The State of the Commission 2018
In the United States, real estate agents make about $75 billion per year in commission payments, according to mortgagecalculator.biz. The median gross income of realtors® was $42,500 in 2016, according to a 2017 study by the National Association of Realtors®. That’s an increase from $39,200 in 2015.
Drilling down to specific statistics are hard to come by; these are national commission percentage averages recorded by Real Trends, an industry consulting firm:
- 1992 = 6.04%
- 2005 = 5.02%
- 2011 = 5.30%
- 2013 = 5.38%
- 2014 = 5.18%
- 2015 = 5.26%
- 2017 = 5.12%
In late 2017, Real Trends president Steve Murray, wrote: “The average commission rate has dropped about 20 basis points in the last five years [5.32 to 5.12].” This is surprising news to many; the common perception is that the average commission rate is six percent.
The Washington Post speculates that more agents are working for brokerages that allow them to negotiate lower commission rates, with no set minimum. Competitors like Redfin offer lower commissions, forcing traditional brokerages to be more competitive and flexible. Redfin also offers refunds to clients who buy property through one of their agents. The recent shortage of housing inventory is also forcing agents to settle for a lower commission rate.
As we know, the agent commission is not set in stone, although many people think it is. According to Zillow, agents get about 37.5 percent of the commission total, on average. This varies by geographic area. The buyer’s agent’s company gets half of the entire amount. Of the remaining half, the listing agent’s company gets about 25 percent of that or more.
What should an agent charge, then? It may be best summed up by a comment by an agent on the Trulia site: “It depends on how much the agent values their own services.”
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