Realtor Commission Fees & Rates

Realtor Commission Fees & Rates

Massachusetts real estate commission rates impact all home sales.  How much is the average real estate commission? The average real estate commission rate for selling a home is between 5% and 6% of the sale price.

Guilty National Association of Raltors Ruling in Burnett vs. NAR et. al Will Soon Change Commissions

Historically, sellers pay ALL real estate agent commission and fees. However, when NAR, Homeservices of America, and Keller Williams were found guilty of conspiring to keep commissions artificially high, change was set in motion.

Who pays realtor fees in Massachusetts?

Many consumers are far less familiar with the Nosalek v. MLS PIN lawsuit than the NAR guilty verdict.  MLS PIN is not a Realtor owned or operated MLS and therefore not subject to the NAR ruling, yet MLS PIN is being sued and the Department of Justice (DOJ) has rejected the settlement reached in October 2023.  What this means for Massachusetts consumers is sellers still must offer compensation to a Buyer’s Agent, yet this will absolutely change in the future when the DOJ brings closure to the Nosalek v. MLS PIN lawsuit.

Whether you’re a for sale by owner (FSBO) using a flat fee MLS listing service or a traditional full-commission brokerage, or a buyer, real estate fees are a material component of any real estate transaction. You’ll be better prepared and equipped throughout the real estate transaction process if you understand how real estate commission rates are established.  

No standard real estate commission rates

Despite the outcome of the 2023 Burnett vs. NAR et. al  case, both buyers and sellers need to realize there are no “standard” real estate agent fees that can be charged by a real estate agent or broker.

While there may in an anecdotal manner be an average or typical real estate agent commission rate that develops in any given market, there is no single commission rate, Realtor fee, or standard real estate commission percentage rate for real estate agents, brokers, and Realtors and the services they provide.

Are real estate fees fixed?

Naturally, an average will develop over time, yet no entity in the US real estate market dictates or sets real estate agent commission fees. Why not?

It comes down to an issue of antitrust law. Specifically, the Sherman Antitrust Act, dated 1890, which prohibits certain business activities that reduce competition.

Ultimately, real estate buyers and sellers have a choice in who they seek to represent them and the corresponding Realtor fees that they pay for services rendered, and therefore competition exists.

That said, an individual real estate brokerage can mandate their agents all charge a certain commission when listing a home for sale, that’s perfectly legal and at the discretion of the brokerage.  What’s not allowed is colluding among brokerages to use a specific commission rate, in effect, setting prices (commission income) in a market.

It was a landmark 1979 lawsuit, United States v. P Foley, that tied up Realtor fees with antitrust law and both heightened the scrutiny on real estate agent fees and altered the course of how real estate brokers conduct themselves as it relates to compensation from clients.

Sherman Act, 15 U.S.C. § 1 Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

Real estate agent commission splits

Rarely discussed, there is an additional set of “splits” that take place, between the individual agents and the brokerage firms for which they work – individual agents, or real estate salespersons as they are called in Massachusetts, do not retain the entire gross real estate commission on a transaction. In the above example, the 3% each that the listing agent, and separately, the buyer’s agent receives is actually given to their brokerage firm and the firm takes a percentage and passes on the rest directly to the agent.

Realtor Commission Fees & Rates FAQ

Historically, when a homeowner sells they end up paying a total of about 6% in commission and fees.

As there's no transparent record of what listing brokerages charge, one can reasonably assume the average total commission in Massachusetts is 5%.

The two most common total commission percentages are %5 and 6%.

Most often, Realtor fees are split evenly 50/50 between the agents (really the brokerages) involved in a real estate transaction.

The average total commission is somewhere between 5% and 6%.

Historically, the seller has paid all real estate commission and fees, but this will very likely change in the near future.

Most oftentimes the total compensation is a percentage of the sale price when listing a property for sale, and oftentimes one month's rent when listing a property for rent.

In effect, property owners pay all Realtor fees when selling.

That total compensation or real estate commission rate is then split between the listing agent and the agent or broker that brings the buyer to the transaction (sometimes referred to as the cooperating broker). The split between the two is at the discretion of the listing agent, and agreed upon in writing with a seller before a property hits the MLS. The property owner can influence how the compensation is split, but rarely does in practice.

As an example for illustration purposes, a property owner and listing agent come to an established agreement that the total compensation, or real estate agent commission rate, for the listing of a property for sale will be 6%. It is then at the discretion of the listing agent to offer the cooperating broker, if there is one, part of that commission rate, for example, splitting it in half and providing 3% to the buyer's agent.

Interested in learning more about how buyer’s agents get paid, visit how much commission do buyer’s agents get paid?

MA Real Estate Agent Fees & Commission

Real Estate Agent & Realtor Commission Fees Massachusetts

The latest (somewhat) thorough assessment of real estate commission fees was released in a 2011 real estate agent compensation report by Inman News.  After polling hundreds of real estate brokers and agents, their data show Realtor commissions for each real estate agent involved in a real estate transaction average between 2% and 3%.

So how much is real estate commission? The chart below describes, as a % of sale price, the typical real estate agent commission for a single transaction side (i.e. an individual listing agent, or separately, an individual buyer’s agent).

You will note from the below chart that the majority of respondents fall between 2% and 3%, with the skew going closer towards a 3% real estate agent commission rate per transaction side – these percentages represent the compensation each real estate professional receives, and in effect, need to be doubled to accurately represent the total Realtor fees for selling your home.

The total average real estate commission rate for selling a home is between 5% and 6% of the sale price.

Average Real Estate Commission Rates

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