What Are Realtor Fees?

Getting your home ready to go on the market can be a challenge —there’s so much to think about. And if you’re selling in a hot market, the thought of a healthy profit can be alluring. But it’s easy to overlook the fact that selling a home comes at a price. When you list your home for sale with a realtor, you’ll probably be paying realtor fees, for your agent and the buyer’s agent as well.

Realtor fees are commissions paid to realtors for the work they do to help you through the sale or purchase of real estate. But how do realtors get paid and how much is realtor commission? Average realtor commissions are based on a percentage of the overall purchase price of a home, typically paid at closing. The realtor fees for selling a house amount to around six percent of the total purchase price of the home — with three percent going to the selling agent and three percent to the buyer’s agent. And these expenses can surprise homeowners that aren’t familiar with the process.

How Do Realtor Fees Work?

The good news here is that realtor fees can be paid from profits made from the sale and don’t require an upfront payment of the seller. And in competitive markets, a motivated buyer may be willing to pay realtor fees for the seller as an incentive to go with their offer. Depending on the contract, realtor fees for selling a house is sometimes split between the buyer and seller. This may be the result of a counteroffer made by the buyer to sweeten the deal.

Are Realtor Fees Included in Closing Costs?

Closing costs are an assembly of many different charges and fees. Buyers usually foot the bill for most of the fees, but sellers are usually responsible for paying realtor fees at closing. But it should be noted that the realtor does not pay closing costs, even if the name may imply that. Think of them as “fees paid to the realtors” instead. So, how do realtors get paid? Here are a few common questions and answers about closing costs and realtor fees:

Do closing costs include realtor fees?

Yes, typically closing costs for the seller will include realtor fees.

Are closing costs and realtor fees due at the same time?

Yes, closing costs and realtor fees are due at closing, but typically they’ll be paid by both the seller and the buyer. Realtor fees are usually covered by the seller.

Are realtor fees always considered closing costs for the seller?

Usually, but not always. The party responsible for realtor fee payment can shift. In some cases, during the negotiation process, the buyer may offer to pay some or all the realtor fees.

Are realtor fees included in mortgage costs?

Not usually. Mortgage costs at closing are the responsibility of the buyer. Unless the buyer’s agreed to pay for the seller’s closing mortgage expenses, they won’t be included. The final negotiated contract will define terms like these.

Can a realtor pay closing costs?

Yes, and this does happen sometimes. If the realtor pays closing costs, it will usually be through a “realtor commission credit at closing.” Agents have been known to kick back some or all their commission at closing, to lock in a contract on the sale of a given home.

Are realtor fees part of closing costs?

Yes. When the home changes hands, closing costs can include realtor fees — but they may not be the only closing cost that the seller is responsible for.

Who Pays Realtor Fees?

Realtor fees are paid mostly by the seller, but they can be paid by either party, under the right circumstances. Because fees and expenses can be shifted between parties when negotiating, there’s no hard-and-fast rule as to who’s going to pay realtor fees. Sometimes, the listing broker will be entitled to a share of the selling realtor’s commissions if the purchase contract stipulates that.

Does the Seller Pay All Realtor Fees?

Usually. The industry standard is that the seller will typically pay about 3 percent of the sale price to the listing agent and 3 percent to the selling agent — equal to around 6 percent of the entire purchase price. But because these costs are folded into the price of the home the buyer pays for these fees in the overall purchase of the property.

How Much Are Realtor Fees?

Average realtor fees and commissions range around 6 percent of the purchase price for the home. So, if the total cost of a home is $200,000, multiply that number by 0.06 ($200,000 x 0.06 = $12,000) to get an idea of what the average cost of realtor commissions would be. In this case, $12,000 would go towards realtor and broker fees.

Exactly how much does the seller pay the realtor?

The out-of-pocket costs are usually covered by sale of the home when it’s a profitable arrangement for the seller. These expenses are paid out of the “financial winnings” of the sale.

How Much Are Closing Costs and Realtor Fees?

Although they total around 6 percent of the total purchase price, every real estate transaction is unique. And closing costs for the buyer are typically very different between the buyer and the seller. The buyer’s going to be paying for a very different set of expenses compared to those of the seller.

How Much Does the Seller Pay the Realtor?

That depends on the agreement between the seller and their realtor. Typically, the seller pays about 6 percent toward realtor fees, and the seller will have turn over that money to the agents at closing. If the sale price of the home is equal to the amount owed by the seller, they may have to pay these costs out-of-pocket or seek other arrangements.

How Much Are Closing Costs Without Realtor Fees?

Sellers can save on closing costs without a realtor, but they risk being without the keen market insights that realtors offer. Even so, some homeowners elect to sell their home without a realtor and in doing so they’re able to retain more of the money from the sale.

Some find that the cost of selling a house with a realtor won’t result in a financial gain, given the amount they still owe on the home. The average closing costs without a realtor can be significantly less for the seller.

When realtor fees are taken out of the equation, most of the closing costs that remain are primarily paid by the buyer. That’s because most of the closing fees apply to the purchase of the home. Municipal fees, state taxes, lawyer, appraisal, and assessment fees will usually fall on the shoulders of the buyer — and these costs will be payable at closing. Lending-specific charges are also due at that time.

Getting a firm idea of what your closing costs are going to look like is key — whether you’re selling or buying a home. And while you’re considering how closing costs are going to impact your finances, remember to check in with your American Family Insurance agent. You’ll find they’re able to help you make the most of your insurance coverage.

This article is for informational purposes only and includes information widely available through different sources.