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Whether you’re buying or selling a house, you’re dealing with such a huge amount of money that one mistake could cost you tens of thousands of dollars—and cause months of migraines. So there’s no wonder why over 90% of all buyers and sellers last year chose to work with a real estate professional.1
But how much does a real estate agent cost exactly? More importantly, is it worth it? Maybe you’re dreaming about how much cash you could pocket if you don’t hire an agent.
We get it. We’re all about saving money, too. But you might be disappointed at how little you actually save if you skip out on having an experienced pro guiding you through the deal. So, before you decide if an agent is worth the cost, let’s consider all the value a good one provides.
How Much Does a Real Estate Agent Cost?
The standard commission for a real estate transaction is typically 6% of the home’s sale price, according to most real estate websites. The commission is usually split between the seller’s agent and buyer’s agent—meaning both agents receive a 3% cut. So, if you’re buying or selling a $250,000 house, the agents would receive a total of $15,000 (or $7,500 each). Now, if you’re like us, when you’re charged a fee that big, it’d better be for a good reason, right?
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So, let’s find out exactly how that 6% breaks down!
What Does a Real Estate Commission Cover?
Simply put, a real estate commission covers all the work that goes into buying and selling property. A seller’s agent shows you how to best 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 inspection and 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 your questions
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!
How Do Real Estate Agents Get Paid?
It’s standard practice for the seller to cover the commission for both the seller’s agent and buyer’s agent. So, if you’re buying a home, you may get all the benefits of using an agent for free! The commission is paid at the end of the deal as part of the closing costs and comes out of the sales proceeds.
It’s standard practice for the seller to cover the commission for both the seller’s agent and buyer’s agent. So, if you’re buying a home, you may get all the benefits of using an agent for free!
Is a Real Estate Agent’s Commission Negotiable?
Okay, so you know you want to use a real estate agent. But is there any way to get a discount? Guess what? There are no federal or state laws that regulate real estate commission rates. So, while some agents may be constrained by their company to stick to a certain percentage, many agents’ commissions are negotiable.
Some agents may be willing to offer a discount on the commission fee if you’re willing to give up a portion of their full range of marketing services. Just be aware that forgoing some services might affect how efficiently your agent can serve your needs. Remember: You get what you pay for.
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 $200,000 compared to $265,000 when sold by an agent.2 That’s a $65,000 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 $200,000 compared to $265,000 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.
Find an Agent Who’s Worth Every Penny
A good agent is worth the cost! Just make sure you know how to find an agent who has solid experience. Your buddy who’s just getting started in the real estate biz isn’t going to cut it. Let them earn their chops with someone else’s money. You need a pro who has a long history of success! But where can you find an experienced agent in your area who shares your financial values and will walk you through the process step-by-step?
Try our Endorsed Local Provider (ELP) program, where we’ll instantly connect you with the top-performing real estate agents in your area for free. From there, you can interview them to decide which agent gets the right to buy or sell your home.
Find a real estate agent today!