How Much Commission Does A Realtor Make? (Updated For 2022)

How Much Commission Does A Realtor Make? (Updated For 2022)

Whats in a Commission, Anyway?

What’s the first thing any new real estate agent wants to know? How much they can expect in commission. Many people assume that the entire Realtor fee goes to the real estate agent. But a real estate agent usually has to share their fee with the real estate broker they work under — and both the listing agent and buying agent split the fee.

A Realtor can make a lot of money, but it’s not all at once, and it does take work.

The full commission on a real estate sale is usually 4% to 6% of the sale. This money is split four ways: listing agent, listing broker, buyer’s agent, buyer’s broker.

Let’s say you’re the buyer’s agent. You’re selling a small, $100,000 house at a 6% commission — $6,000. You, the buyer’s agent, get $3,000. The listing agent also gets $3,000. Both the fees for the buyer’s agent and seller’s agent will be included in the closing costs.

But you don’t walk away with the $3,000, because you still need to pay your brokerage. Some brokers charge up to 50%. Often, it depends on how long you’ve been with the managing broker and how many clients you have. At the end of the day, you may be walking away with between $1,500 and $2,400.

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What the Agent Does

Neither the buyer nor the landlord sees much of the actual process the agent goes through to find a property and conduct the deal. This includes creating presentations, scheduling viewings of the spaces, gathering comps and other relevant data for the client and more.

Typically, a good broker has some way to keep up with all their clients and the associated meetings and to-do’s for each. Some of the best brokers will turn to CRE technology to help them out, specifically CRM platforms(client relationship management) such as ReThink, Apto or ClientLook

What Is a Commercial Real Estate Agent? 

Typically, there are two types of real estate professionals in this field: commercial and residential. What is the difference between the two? This video helps to explain it, but commercial real estate agents deal with commercial real estate, such as a business acquiring land for a new office or an existing building. Residential real estate agents help people find and buy their dream home. In other words, the day-to-day responsibilities of a commercial real estate agent are completely different than those of a residential real estate agent. A commercial sales agent has to know the trends of the commercial real estate industry for their market, so there is more research involved, and they tend to be more data-focused than residential real estate agents. They also have to deal with more leases than the average residential agent.

How to Save on Commercial Real Estate Commission Rates

Look for Off-Market Deals

Commercial real estate deals don’t require the presence of a real estate agent. If buyers and sellers find each other without the help of an agent, they won’t have to pay any commission fees.

Of course, this is easier than it sounds. This strategy requires buyers to hunt for commercial properties and sellers to negotiate on their own, but it may be worth saving 6% in commission fees.

Look for Wholesale Deals on Commercial Transactions

If you have looked into different ways to make money from real estate, you may have run across the idea of wholesaling. Wholesalers can make commission fees without even leaving their home; they simply take a small fee by connecting sellers to buyers.

People who connect sellers and buyers will still charge a commission fee, but since they wear multiple hats in the real estate process, these fees typically aren’t as high. In addition, investors can find wholesale properties at a lower price than other properties. Even if you are paying commission fees, they won’t be as high as they would be if you go through more traditional methods.

Negotiate the Terms

In a commercial sale, the contract will state who pays the real estate commissions. In certain deals, the buyer may take on the responsibility of these commission fees. We can’t guarantee that the buyer will be willing to take on these commissions, but you will never know unless you try to negotiate. Reach out to a commercial real estate broker for more information about how you can negotiate the terms of your contract.

Find a Flat Fee Service

Real estate commissions have caused buyers, sellers, and investors headaches for years. Flat fee services have found a way to eliminate those headaches while still finding you the property or buyer that you want.

Here’s how flat fee services work: you pay a flat fee. (Obviously.) The service connects you with an experienced commercial real estate agent in the area. You don’t have to pay a dime in commercial real estate commissions but you still get a high-quality deal. Flat fee services are a win-win for everyone in the commercial real estate process.

Learn more about how flat fee services can save you money on commercial real estate commissions here.

How is the Commission Paid to the Realtor?

Real estate commissions are paid once the home sale is closed. If you’re interested in a real estate career, you will need to be prepared to wait. A closing can take anywhere from 30 to 45 days, depending on how complex the sale is, and how sluggish the mortgage lender is. (

Cash sales can go much faster, but they’re rare.

While doing their due diligence, the escrow company will collect the money from the buyer. They will then pay out the seller, the agent’s commission, and other closing costs (such as inspections, property taxes, and other fees). The home buyer will then receive the deed once everyone has been paid.

Whether you’re the buyer’s agent or the selling agent, you’ll have to be aware that the sale can fall through. And if the sale does fall through, you’re not going to make a thing. If you can’t sell the property, you’re not going to make a thing. This is part of the uncertainty that can be inherent to being a real estate agent or associate broker.

What Is The Average Rate Of Commission Fees?

Before looking at the different ways through which you can reduce commercial real estate rates, it is important to first look at the average market rate.

As previously stated, the average rate of commercial real estate agent fees is around the 6 percent mark; similar to the average rate in residential real estate transactions. It is however worth noting that most real estate agents will be willing to lower this rate as a way of incentivizing their client for the business they have brought them.

In most cases, the rate will be anywhere between 5 and 6 percent for commercial properties worth anything below five million dollars. For properties worth more than this amount, most agents are willing to settle for a lower rate of up to 4 percent.

Now that you have an idea of the amount of money you might be forced to pay out, fully or partially, towards meeting the cost of having a commercial real estate agent handling your transaction you can read on to find out how you can reduce or entirely avoid this cost.

Negotiate For Better Terms

Did you know that you can reduce the amount of money you have to contribute towards the payment of commercial real estate agent fees by negotiating for friendlier terms from the beginning? If you didn’t know, now you know!

As a seller, you can negotiate to have the entire cost of real estate agent fees covered by the buyer, a common practice even in the world of residential real estate deals. However, you need to be a great negotiator to convince the buyer to shoulder the entire cost.

Furthermore, consider reaching out to your real estate agent and asking them for a better rate. If you handle a huge number of commercial transactions on a regular basis, most agents will be willing to offer you a reduced rate provided that you run most or all of your future business through them, for instance.

Go It Alone

It is possible for commercial real estate buyers and sellers to find each other negotiate and finalize property exchange transactions without the help of real estate agents. This way, you do not have to pay any fees to the real estate agent; hence, getting the opportunity to get the most out of your hard earned cash.

However, it is worth noting that even though this sounds easy and straightforward, it is nothing but. Buyers and sellers who are looking to engage in commercial real estate transactions must find ways of finding each other, negotiate and complete the entire transaction free of any assistance from professional real estate agents.

Fortunately though, all this work will pay off in the end as you will not have to pay any commission fees.

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Hunt For Wholesale Offers

Real estate investors looking to reduce or even do away with commission fees when making commercial real estate deals can also consider wholesaling as a solution to their problem. In most cases, wholesalers usually connect commercial real estate buyers and sellers in exchange for a small commission fee. This is mainly due to the fact that as opposed to real estate agents, these industry players do not have to leave their house/office or actively engage themselves in the details of each transaction.

Wholesalers create value to real estate investors in a number of ways. For starters, even though they charge a commission fee for brining buyers and sellers together, this fee is significantly lower than what commercial real estate agents charge. Secondly, wholesalers normally offer properties at significantly lower prices, wholesale prices, hence giving buyers the opportunity to make a higher level of savings, over and above the commission fees, at the end of it all.

Look For Flat Fee Services

If you are still yet to find a way to reduce or eliminate commission fees from commercial real estate deals from the above options, consider going with a flat fee service. These services are designed to help eliminate the problems that sellers and buyers associate with traditional real estate agent commission fees.

Flat fee services usually connect real estate investors with qualified and reliable real estate agents in exchange for a flat fee. After paying the flat fee, buyers and sellers do not have to fork out more money towards paying any real estate commission fees. As such, going through such services not only reduces the amount paid as commission fees but also ensures that you reap all the benefits of having an established real estate agent in your corner throughout the commercial real estate transaction.

Seek Rebates

You can ask for a rebate from your real estate agent when it comes to commercial real estate deals. A rebate, which is a refund of part of the funds paid as commission fees, can significantly reduce the amount of money that leaves your pocket.

The commission fees are usually split between the seller’s and buyer’s real estate agents. This essentially means that the buyer can get back most or all of the money contributed as their portion of the commission fees if their agent offers rebates, or they do not have an agent.

To avoid any surprises at the tail end of the deal, it is important for real estate investors to ask their agents whether they offer any rebates at the beginning, before making a commitment. This is due to the fact that not all real estate agents and brokerages offer rebates on commercial real estate transactions.

How Much Do Commercial Real Estate Agents Make?

It depends.

According to the National Association of Realtors random survey the median gross income is about $85,000 to $100,000 per year. 

However if they are worth one’s salt there are those that average $200,000 to over $500,000 per year.

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