What Is the Typical Commission a Real Estate Agent Charges on a Rental, Home Guides, SF Gate

What Is the Typical Commission a Real Estate Agent Charges on a Rental?

The best real estate agents. Find them at Referz.com.

Real estate commissions on rentals are negotiable.

Related Articles

Real estate commissions are negotiable. When agents write real estate contracts they use a “generally accepted” commission standard for the locality they're in, but nowhere is the commission percentage set by law. The question of who pays the commission on a rental, the landlord or the tenant, is also determined by local custom. The amount of commission varies, and is negotiable between the entity paying and the real estate agent.

Find the best real estate agents. Free service. Personal recommendations.

Percentage of Lease

Some real estate agents charge the landlord a commission based on the yearly amount collected. If the tenant is paying $3,000 per month, and the agent is charging 10 percent, he’ll get $3,600.00 for finding a tenant and writing the lease. Often that commission is split between two agents, the listing agent and the agent representing the tenant, netting the listing agent’s broker $1,800.00. The amount paid the agent is a percentage based on his agreement with his broker.

One Month’s Rent

Many real estate agents charge one month’s rent as a commission for finding a tenant. The agent's brokerage collects the tenant’s first month’s rent and his security deposit. From those monies, he deducts his commission and pays the landlord the balance. Real estate agents prefer being paid upfront to avoid being shut out of a commission by the landlord after a tenant has been found.

Lease Extensions

Some lease agreements contain a clause stating that the initiating real estate agent is paid a renewal commission when the tenant re-signs his lease. As part of the contract, renewals can be included with full commission due for every lease extension.

Buyer Pays

Real estate agents in some cities are paid by the tenant. In effect, they’re hired by the tenant to find them a property and are paid a commission when a lease is signed. Many San Francisco realtors actually will charge a flat fee equal up to 50 percent or more of the first month's rent. Before agreeing to pay the rental commission, verify that this is the custom in your area.

Management Company

A real estate management company is not a real estate broker. Management companies handle the day-to-day operations of renting properties, the repairs, complaints, collecting rent and finding tenants. They charge the landlord a percentage of the monthly rent to perform these duties, usually 10 percent. The tenant does not pay these fees.

Rental List Fees

Many cities have companies that produce lists of rental properties available. Prospective tenants pay a fee to the company to either get the list, or see a property that has been advertised. No lease agreements are written by the list company and no commission is paid. The companies offering these lists charge what the market can bear.

References (2)

About the Author

Jann Seal is published in magazines throughout the country and is noted for her design and decor articles and celebrity *in-home* interviews. An English degree from the University of Maryland and extensive travels and relocations to other countries have added to her decorating insight.

Work less. Earn more. Real estate agents earn referral fees at Referz.com.

How Much Is Real Estate Agent Commission, Redfin

The best real estate agents. Find them at Referz.com.

How Commission Fees Work for Buyers and Sellers

How Much Will You Pay in Commission?

Real estate agents are paid a commission when they help you buy or sell a home. They receive a commission based on the home’s price after the sale has been completed.

Buying a Home

of the home’s price

The seller pays your agent’s commission. You still have to pay closing costs.

Find the best real estate agents. Free service. Personal recommendations.

Selling a Home

of the home’s price on average

You pay 2.5%–3% in commission to your agent and 2.5%–3% to the buyer’s agent on average.

How Real Estate Commission Works

How much is real estate commission?

Typically, real estate commission is 5%–6% of the home’s sale price. In most areas the buyer’s agent receives 2.5%–3% in commission and the seller’s agent receives 2.5%-3% in commission.

Who pays the commission?

If you are buying a home, you don’t have to pay real estate agent commission; however, you still have to pay closing costs. On the other hand, if you are selling a home you pay commission to both your agent and the buyer’s agent when your house closes.

Can you negotiate commission fees?

Some agents will lower their commission fees, particularly if they are representing both the buyer and the seller in a home sale (also known as dual agency).

Redfin offers no-hassle pricing. We show you how much you will pay — and how much you will save — in every home sale. Talk to a Redfin Agent to learn the exact amount you can save.

How does commission work for buyers?

The home seller pays the commission for both the seller’s agent and the buyer’s agent. But that doesn’t mean that there is no cost to the buyer. Sellers sometimes account for the fee they’ll be paying and pass costs along by raising their listing price.

If you buy with a Redfin Agent, you can save thousands in closing costs when we give you a portion of the commission the seller pays us. Learn more about the Redfin Refund.

*Redfin Refund is not available where prohibited by law, including in Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon, and Tennessee. Subject to lender approval and minimum commissions. See full terms and conditions.

Do you have to pay commission if you don’t buy a home?

Real estate agents are paid at the end of the process, so if you don’t buy a home, they won’t be paid for their time. On the other hand, if you decide you don’t like your agent and want to work with someone new, it may be difficult to break up with them if you’ve signed a contract (also known as a buyer’s agency agreement). Make sure to ask the right questions before signing a contract!

Do you have to pay commission if your home doesn’t sell?

Short answer: Probably not. Real estate agents are paid when you sell your home, so if your home doesn’t sell, you shouldn’t owe them a commission.

Long answer: Read the fine print. Generally, your contract with your agent is bound to a certain time period. Unless your contract says otherwise, you are typically not required to pay your agent if the contract expires and your home doesn’t sell. However, there may be some exceptions; some examples include:

• Your agent found the buyer: Some contracts state that you still owe your agent commission after the contract period ends if your buyer was a prospect during the term of the agent’s contract.


• You back out of the sale: After an offer is accepted, you are responsible for paying commission to both real estate agents immediately. If you decide to back out of the sale last minute, you still have to pay both real estate agents their commission. If the buyer backs out, you may still be responsible for paying the commission — but can potentially sue the buyer for breach of contract.

Bottom line

Read all contracts carefully. To find a real estate agent who’s paid on your satisfaction, not just commission, find a Redfin Agent in your area.

*Real estate commission varies by transaction. The Redfin commission calculations are based on a 2.5% commission for the buyer’s agent and the seller’s agent.

Talk to a Redfin Agent

Talk to a Redfin Agent in your area.

Save Thousands in Commission

Buy with a Redfin Agent and we'll give part of our commission to you. Sell with Redfin and pay only a 1.5% listing fee . Either way, you'll get second-to-none service and could save thousands.*

Adjust to match the value of your home

*Redfin Refund is not available where prohibited by law, including in Alabama, Alaska, Iowa, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Oregon, and Tennessee. Subject to lender approval and minimum commissions. See full terms and conditions.

The savings listed are only an estimate. Savings vary by market and are subject to a minimum commission.

More Resources for Buying & Selling

• Tools & Calculators


• Home sale calculator


• Home value estimator

• Real Estate Resources


• Homes for sale


• Real estate agents

• Popular Searches


• Home affordability calculator


• Tax implications of buying a home
  

  Copyright: © 2018 Redfin. All rights reserved. Patent pending.

  
  

  If you are using a screen reader, or having trouble reading this website, please call Redfin Customer Support for help at 1-844-759-7732 .

  
  Work less. Earn more. Real estate agents earn referral fees at Referz.com.

Commissions and Splits in Real Estate Agent Compensation

The best real estate agents. Find them at Referz.com.

Methods of Compensating Real Estate Agents

In these Step-by-Step Tutorials, you'll learn some of the different methods used to compensate real estate agents. When choosing a broker to hold your license, the commission arrangement may not be the most important factor.

Weigh the services that your broker provides to agents, as well as the expected number of prospect leads and their quality. If you're receiving a large number of quality leads, then a smaller commission split percentage will still lead to more income for you.

Find the best real estate agents. Free service. Personal recommendations.

The vast majority of real estate agents are compensated by a broker via sharing the gross commission amount that the broker collects. We're not discussing percentages charged to the client here, only the way the agent is compensated. Here's an example:

1. Gross commission amount of a transaction = $12,000.

2. Broker/Agent split of 50% broker/50% agent = $6000 to the broker and the same to the agent.

3. The percentage split is an amount agreed to by the broker and the agent and usually reflects the level of services and support the broker provides. It can also reflect the volume of business the agent brings in. Highly productive agents can negotiate better splits.

4. If you're in the process of choosing a broker to hold your license, the split is important, but should be balanced with the services and leads provided by the broker.

In this compensation model, the agent gets the entire commission. This model can pay 100% to the agent because the agent is paying a "desk fee" or monthly office fee. This can be a significant amount per month, but experienced producers prefer it because their costs are capped while their income is not.

1. The example from above would pay the full $12,000 to the agent.

2. In this model, the agent might be paying anywhere from a few hundred dollars to more than a thousand dollars per month for a desk fee. This fee is frequently based on the type and size of the office space the agent is given. Another method is for the agent to pay a set fee per transaction to the broker.

3. New agents generally are not interested in this model because of the fixed cost they must pay monthly. Not having any idea at the beginning of their commission income, new agents would find this method stressful. Also, few brokerages using this model want to take a new agent for these reasons.

Referrals come "off the top" before commission is split. The referral is a negotiated percentage paid to another company for sending a client, either as a seller or a buyer. Here's an example of a typical buyer referral:

1. Brokerage A has a client selling their home and leaving the area. They refer the buyer client to Brokerage B in another state with a written referral agreement at a certain percentage of the final commission earned by Brokerage B.

2. Using the $12,000 gross commission from above, and an agreed referral fee of 25% would give Brokerage A $3000 for the referral, and Brokerage B's agent and broker would split the remaining $9000.

3. Using the 50/50 split from the first example would yield $4500 for the agent in Brokerage B.

Some of the major franchises charge a percentage fee "off the top" of each commission to their franchisee brokerages. This fee would come off the commission before the Broker receives it and splits with the agent. Using a 7% franchise fee as an example:

1. The $12,000 gross commission from the deal would pay franchise $840, while broker and agent would split the remaining $11,160.

2. On the referral deal from above, the referral fee would normally come off first and the franchise percentage would come off of the $9000. The agent and broker would then split $8370.

3. Many consumers have the mistaken impression that their agent is pocketing the entire commission that they see on their settlement papers. It never hurts for them to be educated to these facts and understand the net commission actually received by the agent.

Some of the newer fixed-fee and fee-for-service listing brokerages are paying their agents a salary, rather than a commission.

Some brokerages pay their agents a base salary and a lesser commission percentage for each transaction.

Work less. Earn more. Real estate agents earn referral fees at Referz.com.