the seller.

Some buyer broker agreements contain clauses that will compensate the brokerage for the fee it is due less the amount paid by the seller. For example, a cooperating listing might offer to pay a broker a smaller portion of the sales price, but the brokerage charges fees that are a higher percentage. The difference could be paid by the buyer if the broker chooses not to waive the difference.

Buyer Pays the Commission Directly

The seller is not obligated under most listing agreements to compensate the listing broker for more than the listing side's portion of the commission. Often, sales prices are reduced to reflect the amount the buyer is paying.

It is considered insulting to call an agent to list your home and immediately ask if the agent will discount their commission.

How is commission determined and who pays it?

The home seller pays the real estate agent’s commission, but the fee is subtracted from the proceeds of the sale (which, of course, the buyer supplies the money for). Most sellers can account for that fee in the price of their home. 

As mentioned earlier, how much of a commission percentage real estate agents make depends on the terms spelled out in their contract with the seller. While most agents are paid around 6% commission, this amount does vary. This contract between the seller and the listing agent is what ensures the agent gets paid once the property sells. 

Sellers may feel frustrated when they have to hand over a chunk of their profit after they sell their home, but there’s a lot of work and expense that goes into selling or buying a home. Both listing agents and their brokers spend time and money to advertise a home and to prepare it for sale. If they don’t sell the home, the seller typically doesn’t reimburse these costs. The agent and their brokerage both take on risk and upfront expenses. They also make it easier and less stressful to sell or buy a home, so it’s important not to underestimate the value they bring. 

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What Does a Real Estate Commission Cover?

A real estate commission covers all the work that goes into buying and selling property. Trust us, a great agent does a lot to help you buy or sell a house. A seller’s agent shows you how to stage your home for buyers and—since they know what similar homes in your area are selling for—they help you price it right. They also put your home in front of a ton of buyers using a multiple listing service (MLS), social media and ads. This helps you get your home sold quickly and for top dollar.

Meanwhile, a buyer’s agent studies home listings that match your needs and price range. They help you arrange a home inspectionand oversee any necessary repairs or contract adjustments so you don’t get a bad deal. They do everything they can to help you find and purchase a dream home that’s within your budget.

Beyond those differences, both types of agents give you the confidence that a real estate professional is on your side, and they offer many similar services. For example, both agents:

  • Meet with you in person to understand your needs and answer any questions you have

  • Educate you on current market conditions

  • Give you access to an MLS—which offers more options to buyers and visibility to sellers

  • Refer other needed pros (mortgage lenders, photographers, inspectors, attorneys)

  • Schedule home showings

  • Negotiate the best price for you

  • Represent you throughout the sale and act in your best interest

  • Help you through the mountain of paperwork

A good agent tackles these tasks day in and day out. Their experience helps you avoid rookie mistakes. Sure, you can try to handle all these things by yourself. But, when you’re sitting in the hot seat of a real estate transaction, you’ll quickly realize that agents are worth their weight in gold!

What do these fees cover?

While many of today’s buyers often prefer to house hunt on their own, others decide to work with an agent to find a home. For those who choose to work with a traditional buying agent, they’ll find that their agents spend most of their time pulling home listings, driving to tour homes and doing pricing analysis to help them make strong offers.

Once the buyer’s offer is accepted and enters escrow, the agent will spend their time helping coordinate inspections and appraisals, negotiating repairs costs, handling all of the closing paperwork and some light accounting (the agent is responsible for maintaining the financial account used to pay inspectors and appraisers).

Now you know how real estate agent commissions work!

Sellers pay real estate commissions in exchange for an agent’s expertise and services throughout the sale process. If you’re worried about the cost of the commission, consider that targeted upgrades, stellar marketing, and savvy negotiations can help you maximize your sale price. With an agent to guide you, you also avoid the stress of navigating this complex process without professional oversight.

The key is finding a quality agent who provides the highest amount of value for their commission fee. In fact, our transaction data shows that the top 5% of agents in the U.S. sell homes for as much as 10% more than the average agent.

We’d recommend going through an online agent matching service like HomeLight that can surface top agents with experience tailored to your needs. Whenever you’re ready to get started, HomeLight would be happy to put your commission worries to rest by introducing several agents in your area well worth their salt.

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