There are many costs associated with buying and selling a home. Buyers have to secure financing and pay for home inspections and appraisals. Meanwhile, home sellers have to prepare their homes for sale. Both parties must fork over additional funds to close on a house. For the seller, the listing fee is particularly expensive.
What Is a Listing Fee?
“A listing fee or commission is the agreed upon, usually percentage, that the seller has agreed to pay the seller’s broker for their efforts in bringing a buyer to a property,” says Scott Shuffield, a real estate agent in South Florida.
Traditionally, the seller agrees to pay the full commission, which is split between their agent and the buyer’s agent. Real estate commissions have always been negotiable, with a typical commission costing the seller between 5% and 6% of the home’s final sale price.
For the median home sales price of $412,300, a seller could anticipate paying between $20,615 and $24,738 in total commission fees.
New NAR Rules for Buyers and Sellers
The new rules from the National Association of Realtors (NAR) regarding commissions could mean this practice might change.
The NAR says that the listing broker (or seller) can pay the buyer’s agent fee, “but there are limitations to how that offer can be marketed.” In particular, the fee charged cannot be indicated in the multiple listings service (MLS).
This rule took effect in August 2024, and its full impact is still developing.
“While we wait for the effects of the NAR settlement to be seen in the market, the overall trend suggests we’re starting to see some volatility in the traditionally staid commission space,” says John Walkup, co-founder of real estate data analytics company UrbanDigs. “However, the persistence of sellers offering to pay 2.5% and 3% to buyer’s brokers suggests that sell-side commissions won’t be falling by half anytime soon.”
Factors that Affect Real Estate Listing Fees
While the 5% to 6% commission may be typical, a listing fee depends on the terms the seller can negotiate.
“The commissions have always been negotiable,” Shuffield says. “The rates vary depending on the level of service that a seller is providing.”
Factors that can impact the listing fee could include your agent’s experience, location, market conditions, and any negotiations made with the agent. If your real estate agent is new to the industry or your local market is particularly stale, you may want to try to negotiate your listing fee.
On the other hand, if you’re in a hot market with an agent with an impressive home sales record, you might find that it’s worth it to pay the higher end of that scale at 6%.
Alternatives to Traditional Listing Fees
If you’re considering other routes to selling your home, you may be weighing the option of a flat-fee MLS, discount brokerage or selling your home yourself. These methods can help lower your listing fee, but the cost savings may not be worth it.
“Limited service brokers and flat-fee services are not necessarily advising you on the comps or the right listing price, but are providing a platform for you to do the work yourself,” Shuffield says. “I don’t think it’s worth it. We see many cases where people without the proper professional advice sell at a lot less.”
Shuffield says properties sold through discount brokerages typically sit on the market longer, often with a low sales price per square foot.
Benefits of a Full-Service Real Estate Broker
A traditional, full-service broker will do a lot of work to sell your home. Moreover, a broker gets their commission payment once your home has sold.
“We earn about three-quarters of our commission before we even list the property,” Shuffield says. “We put a lot of work into getting them ready to sell. We made recommendations on improvements and changes to the property that will result in a higher sales price.”
A full-service brokerage may also arrange the staging, photography and marketing materials necessary to advertise your home.
Most importantly, a local expert will know your specific market and overall market conditions. That helps them strategize the right sales price for your home, which is extremely valuable in determining how to market and sell a property.
“Assistance with negotiation is one of the main reasons people hire us,” Shuffield says. “When negotiating through a broker, you’ll end up with a higher sales price.”
Tips to Negotiate a Lower Listing Fee
“I often tell sellers, you have two opportunities to negotiate,” Shuffield says. “When you list, and when you get an offer.”
It might give sellers peace of mind to know that they don’t have to agree to a specific listing fee until after they’ve sold their home. If the seller’s agent didn’t perform as they had expected or hoped, they still have the opportunity to negotiate that listing fee after they receive an offer.
“If the buyer isn’t willing to come to an agreeable price, then there might be some additional negotiation with the listing fee,” Shuffield says. “The deals where the seller is understanding of the broker’s skill set and agrees to the commission rate offered by the broker generally run more smoothly.”
How to Choose the Right Real Estate Agent
If you’ve decided to go with a traditional, full-service brokerage, finding the right real estate agent is an important step in the process of selling your home. Your agent will set the tone for your home selling experience, and it may be worth it to interview several agents from different brokerages.
“You want someone who knows your neighborhood and understands your property specifically and your situation,” Shuffield suggests. He also recommends that the agent you choose “has a strong relationship with the broker community. As much as I, as a broker, wish I knew every potential buyer, it’s impossible. The huge majority of deals are worked out through a co-broker. You want your broker to have a good relationship with other brokers.”
If you’re beginning the process of selling your home, it is also wise to research agents before you interview them. Look at their online presence and be prepared to ask questions about their marketing strategy. It’s important to be discerning when dealing with a broker who seems like they might be telling you what you want to hear.
“You don’t want an agent who will mislead you on a higher price than a property is worth,” Shuffield says. “It damages the marketability of a house long-term because it usually sits on the market too long.”
The Bottom Line on Listing Fees in Real Estate
The listing fee is just one of the many costs of selling your home, and it isn’t cheap. The agents’ commission can easily cost tens of thousands of dollars, but that expenditure should be considered an investment. Spending money on a real estate agent means you gain access to valuable market insights, negotiation skills, marketing and advice. That expertise will help your home sell quickly and for a higher price than if you were to go about it on your own.
Grace Cassidy is a freelance writer covering the beats of real estate and interior design. She served as the final editor of Curbed Hamptons, and has bylines in publications such as Apartment Therapy, Zillow's Out East, Cottages & Gardens, and more. Originally from Long Island, Grace lives in San Diego.
