A real estate commission is the amount of money paid to a broker when someone
buys or sells a home or apartment. Realtors typically charge a fee of around 6% of
the sales price of the property. The fee is paid by both the seller and buyer, and it
goes to the listing agent and the buying or selling agents’ brokerages.
Real estate commissions are not set in stone and can vary depending on local
market conditions. The typical 6% commission has been the standard for years, but
it has started to see some competition from newer business models like flat-fee MLS
listings and rebates for buyers. However, even with these options, the average NYC
commission rate still remains higher than in other markets around the country and
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There are four parties involved in every real estate transaction, and the total real
estate commission payment is determined by adding up all the individual fees from
each party:
The first two parties are the listing agent and the buyer’s agent, and they share a
portion of the commission evenly. The broker earns the remainder of the
commission. For example, if the sales price of a home is $200,000, the listing agent
and the buyer’s agent will each receive $6,000.
In addition to these individual compensation amounts, there are additional
transaction costs that can make a sale more expensive. These include things like
the mortgage payoff amount, escrow services, and closing costs. The total cost of
these expenses can often exceed $10,000.
Some local governments regulate real estate commission rates, but most of these
laws do not specify a maximum or minimum amount. However, the prevailing norm
is that sellers must offer a 6% commission to buyers’ agents in order to attract
qualified leads and help their clients close on a deal.
Realtors will often negotiate lower commission rates for repeat business from
sellers. This is because they will be able to build a long-term relationship with the
client and potentially sell the property multiple times, which increases their potential
earnings. This is one reason why it is important to work with a Realtor who has
experience in your market and understands the nuances of the neighborhood.
A good way to reduce the amount of real estate commission you pay is to choose a
flat fee real estate listing service like Hauseit. This can save you up to 6% in NYC
broker commissions when selling your property.
In general, flat fee services are a great option for buyers and sellers who need a
basic level of services from an agent. While these services may not be as
comprehensive as a full-service agency, they will usually still provide sufficient
marketing and negotiating support to get your home sold at the best possible price.
However, if you have significant knowledge about real estate, then you might want
to opt for a full-service agency or work with a listing agent who charges less than the
national average of 6%.
