Real Estate Agent Commission in 2022
So you’ve decided that now is the time to buy a new home or sell your current one. You’ll need to account for closing costs and taxes before you reach your closing date. Likely the most important cost to keep in mind is the real estate commission that needs to be paid to your agent. To understand what your total expenses will be, you will first need to learn about real estate commissions.
Florida Real Estate Agents Charge 5.4% Commission
The commission is how most agents are paid, and in Florida, typically runs around 5.4% of the home’s sale price, with the national average being 5.5% according to a poll of FastExpert agents.
Buyers spend an average of $356,000 to purchase a home in Florida. If the commission is 6% of the sale price, this amounts to $21,360. This commission is usually split evenly between the buyer’s agent and the seller’s agent.
You can better visualize how to calculate the commission fees with the following:
$356,000 x 0.06 = $21,360
This may seem like a lot of money. But keep in mind that agents do a lot between listing and marketing your home to helping with the closing. Even though commission fees seem high, they can be negotiable.
Seller Pays the Realtor Commission Fees
The Realtor commission fees are split between the listing agent and the buyer’s agent. However, the seller must pay these fees to the listing agent. Once the listing agent receives the money, a portion will be given to the buyer’s agent.
Commissions Can Sometimes be Negotiated
You can reduce the commission fees you pay by negotiating with the listing agent. While the average commission is 6%, this isn’t set in stone. You won’t pay the commission until after the sale goes through. As such, the commission fees will be taken out of the proceeds from the sale.
Many times, the seller will factor in the commission that will go to the buyer’s agent when deciding their listing price. If the buyer decides not to use a listing agent, they may have some room to negotiate a slightly lower price. The buyer should keep in mind that they will then be responsible for all of the post-purchase negotiations and paperwork.
Let’s summarize. The average Realtor commission in Florida is around 6% with half going to the seller’s agent and half going to the buyer’s agent. The seller is expected to pay the 6% but can include that in the asking price of the home. Got it? Great!
For Rentals, the Landlord Pays Commission Fees
If you use a real estate agent to help you find a rental, you generally won’t need to pay commission fees. In most markets, the landlord is required to pay fees associated with finding a renter. The amount that the landlord pays is usually one month’s rent. If the monthly rent is $1,200, the commission will also be $1,200.
This is because the landlord is like the seller. They are looking to get their rental property rented, usually to make money on it. There are some markets that handle this differently, so you should always be sure to check. In the state of Florida, you can be fairly confident that you won’t be charged a fee as a renter.
How to Lower the Cost of Selling a House
As a seller, there are several things you can do to increase the value of your home and help offset the cost of the real estate agent commission.
Increase Home Value with Renovations
Making renovations is a great way to add value to a home. Larger renovations lead to more substantial increases in home value. These renovations can include:
- Upgrading an old appliance
- Replacing your roof
- Adding a new room to your home
- Improving your home’s landscaping
- Upgrading kitchen cabinets
Making these improvements gives you the opportunity to increase your asking price. Speak with your listing agent to find the most valuable home improvements. Increasing the value of your home allows you to gain more profits.
Let’s say that your home is originally valued at $300,000. If the commission rate is 6%, the fees would be $18,000. With the right improvements, you could increase the asking price to $370,000. Even at the same commission rate of 6%, your fees would be $22,200. After paying these fees, and say $20k for the improvements, you would make $327,800. The old price would only net you $282,000.
Negotiate with the Buyer to Pay Agent Fees
When selling a home, you can negotiate with the buyer about who pays the commission. Sellers typically pay the entire commission amount to their listing agent. The listing agent then splits the commission with the buyer’s agent.
To reduce the fees you pay as the seller, negotiate with the buyer to pay their own agent or even both. Your fees would then drop to half of the 6% average. This is something that usually only works in a hot seller’s market where many offers have been made.
Hire a Flat Fee Real Estate Agent
Commission fees can be reduced naturally by hiring a flat fee real estate agent. These agents work on a set fee instead of a percentage of the asking price. This fee could be around $5,000.
If your home is sold for $300,000 at a 6% commission, your fees could be $18,000. By hiring a flat fee real estate agent, these fees drop to $5,000. As the seller, you should remember that the buyer’s agent still needs their share of the commission. At a rate of 3%, the buyer’s agent would receive $9,000. Your total fees would then be $14,000, which makes for great savings.
These types of agents can be hard to find. And remember, you get what you pay for. Agents that aren’t incentivized to go above and beyond rarely do.
Average Real Estate Agent Salary in Florida
Real estate agents that are good at their jobs can do well and good money. The total salary of a real estate agent depends on factors like:
- Client availability – how many people are looking to buy and sell?
- Market health – how quickly are homes selling?
- Competition from other agents and Realtors – how many agents service the same area?
The best agents understand how to maximize sales and close on homes quickly.
Real Estate Agents Make an average Salary of $93,000 in Florida
The Florida real estate market is currently very healthy. A healthier market allows for agents to make more sales. In 2022, the average salary for real estate agents is just over $93,000. This is $1,000 lower than the national average. An agent’s salary will typically increase as they gain more experience.
The salary a real estate agent brings in can also differ based on the city they work in. In cities like Orlando, the average salary is around $87,000. However, the average salary increases to $96,000-$98,000 in cities like Kissimmee, Tampa, and Miami.
Real Estate Commission in Top Cities in Florida
The average real estate commission in Florida is 5-6%. However, agents can ask for different fees depending on the city they work in. Listing agents are in higher demand in large cities like Jacksonville and Miami. As such, agents may ask for a commission of 6%. They might also be less willing to negotiate. In suburban areas and smaller cities, the commission could be closer to 5%. The reason for a lower commission is because competition isn’t as high.
What Goes into the Commission Rate for Florida Real Estate Agents?
This is a common question for anyone who buys or sells a home. The answer is that real estate commissions pay for a number of things. Commissions are high primarily because of the amount of work that an agent puts in.
A good selling agent will list and market your home, get pictures taken, make recommendations around changes and fixes, organize showings and open houses, help with closing paperwork, and a lot more.
When an offer is made on a home, real estate agents conduct negotiations. These tasks can be spread out over months, and when a commission is broken down to hours spent, it might not seem like so much.
Third Parties Require Payment
While 6% commission fees may seem high, each agent only receives 3%. From these fees, both agents will need to pay for any services they used while the home was on sale. For instance, part of the fees you pay will go to thethat represents your agent.
Your listing agent will also pay for marketing materials to increase exposure. If your home is on the market for months, these expenses can add up. Your agent will also pay for:
- Open house costs
- A professional photographer
- An interior designer to stage your home
Your commission fees cover these costs. As a seller, these services will pay off. When a professional photographer takes photos of your home, buyer interest should increase. These photos will be placed right alongside the online listings of your home. More interest equals more bids from buyers. If you receive more than one bid on your home, you’ll be in the driver’s seat during negotiations.
If you ask for help when buying or selling a home, the agent you hire will receive a commission. Even though these fees can be high, the benefits far outweigh the costs. The entire process of buying or selling a home is more efficient with an agent by your side. When you buy a home, you won’t even need to pay commission fees. These fees are already accounted for in the price of the home.
As a buyer, the extra expenses you pay will include property tax and homeowners insurance. When selling a home, you can reduce the commission fees by negotiating with your real estate agent. Now that you know what the average commission is for Realtors in Florida, you should be ready to move forward with buying or selling a home.