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Selling a House: How to Minimize Realtor Commissions

Are you planning to sell your house? If so, be prepared for a double dose of "sticker shock." First, potential buyers may not be willing to pay as much as you hoped. Then, when you...

Are you planning to sell your house? If so, be prepared for a double dose of "sticker shock." First, potential buyers may not be willing to pay as much as you hoped. Then, when you see your closing documents, you'll be confronted with the reality of how much you have to pay in fees, closing costs, and realtor commissions.

While most homebuyers and sellers know that additional costs are involved, the actual numbers can still be shocking. The median home sales price in America is around $300,000, and sellers can expect to pay between 2% and 4% in closing costs. On top of that, there are realtor commissions to consider.

Understanding Realtor Commissions

Realtor commissions typically total 5-6% of the selling price, with 2½-3% going to the buyer's agent and an equal amount going to the seller's agent. The seller is responsible for paying both commissions. This means that for a $300,000 home, realtor commissions can range from $15,000 to $18,000.

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These commission numbers might seem high, but they are actually justifiable. Realtors invest a significant amount of time and effort into each home sale, providing various services such as pricing advice, staging, negotiations, and handling all the details of the transaction. Moreover, real estate agents often have to split their commission with their broker, meaning they receive only half of the total.

So, when you see that you have to pay thousands in realtor commissions, remember that it's not all profit for the agent. They work hard to sell your house and earn a modest portion of the commission.

Alternatives to High Commissions

If you're looking to minimize realtor commissions, there are a few alternatives to consider:


If you're comfortable negotiating, you can try to discuss the commission rate with your agent. While it may be challenging to find an agent willing to go below 2-2½%, it's worth exploring if you're in a slow market or have other agents offering a lower commission. Just keep in mind that concessions may be required, such as eliminating open houses or using their preferred vendors for repairs or staging.

Use a Discount Broker

Discount brokers have emerged as a popular option in recent years. These agents charge lower commissions but offer less client service. For example, Redfin charges a 1½% listing fee and even provides a rebate if you buy your next home through them. However, be aware that discount brokers may handle more clients and may not provide the same level of attention or services as full-priced agents.

Try FSBO (For Sale By Owner)

FSBO eliminates the need for a listing agent altogether. You take on the responsibilities of selling your home, including setting the price, attracting buyers, negotiating offers, and handling all the paperwork. While this option saves you the listing agent's commission, it requires extensive knowledge and can be time-consuming.

Sell Your Home for Cash

If you want to avoid realtor commissions entirely, selling your home directly to a cash buyer or home-buying company is an option. These buyers purchase homes for cash, allowing for quick sales without realtor involvement. However, be cautious when dealing with cash buyers and research their reputation and terms thoroughly.

Each alternative has its pros and cons, so carefully assess your situation and determine which option aligns best with your needs.

Remember, realtor commissions may seem high, but they are reasonable considering the work realtors put into selling a home. Explore your options, negotiate when possible, and make an informed decision that benefits both you and your agent.