By state law, real estate commissions are fully negotiable. There is no set fee, although 2.8% on each side of the transaction is very common. HOWEVER, listing a home and doing the marketing is much, much less work than selling a home (working with the buyer). Buyers take much more work, time and effort. They deserve good representation and that takes a lot of work. So, a 2.8% 'selling' commission is probably fair.
When I worked out of the Keller Williams Highlands Ranch office my expenses and splits were:
2.8% commission on a $300k sale: $8,400-
Less; 30% commission split to the company: $2,520-
Less: 6% franchise fee: $504-
Gross commission: $5,376-
Less any 'referral fees' from company leads: $2,100-
Potential final commission: Approximately $4,000-
Plus Additional Expenses:
Monthly franchise office expense: $75+
Annual Realtor Association fees: $450+
Company website monthly fees: $25+
We were always encouraged to not discount our commissions because we had all the big company resources behind us. But, there are not really any special resources. All the brokers are Independent Contractors, not employees. The main tool we all use is the Denver Metrolist Service, the MLS. Everything happens there, whether you are a new broker, part of a national franchise, or a complete independent.
The Realtor Association is just a marketing organization based in Chicago. In Colorado, about half of all licensed brokers are not Realtors, Typically, they charge much less because they don't have to pay all the fees. You get the same services from an experienced broker, but none of your money goes to an out of state national franchise or the Realtor organization.
I'm no longer working out of a national franchise office. I'm at Brokers Guild, one of the largest brokerages in Colorado, with over 900 agents. It's locally owned and only allows brokers with more than two years of experience. So, now when I list a property for sale I can charge much less and still make the same, or more, total compensation:
2% commission on a $300k sale: $6,000-
Transaction & Record Keeping Fees: $395- per closing
- No monthly expenses, no commission splits, no franchise fees and no Realtor dues.
- You keep more of your equity and I keep more of my commissions.
Of course, when I'm representing a buyer, I'm still hoping to get a full 2.8% commission for my hard work. That's usually the tougher side of most any real estate transaction.
So there. That's how the numbers work out. And remember, by state law, all commissions are fully negotiable.