Reviewed by: Brandon Brown  

If you’ve ever sold a home, you know the sting of seeing thousands—sometimes tens of thousands—of dollars vanish into Realtor fees. Standard real estate commissions typically hover around 5–6% of the home sale price, which can feel like a hefty price tag for homeowners. This is a cost many consumers find difficult to defend as they reflect on the value of the services they receive in return. So, why are these commissions high? And, more importantly, is there a way to sell your home without paying so much in commission? With home sale prices continuing to rise, many buyers and sellers are questioning whether real estate agent commissions are still worth the cost. The good news? You have options. Companies like FlipSplit offer a cost-effective, hassle-free alternative that helps you keep more money in your pocket while simplifying the selling process. Let’s break down the real reasons Realtor fees are so high and explore whether there’s a better way to sell your home.

How Do Realtor Commissions Work?

Standard Commission Breakdown

Most people know that when you sell a house, you have to pay commission to your real estate agent. Realtor fees are essentially the cost of the professional expertise provided by real estate agents. But what happens to that money? Typically, that 5–6% commission isn’t going straight into your agent’s pocket. Instead, it’s split between multiple parties.

• The listing agent (the one representing the seller) and the buyer agent (the one bringing in a buyer) usually split the commission 50/50.
• Both agents then have to share their cut with their brokerage, often giving up anywhere from 10–50% of their earnings.

This means a real estate agent may not actually be pocketing as much as you think—and they still need to pay brokerage splits, upkeep their real estate licenses, and cover other expenses.

What Services Are Covered by Commissions?

So, what exactly are you paying for when you hand over a percentage of your home sale to an agent? Realtor fees cover a variety of services that are meant to help sell your property faster and at a higher price. These include:

• Marketing and Listing Costs – Professional photography, paid advertising, and MLS listing fees are focal points, as consumers invest in homes that stand out.
• Negotiation Expertise – Experienced agents negotiate offers on your behalf, working to get you the best deal.
• Transaction Coordination – Agents handle the paperwork, ensuring everything is done legally and correctly. Having a comprehensive transaction coordination ensures that real estate deals are legally compliant and smooth from start to closing.
• Compliance and Legal Protections – A licensed Realtor understands the complexities of the home selling process, reducing the risk of legal issues. In many states, real estate agents help sellers navigate seller disclosure legal requirements, which is one of the services covered by high realtor fees.

While these services can be valuable, many homeowners wonder if they’re worth paying such a high commission—especially when alternative selling options are available.  

Why Are Realtor Fees So High?

The Risk-Based Model

One of the biggest reasons real estate agent commissions are so high is because of how agents get paid. Unlike most professionals who earn an hourly wage or salary, real estate agents work on commission only. Agents are only paid if the deal goes through, meaning their earnings are tied to the successful sale of a property. This means they could spend weeks or even months working on a listing—paying for marketing, showings, and paperwork—only to walk away with nothing if the home doesn’t sell. To compensate for this uncertainty, agents charge higher commission rates to ensure they can cover their expenses and still make a living.

Operating Costs for Agents and Brokers

Many homeowners assume that because realtors make thousands from a single home sale, they’re keeping all of it. In reality, most agents face significant business expenses and cannot work hourly; their fees cover support from their brokers and other necessary costs. These expenses include:

• Marketing and Advertising – Agents invest in professional photography, virtual tours, staging, and digital marketing to attract potential buyers.
• Brokerage Splits – Many agents work under a brokerage, which takes a portion of their commission (often between 10-50%).
• Legal and Administrative Costs – Managing contracts, compliance, disclosures, and paperwork to ensure a legally sound transaction.
• MLS Access and Licensing Fees – Agents pay membership dues and ongoing education costs to maintain their credentials and access listing platforms.

Market Factors That Influence Commission Rates

Industry Structure & Market Control

The real estate industry’s structure maintains commissions high, as organizations like NAR set norms aligning with brokers. NAR has long been criticized for maintaining standard commission norms that benefit agents more than consumers. Additionally, recent antitrust lawsuits are challenging the traditional real estate commission structure, arguing that sellers shouldn’t be forced to pay buyer agent fees. If these cases succeed, it could lead to lower commissions in the future.

The Influence of Home Prices

As home prices rise, so do real estate commissions. A 5% commission on a $200,000 home is $10,000, but on a $600,000 home, that jumps to $30,000—despite the agent often doing the same amount of work. Unfortunately, real estate remains resistant to fee reductions like those seen with stockbrokers, keeping the average costs for selling your home high. This has left home sellers stuck paying high agent fees, even in today’s digital marketplace.

Comparing Traditional vs. Discount Brokers

Not all real estate agents charge the same. Here’s how traditional vs. discount brokers compare:

• Traditional Realtors – Charge full commission (5–6%) and provide full-service marketing, negotiations, and transaction coordination.
• Discount Brokers – Offer lower commission rates (1–3%), but may provide fewer services, such as limited marketing or but often provide fewer services, such as limited marketing, fewer showings, or minimal negotiation support. Sellers should weigh the trade-offs between cost savings and service quality to make sure the value is aligned with their needs.

How to Negotiate Realtor Fees

Can You Ask for a Lower Commission?

Yes—but that doesn’t mean you’ll get one. While some agents may be willing to negotiate their fees, many won’t, especially if they believe their services justify the full commission.

• Discount brokerages exist, offering lower commission rates, but they may provide fewer services. These may also lack the personal touch and detailed experience provided by traditional real estate agents.
• Some agents may agree to a lower percentage if the home is highly desirable and expected to sell quickly.

Tips for Negotiating Fees

While many sellers assume that commission rates are non-negotiable, the truth is that some agents are willing to negotiate their fees—if you know how to ask. Here are a few strategies to ensure that you don’t overpay:

• Shop around – Interview multiple agents and ask about their commission structures.
• Negotiate a tiered rate – Some agents may agree to a lower commission if your home sells quickly.
• Ask for a rebate – Some brokers offer commission rebates that put money back in the seller’s pocket.
• Offer dual representation – If one agent represents both the buyer and seller, buyers and sellers might reduce their fees.

What About Flat-Fee or DIY Options?

Some home sellers try to avoid commissions by using For Sale By Owner (FSBO) or flat-fee MLS services. While this can save money, it also comes with risks:

• Limited market exposure – Your listing may not reach as many buyers.
• Pricing mistakes – Without an experienced agent, you might overprice or underprice your home.
• Legal risks – Navigating disclosures, contracts, and negotiations without professional help can be tricky.

Understanding the Value of a Licensed Agent

While some sellers try to avoid Realtor fees by selling their property on their own (FSBO), working with a licensed real estate agent provides several key advantages:

• Access to a broader range of clients– Agents use MLS listings and marketing tools to reach more potential property buyers.
• Experience in negotiations – Skilled agents can help increase your final home sale price.
• Legal protection – Licensed real estate agents ensure all paperwork and disclosures are handled correctly, reducing the risk of legal disputes at closing.

Alternatives to Traditional Commission Structures

If negotiating doesn’t work, consider alternative models to save on realtor fees:

• Flat-Fee MLS Services – Pay a one-time fee to list your home on the MLS while handling the sale yourself.
• Limited-Service Agents – Some agents offer à la carte services, allowing you to only pay for what you need.
• Hybrid Models – Some companies provide a mix of discount brokerage services and traditional full-service offerings.
• A Direct Home Buyer Alternative – Unlike traditional real estate transactions, companies like FlipSplit operates as a direct home buyer, meaning sellers skip the agent commissions altogether. Unlike conventional methods where you need to pay a commission, the FlipSplit model handles everything. Homeowners receive a fair, upfront cash offer, with the added benefit of a profit split after renovations.

This unique model allows sellers to avoid high realtor fees while maximizing their home’s value, and without dealing with complicated negotiations or extended listing times. Plus, this is also a good option if you need to sell a house with foundation issues without making repairs, saving you more money.

Keep More of Your Home’s Value with FlipSplit

At the end of the day, real estate commissions remain high because of the way the industry is structured—but that doesn’t mean you have to accept them. With FlipSplit, you can sell your home quickly and keep more of your money. Our direct buying model eliminates the need for Realtors, listing fees, and traditional agent commissions—giving you a fair cash offer with a profit split bonus. If you’re tired of losing money to high commission rates, it’s time to explore a better way to sell your home. Get in touch with FlipSplit today and see how much you can save on your home sale.  

Reviewed by: Brandon Brown

As a long-time Asset Manager, Investor, Real Estate Agent, and Broker/Owner of BayBrook Realty in Orange County, Brandon Brown is one of FlipSplit’s lead Real Estate experts. Having worked on over 2,000+ real estate transactions, Brandon brings a depth of knowledge that ensures clients are appropriately treated with honesty and integrity. His insights and advice have been published in numerous blogs beyond FlipSplit, and he keeps a close eye on market trends and statistics, which are updated weekly on his social media pages. Outside work, you can find him participating and serving at church, cycling, mountain biking, surfing around Orange County and beyond, and enjoying time with his wife and two daughters.

Sources:

1. CNN Business. (2023). Why are real estate commissions 6%? – and why that’s about to change. https://edition.cnn.com/2023/12/03/business/why-are-real-estate-commissions-6-and-why-thats-about-to-change/index.html
2. Bankrate. (2025). Realtor fees: Who pays the commission and how much is it? https://www.bankrate.com/real-estate/realtor-fees/
3. Real Estate Magazine. (2023). Realtor fees: Are they justified? A critical look at the value proposition for consumers. https://realestatemagazine.ca/realtor-fees-are-they-justified-a-critical-look-at-the-value-proposition-for-consumers/
4. Investopedia. (2024). How real estate agent and broker fees work. Investopedia. https://www.investopedia.com/articles/active-trading/031215/how-real-estate-agent-and-broker-fees-work.asp