The average real estate commission on commercial property is between 4.45 percent and 6.34 percent of the final sale price. The percentage depends on several factors, including the size of the property, the type of property, where it’s located, and your experience level.
Real estate commissions are typically calculated as a percentage of the sales price. Still, they may be calculated based on an hourly or flat-fee rate if there are unusual circumstances surrounding the transaction.
Everyone knows real estate agents are paid on commission, but how much of that commission do they get to keep? It’s common knowledge that real estate commissions are typically 6% of the sales price, so why does the agent only get half of it?
And what about marketing fees and expenses – where do those fit into the equation? This article will address all these questions and more to give you the full picture of commercial real estate commissions.
What is an Average Real Estate Commission?
We extensively polled active agents across the U.S. to provide the most reliable data on typical realtor commission rates in each state to home sellers. Our research revealed that typical realtor commission rates fell between 4.45 percent and 6.34 percent.
Keep in mind that these rates are merely averages. You can always negotiate realtor fees with your agent or sell with a cheap brand that offers pre-negotiated reduced commission rates because commission rates aren’t set in any official capacity.
Saving money is now simpler than ever, thanks to top low-commission businesses like Clever. Clever pre-arranges listing fees of 1% or $3,000 with the best regional agents.
You will receive full-service representation from a reputable brokerage, such as Berkshire Hathaway or Keller Williams, but just pay a small portion of the cost.
Real Estate Commission breaks down: Agents and fees
The normal commission for buyer’s agents nationwide ranges from 2.19 percent to 3.17 percent, or 2.65 percent on average. A home sold for $350,000 amounts to buyer’s agent commission expenses of $7,661–11,089 in total.
Although we discovered that buyer’s agent commission rates differed by 0.88 percentage points depending on which state you reside in, which is a substantial cost difference, these numbers represent the national average. We’ve broken down how buyer’s agent commissions vary around the nation below:
What do you need to calculate the total real estate costs?
How can you predict your costs and prevent unpleasant surprises?
Usually, there are two significant unknowns: What will my monthly payment be, and how much will I have to pay upfront?
Many online mortgage calculators can help you in certain ways, but they frequently fall short since they use estimates and averages for financial data that can make a large difference. Research is the first step to acquiring an accurate picture of the cost of purchasing a home:
What is the cost of the purchase?
The simplest component is this. You are already aware of the price of the house if your offer is accepted. Using the listing price as a starting point for your calculations, you can then try to negotiate a lower price if you have a certain house in mind. The house’s purchase price will be the starting point for all calculations.
Calculate the down payment:
Normally, mortgage lenders need a 20% down payment; however, there are rare situations where you might offer less. Decide how much you can afford to deposit.
Look up interest rates
Currently, interest rates are at record lows, making it a terrific time to buy. However, the mortgage lender, credit score, and other factors affect your interest rate.
Run the numbers now that you have the appropriate data and input.
Calculate your monthly mortgage payments. At this point, you can use an online mortgage calculator with confidence. Several straightforward ones can assist you in figuring out your monthly payments; just remember to alter their property tax, insurance, and interest rate assumptions and apply your unique data.
What amount will you provide us up front?
Closing fees may come as a shock to first-time homebuyers. Yes, in addition to spending a significant portion of your savings on this purchase, you must write a separate check to pay fees.
When purchasing a property, knowing how to calculate your expenses is essential. In addition to assisting you in figuring out how much you will pay, it also helps you calculate how far you can pay.
How to Calculate the Average Real Estate Commission on Commercial Property?
The real estate commission calculator formula is as follows: The property’s purchase price is multiplied by the agreed-upon payment percentage. The math would be (5/100) x 200,000 = $10,000 commission if a homeowner sold their home for $200,000 and the commission rate was 5%.
It’s crucial to remember that commission is part of the price of the sale, not an additional expense. The seller would only receive $190,000 in the scenario above because the additional $10,000 would be automatically allocated to a commission for the agents/brokers involved.
Tips to Reduce Real Estate Commission while buying property
You should understand the ins and outs of effective negotiation before discussing it with your real estate agent. Also, you will have greater negotiation power the better informed you are. You should respect your agent and present a counteroffer that will benefit both of you.
Understanding the local market:
An excellent negotiating tool is market knowledge for your area. Give your real estate agent the justification for why your property would be an easy (and profitable) sale for them if you are a seller who lives in a desirable neighborhood. Of course, you’ll also want to conduct research and provide evidence to support this assertion.
Offer to carry some of the responsibilities:
Your payment for the real estate agent commission compensates them for the services they render. However, if you forgo some of the services that the agent would typically offer and complete them on your own, you might be able to negotiate a lower charge.
You may prepare your property or shoot your listing images as a seller. As a buyer, you can do your property search while working with your agent to support you during contract negotiations. Make sure you can handle these tasks, though. Agents are compensated for their services for a purpose.
Financial analysis before investing in real estate
Here are some factors related to real estate investing that you should be able to compute and apply when assessing possible investment properties.
Real estate investments can produce both capital gains and rental income.
Each property will be assessed based on its distinctive features, including its layout, location, and amenities.
However, several additional crucial data points may be collected for each property, allowing potential investors to forecast and make comparable comparisons. We discussed crucial measures that every real estate investor should be able to utilize to assess a property.
We can conclude that each state sets its laws regarding real estate commissions on residential and commercial properties. So each state will have different standards for both residential and commercial real estate commissions. As a general rule, it can be 6% in most states, but some states do not have a restriction.
- Clever Real Estate. (2022, June 28). Average real estate commission rates by State (2022). Clever Real Estate. Retrieved July 7, 2022, from https://listwithclever.com/average-real-estate-commission-rate/
- Frazier, L. (2021, June 28). How to calculate the (real) cost of buying a home. Forbes. Retrieved July 7, 2022, from
- Easy Real Estate Commission calculator. RentSpree Blog. (n.d.). Retrieved July 7, 2022, from https://www.rentspree.com/blog/real-estate-commission-calculator
- SimpleShowing. (2022, January 25). Negotiating real estate agent commission: How to reduce costs. SimpleShowing. Retrieved July 7, 2022, from https://www.simpleshowing.com/blog/negotiating-real-estate-agent-commission-how-to-reduce-costs
- Lerner, M. (2022, January 19). 8 must-have numbers for evaluating a real estate investment. Investopedia. Retrieved July 7, 2022, from https://www.investopedia.com/financial-edge/0511/8-must-have-numbers-for-evaluating-a-real-estate-investment.aspx