Short Answer
A real estate commission is the fee paid to real estate agents for their services in a transaction. It is typically calculated as a percentage of the final sale price, usually 5% to 6% in New Jersey. The commission is paid by the seller at closing and is split between the listing agent and the buyer's agent. The percentage is negotiable and can vary based on the agent, the market, and the services provided. The commission is one of the largest costs of selling a home.
The real estate commission is the primary way agents are compensated. In a typical transaction, the seller agrees to pay a commission to the listing broker, who then splits it with the buyer's broker. The total commission is typically 5% to 6% of the sale price, though it can be higher or lower depending on the market and the agreement. On a $400,000 home, a 6% commission would be $24,000, split between the two agents. The commission is paid at closing from the sale proceeds. The commission covers the agent's services, including marketing, showings, negotiations, paperwork, and guidance through the closing process. Commission rates are negotiable and should be discussed and agreed upon before signing a listing agreement. Some agents offer different service levels at different commission rates. Discount brokers may offer lower commissions for limited services. The commission is typically higher for full-service agents who provide comprehensive marketing and support.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
Commission is a significant cost of selling a home, and you should understand exactly what you are paying for. I am transparent about my commission and the services I provide. I believe in earning my commission by delivering results, not by charging a high percentage. When you interview agents, ask what services are included in their commission. A higher commission may be worth it if the agent provides exceptional marketing, photography, and negotiation. A lower commission may save you money upfront, but it could cost you if the home sells for less.
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