Negotiate the Agent's Commission When Selling Your House

Whether the home you own has gone up or down in value, when the time comes to sell, you want to keep your profits as high as possible. After paying off your existing mortgage, the real estate commission you pay to your agent—called the "listing agent"—is probably the next largest selling expense.

Here's what you need to know about how your listing agent is paid and how to get the best deal when you sign your listing agreement.

How Real Estate Commissions Are Determined Is in Flux

In a typical home sale, each party—the buyer and the seller—works with their own real estate agent. Traditionally, before putting the house on the market, the seller and the listing agent agreed upon a commission amount (usually a percentage of the final sales price) that would be shared between the buyer's agent and the listing agent. The listing agent would then advertise the commission offered to the buyer's agent on the local multiple listing service (MLS). Both agents would be paid at closing.

In 2024, though, this traditional way of paying the buyer's agent was essentially banned. The National Association of Realtors (NAR) settled a lawsuit brought by home buyers alleging that Realtors were engaging in anti-competitive practices that resulted in agents being paid artificially inflated commissions. As part of the lawsuit, NAR agreed to prohibit listing agents from advertising commissions on the MLS. NAR also agreed to require Realtors working with buyers to enter into written agreements that specified how they were going to be paid before even showing a property.

There No Longer Is an Assumption That the Buyer's Agent Will Be Paid by the Seller

Although the NAR settlement didn't change how listing agents can be paid, it still affects you as a seller. Because buyers' agents now have to agree with their buyers on compensation before showing properties, there is no longer an automatic assumption that the seller will offer a commission to the buyer's agent.

This means that you and your listing agent will have to strategize more about how—and whether—to offer a commission to an agent who represents the person who ultimately buys your house. This decision will depend on what's best for your situation, as well as state and local laws and practices. It's a good idea to discuss buyer's agent compensation at the same time you're discussing how you will compensate your agent.

How Much Is the Usual Real Estate Commission?

When entering into the listing contract, you, as the seller, have an opportunity to set the amount of compensation your agent (and possibly the buyer's agent) will receive. It's important to note that there are no set rules on how a listing agent must be paid. For example, you can offer your listing agent a flat fee for selling your house, or you could offer to pay them a commission at closing.

Before the NAR settlement (discussed above), most selling agents asked for a commission of around 5%, to be split with the buyer's agent and paid out at closing. That split was sometimes 50-50, but often cut unevenly, so that the buyer's agent will receive around 2.5%.

Even though the NAR settlement has changed the rules of the game, it still seems likely that most listing agents will want to receive a percentage of the sales price at closing as their compensation. It remains to be seen whether the settlement will have the effect of lowering the typical commission rate.

No matter how this all plays out, reducing the commission you'll pay to your real estate agent by as little as 0.5% could result in big savings—for example, saving 0.5% on a $400,000 home sale would be an additional $2,000 in your pocket.

The Real Estate Commission Is Negotiable

Studies have found that sellers who negotiate to cut their real estate commission can do so with little risk of getting worse service. Many real estate agents are hungry for business and willing to find financial middle ground.

Given the new public attention to this issue, some agents are likely to be especially amenable to negotiation. Some circumstances that you can use as leverage include:

• if you plan to hire the same agent to help you buy your next home
• if your home is likely to command a high price, or
• if you have an interested buyer already, such as a family member, friend, or renter, so that the agent will save a great deal of time and marketing expenses.

Of course, some agents might push back. They're under pressure from the company they work for to keep commissions high, since this money not only pays the agent directly but also goes toward office overhead and the numerous costs of marketing the home, such as paying for advertising listings and flyers, photographers, possibly snacks at open houses, and so on.

Don't want to take "no" for an answer? Go to the top. Seek out the broker, rather than the real estate agent who holds your listing. The broker has the power to pull strings, negotiate their cut with the agent, or otherwise help you get a discount.

If you're hitting a wall, but really want to work with a certain agent, you could offer to play a greater-than-usual role in the process, as described next.

Then again, you might simply look for a different agent, perhaps one that routinely offers a discounted commission or flat-fee arrangement. Before going that route, make sure you'll be getting all the same types of service a regular agent would offer, or at least are willing to do them.

Offer to Share the Work With Your Real Estate Agent

Consider doing a meaningful portion of the agent's work, much as you would with a discount broker in a hot market. For example, you might host your own open house or perhaps have an informal open house for friends and neighbors (who might tell their friends, and so forth). You'll need to provide brochures, fliers, and information about the property, which your agent might help you prepare. You can refer unanswered questions and bids to the agent.

Also think about how you can reduce the agent's work on the physical condition of your home. Real estate agents know they will have to work harder if your home isn't move-in ready, and might thus be less likely to reduce the commission. Ideally before the agent even sees the place, you can add curb appeal to get shoppers excited about the property and spiff up or stage the inside so that it's clutter-free, sparkling like a gem, and laid out for easy navigation.

Off-season is a good time to request a reduced commission. Whether it's the dead of winter in some locales or the pre-school summer doldrums in others, selling in the slowest seasonal periods can be the best times to find a real estate agent who's hungry for work, even at a cut rate. But before you set your selling schedule around this plan, balance the possibility of a reduced commission with the possible negative impact of selling at a time when there are fewer potential buyers to bid the price up.

Agent's Commissions Don't Drop When Home Sellers Pay for Repairs

It's legal (and is the industry standard) for an agent's commission percentage to remain unchanged despite unforeseen costs such as repairs demanded by the home buyer. Your contract probably states that the listing agent will be paid a percentage of the sales price of the property at the closing, with no concessions for surprises or extra costs incurred by the seller. The only time an agent's total commission amount will change is if there is a change in the actual sales price.

To learn more about real estate agent commissions and more, see Selling Your House: Nolo's Essential Guide, by Ilona Bray (Nolo).