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Average Cost of a Real Estate Agent

written by: Melanie Bremner•edited by: Jean Scheid•updated: 11/29/2010

If you are considering selling your home, you may be wondering what the average cost of a real estate agent is on the market today. Depending on the city or state you live in, there may be a difference in the commission being paid out. Knowing what the average commission is where you live can help.

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    Understanding How it All Works

    If you are looking to buy or sell a home in the U.S. market today, there are a few questions you may have in regards to the average cost of a real estate agent. You may wonder if commissions and fees are the same regardless of the state or city you live in. Knowing a few facts before you begin will enable you to have a better understanding of the way things work and to negotiate well with your agent or 22384 20101104 

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    Do You Pay Commissions When Buying a Home?

    If you are buying a home, you will not have to pay anything for using your real estate agent's services. The agent's commission comes out of the selling price. So whatever the seller receives, the fees are then taken out to pay the agent. Although, some may say that technically the buyer does ultimately pay a share of the agent’s fee since it is included in the price of the home.

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    When Do You Pay Commissions Fees?

    If you are the seller, you do not have to pay anything to the agent until the property is sold. Once sold, they will receive between a 5-8% commission, depending on the amount specified before the selling began and the state and city in which the transaction occurs. Unless they represent both the buyer and seller, the real estate agent will then also have to divide his commissions with their brokerage and the buyer's agent which often means a lot of work for less pay than some other jobs. For example: if a commission is $12,000. Half of that would go to the buyer’s agent and half to the seller’s agent. From that share of $6,000, the agent then needs to pay for fees to the brokerage firm which could then result in the agent receiving anywhere from $3,000 to $4,800 when all is said and done.

    Some cities and states may have a higher sales volume than other cities or states depending on the demand of the market. The average cost of a real estate agent can be influenced by a number of things. There may be agents who are willing to concentrate more on the selling of multiple dwellings at a lower price and receive smaller bulk commissions that could amount to a larger profit in the long run. This can cause some conflicts when a seller would really like to receive his asking price. A larger commission is given when a home is sold at the asking price, but if the asking price is too high, or there are no buyers interested in purchasing at the asking price, an agent may negotiate a lower price just to get the property sold.

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    Average Commissions for Various States

    While a 6% commission seems to be the average in all cities and states, many states are offering a little lower than that. As of December 2010, here are some states and the average commissions being offered.

    Alabama has a 5.3% average commission

    California is a 5.2% commission

    Delaware is a 5.7% commissions

    Hawaii is 5.5%

    Idaho is 5.1%

    New Hampshire is only 5%

    Tennessee is 5.6%

    Wyoming is only 5.%

    If you would like to find out the going rate for commissions in the state that you live in, you can visit the online tool provided by Home Gain to calculate yours.

    The commissions paid out for land or commercial property are often much higher than the standard 5-6% for residential. The average cost for a real estate agent who deals with commercial property can range around 8% but can also be as low as 4% depending on the type of property, investment and leasing contracts associated with the sale.