How To Avoid Realtor Fees: The Complete Guide

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How To Avoid Realtor Fees: The Complete Guide

Published Jun 15 



The housing market is hot right now. With housing prices higher than ever and showing no signs of stopping, many American homeowners consider this an optimal time to sell. Furthermore, there is no shortage of buyers, from single families looking to break out of their apartments after COVID-19 to real estate companies looking to expand their catalogs and flippers trying to capitalize. Simply put, listings don’t last for long in our current market.

If you’re going to sell your home, you will want to get the most out of it. One of the primary ways you can take home some extra cash from your home sale is by saving on realtor fees. These fees are a staple part of any real estate transaction with a brokerage agency. Thankfully, you can use some of these handy techniques to either reduce or outright eliminate realtor fees.

What Are Realtor Fees?

If you sell your home for $500,000 through a realtor, they will take $30,000 as a realtor fee. This fee is the agent’s commission, and the national average is around 6% of the total sale price. This commission is then divided between the seller and the buyer’s agent. Most of the time, the seller pays the entirety of this commission, meaning you will pay for the agents on both sides.

Can You Sell a House Without a Realtor?

The first and most straightforward way to avoid realtor commissions is not to use a realtor. The industry term for selling without a realtor is For Sale By Owner (FSBO), and it can save you vast amounts of money. Selling a home without a realtor means that you will have to take up all of the responsibilities that the realtor typically manages. Your first barrier to entry will be getting your home listed through the Multiple Listing Service (MLS). The MLS is the primary means by which homes are listed and sold. You will also have to undertake the following responsibilities and more when selling a home on your own:

  • File all paperwork and mandatory disclosures
  • Create an accurate listing price
  • Properly market your home to potential buyers
  • Make your home show-ready
  • Schedule home inspections
  • Conduct walkthroughs/work with buyer realtors to conduct walkthroughs
  • Host all open houses
  • Manage closing costs
  • Handle coordination with lenders
  • Hire a real estate attorney

While you will undoubtedly save money by selling your home yourself, you’ll increase the amount of work you will have to undertake. Finally, don’t forget that you will still have to cover the 3% buyer’s agent commission. Generally speaking, the only people who should consider going FSBO are the following:

  • Individuals with industry experience in buying and selling homes
  • Anyone selling in a boom or “hot” market
  • Anyone with a property that sells itself
  • Anyone who is consistently being approached to sell their property

How to Avoid Realtor Fees

If you’re looking to cut down on realtor fees without going all-in on selling your own home, there are still plenty of tricks to reducing that steep 6% commission. Remember that we are in a seller’s market and that competition is fierce across the board, so you might be able to leverage multiple of these techniques to get the most out of your sale.

Negotiate Your Realtor’s Fee

The phrase “everything is negotiable” applies to real estate more than any other market. Everything is a massive negotiation from the first phone call to the last signature, including realtor fees. Realtor fee negotiations are standard, and many realtors are willing to be flexible with their commission to guarantee a client. When beginning to work with a realtor, be straightforward and ask if they are willing to negotiate their fee, and if so, you’re golden. If not, there’s no shame in turning them down and shopping for a realtor who is willing to work with you.

Sell Through the Same Realtor You Buy Through

Promises of future deals are great ways to leverage negotiating power. When selling through an agent, try leveraging a future purchase to save on your current commission. By buying a home through the same agent you sell through, they will get a commission on the current home sale price and your future home purchase. Since they will be getting two commissions, albeit one later down the line, they may be more willing to take a lower commission price now.

Shop for the Best Deal

Like any high-value purchase, you should always shop around when buying or selling a home. By shopping for the right realtor, you will find someone more willing to negotiate and be able to leverage your negotiations from a stronger position. Since our market is ultra-competitive, realtors know they will have to fight to obtain clients. Mentioning that you are currently shopping for the right realtor will make them more likely to negotiate their fees with you.

There are other benefits to shopping for agents. First, many brokerage agencies do not allow their agents to negotiate or adjust their commission rates. This industry standard can be unfortunate, but by explaining that you’re shopping for an agent willing to negotiate their rates, you can eliminate agents who cannot negotiate because of their agency. Second, shopping allows you to find an agent who is right for you. It might sound odd, but selling a home can be a personal experience, and a real estate agent will be negotiating on your behalf with the buying agent. It pays off to ensure that your agent understands what you need out of the sale and is willing to work with you.

Shopping for the right real estate agent can take time, patience, and perseverance, but it pays off in the long run.

Use Third-party Sellers and a Flat-rate MLS Listing Service

While listing on the MLS through a realtor is the primary way homes are sold, there are plenty of alternatives. Generally, you have two options in FSBO sales for getting your home seen by buyers. You can either post it on a third-party listing, such as Zillow or gain access to the MLS through a flat-rate listing service.

Use caution when dealing with third-party listing sites, as some can charge fees larger than a real estate agent’s fee or are fraught with scammers. Here are some of the most reputable third-party real estate sites you can list your house on:

  • Zillow: Zillow is by far the most popular real estate website out there. It doesn’t charge a commission, and listing a home is free. However, some catches come along with Zillow, namely that they separate FSBO and realtor listings, making it more difficult for buyers to find your property. Furthermore, Zillow will try to connect potential homebuyers with local Zillow affiliated agents, who will try to collect a 3% commission fee from you.
  • Meta (Facebook) Marketplace: Meta allows you to sell just about anything on its marketplace, including homes. In 2017, Meta, then Facebook, added a real estate section to its marketplace, allowing its users to sell their homes through direct listings. You can even purchase advertising and listing packages to get your home listed on the MLS. You can also advertise and link your listing on local pages and related groups, creating a great source of free advertising. This marketplace is free to use and does not take commissions but is more limited than websites like Zillow. Also, scammers and hackers are known to use the marketplace, so proceed with caution and be sure to beef up your online security.
  • FSBO.com: This site allows you to list your FSBO home for a small fee to a surprisingly large number of viewers. FSBO.com is one of the most popular FSBO sellers out there, and it offers packages with syndication to the MLS and other websites like Zillow. This site is one of the most reliable FSBO-focused websites out there. Unfortunately, its app has poor reviews and is known to update slowly.

If you’re looking to get your property directly listed onto the MLS without the aid of a real estate agent, you can always turn to a flat-fee listing service. These companies only list properties onto the MLS, so they won’t be able to help you advertise or manage the property sale. Still, if you’re looking for the quickest and cheapest way to get your property out there, these websites are the way to go, and these are some of the most popular:

  • ISoldMyHouse.com: ISoldMyHouse is one of the oldest MLS listing services, with a strong reputation and decent user base. While it doesn’t have as many bells and whistles as some other listing services, it has, on average, much higher reviews, a high ranking with the Better Business Bureau (BBB) at an A+ with 4.7/5 on user reviews, and is an industry mainstay. The only major downside to ISoldMyHouse is that it has higher than average costs compared to other MLS listing sites. Its service packages range from $299-$399, which is just above the industry standard.
  • FSBO.com: We have already mentioned FSBO.com on this list as a company you can use to sell your home directly, but it’s also one of the most reliable MLS listing websites. While expensive, its $399.95 MLS service has positive reviews and has syndication with other popular online real estate sites like Zillow, Redfin, and Realtor. We should mention that FSBO.com does not have accreditation on the Better Business Bureau, but it is verified through Trustpilot and carries excellent overall reviews.
  • Houzeo.com: Houzeo is a more expansive MLS service compared to others on this list. It offers several plans, ranging from a Bronze plan at $299.99 all the way to its Platinum plan at $999.99. The lower plans are admittedly bare-bones, with the Bronze plan even charging $25 if you want to make changes to your listing. But even the lowest level plan offers syndication on other real estate sites like Zillow, with the high-end packages offering elements like custom yard signs, showings, and even brokerage services.

Use a Discount Broker

One of the most appealing alternatives to standard listing agents is discount real estate brokers. A “discount broker” is an umbrella term describing any brokerage company working for reduced or limited commission, usually falling between 1-2%. These companies are usually local and offer a wide variety of service models. Some only offer MLS listings and are usually the cheapest of the bunch. Alternatively, others offer the same level of service as standard brokers, only at a much-reduced rate. Discount brokerages can get away with offering less because they typically use innovative, team-based models for buying, selling, and managing properties. When using a full-service discount broker, you will be trading off the personal connection and one-on-one communication afforded by standard home sellers. Several agents or other employees will be working on selling your property, and you may not communicate with the same person twice.

The Bottom Line

Home selling is a stressful, difficult process. While expensive, real estate agents and brokerage companies can help take the weight off by managing your home’s sale for you. But if you’re looking to save some cash, cutting costs on your real estate agent’s commission can be an appealing option. There are a number of techniques and alternatives that can work, from getting the most out of your negotiations on agent fees to using MLS listing services or discount brokerages. 

                                      




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