Mortgages & Home Loans Real Estate Resources Factors That Affect Standard Real Estate Commissions By Elizabeth Weintraub Elizabeth Weintraub Facebook Twitter Elizabeth Weintraub is a nationally recognized expert in real estate, titles, and escrow. She is a licensed Realtor and broker with more than 40 years of experience in titles and escrow. Her expertise has appeared in the New York Times, Washington Post, CBS Evening News, and HGTV's House Hunters. learn about our editorial policies Updated on November 9, 2021 Reviewed by Andy Smith Reviewed by Andy Smith Andy Smith is a Certified Financial Planner (CFP), licensed realtor and educator with over 35 years of diverse financial management experience. He is an expert on personal finance, corporate finance and real estate and has assisted thousands of clients in meeting their financial goals over his career. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Anti-Trust Laws and Real Estate Commissions Full-Service vs. Discount Brokers Differences Between Real Estate Commissions Choose Your Real Estate Agent Wisely Photo: Hero Images / Getty Images All real estate commissions are negotiable. Any real estate agent will tell you that, even if it's somewhat misleading. Answering any question about commissions directly could open an agent to prosecution by the federal government, so agents are advised not to discuss it. Key Takeaways More experienced real estate agents may charge higher commissions.This commission can be worth it if their experience allows them to close better sales.Anti-trust laws prevent agents from collaborating to set a price.The higher the home price, the more likely sellers will not negotiate on the agent fee. How Anti-Trust Laws Affect Real Estate Commissions Anti-trust laws prohibit collaboration among competitors to set certain prices. For example, the Sherman Act and the Clayton Act are two types of anti-trust laws. The government entities that investigate such claims are the Federal Trade Commission and the Antitrust Division of the U. S. Department of Justice. You might go to real estate websites and portals and read questions and answers about standard real estate commissions. Some agents will mention a percentage and others will agree or disagree with that percentage, when in fact, that online discussion could be considered price fixing. Full-Service vs. Discount Brokers Sometimes sellers will call several real estate agents—and without so much as introducing themselves—blurt out, "What is your commission?" as if comparison-shopping the price of milk. A better way to approach the subject, if a seller is shopping solely on price, is to ask if the agent is full-service or a discount broker. If you expect a discount, be upfront and limit the search to only those agents who offer discounts. There are situations where a seller might prefer to hire a discount broker and not engage the services of a full-service agent, who may charge a slightly higher fee. These sellers typically are unaware of what experienced agents can do for them. Frugality could wind up costing more money in the end. Note You can certainly go with a less expensive and most likely less experienced agent. Just don't be penny-wise and pound foolish. The discrepancy between similar competitors comes down to about a 1% difference. Differences Between Standard Real Estate Commissions The higher the caliber of home, the less inclined sellers are to ask a highly experienced real estate agent to discount their fee. This is most likely because with luxury home sales there are larger sums of money to lose (or leave on the table), so sellers might pay a little bit more to hire top-notch talent to negotiate for them. From appraisals to home inspections, much can go wrong after signing a purchase contract. Expertise is often worth the additional expense. Note Think about it. Experience can be the difference between selling your home for $1.3 million or a cash sale of $1.5 million. Sellers may trade a $13,000 difference in commission in exchange for $200,000 in price. This doesn't mean a standard real estate commission should not be discussed in the initial conversation. Just don't make it the sole factor for qualifying an agent. Agents who charge the top commissions could very well set the standard for that type of performance, just like agents who routinely charge much less. In other words, consumers tend to get what they pay for when it comes to a real estate agent. Choose Your Real Estate Agent Wisely Vet your agent wisely, especially for complicated situations. For example, you might prefer an agent who thinks like a lawyer over an agent who behaves like a used car salesman. There are all kinds of people who hold a real estate license. Not all real estate agents are the same. You've probably heard that the top 10% tend to sell 90% of the homes. Note The wrong agent would be a person without enough experience to help a seller navigate the delicate situations that can go wrong, such as a low appraisal or a Request for Repair. In other words, if a seller believes they are "saving" $5,000 because they hired a cheaper agent than the one they preferred, that seller could end up losing say, $10,000, over another issue that the cheaper agent cannot resolve. The commission is one of many closing costs and fees a seller will pay. It is generally the highest fee, but the other fees can also add up. Research the fees agents charge in your area by calling around and talking with agents.Yes, you can ask about their standard real estate commissions, just don't make it the first question. Also, realize that fees differ based on locale. What might be considered a standard real estate commission in sprawling Sacramento could be more than the standard real estate commission charged in a more self-contained community such as San Diego. At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. National Association of REALTORS®. "Code Comprehension: Article 16 — Commissions Are Negotiable." Federal Trade Commission (FTC). "The Antitrust Laws." The U.S. Department of Justice. "Competition in the Real Estate Industry Brokerage Industry. C. Non-Traditional Business Models." National Association of REALTORS®. "Quick Real Estate Statistics." Consumer Financial Protection Bureau. "Closing Disclosure Explainer."