With mortgage rates and real estate prices soaring, buying a house is costlier than ever. But it is not just buyers who are suffering within the buying process – sellers are also having to shell out tens of 1000’s of dollars for the transaction.
Americans report spending nearly $55,000 to sell the average-priced home, and 40% of that quantity is commissions paid to realtors. Other expenses include repairs, improvements, renovations, closing costs, concessions, moving costs, marketing and signage, based on a report published on Monday by Smart Real Estatea platform that connects buyers and sellers with real estate agents.
The total costs surprised 64% of sellers – and had they known the true cost of selling their home, 89% of them would have made a unique decision. The report is predicated on a survey of greater than 1,000 Americans who sold a house between 2022 and 2024.
“Real estate values have been rising at a rate that has outpaced wages year after year for too long. Yet the seller of a home is expected to pay a commission of 2 to 3 percent to both the broker and the selling agent,” says Christopher M. Naghibi, executive vp and chief operating officer of First Foundation Bank Assets. While net commissions are increasing as a result of rising property prices, the workload of agents has not necessarily increased. “Many sellers are not aware of this nuance until they sell their first property, but this has been the case for decades.” Naghibi can also be an actual estate agent and owns his own brokerage office.
The biggest costs of selling a house, based on Clever Real Estate’s study, are real estate agent commissions, which average between $10,000 and $11,000. Other top costs include repairs, improvements and renovations, which average $10,000; closing costs, which cost the vendor $8,000; and buyer concessions, which cost about $7,200.
“The brokerage commissions are the price you pay for a professional to handle your transaction – just like a lawyer if you get sued or a dentist if you have a toothache,”
Melinda Günthera worldwide consultant with Premier Sotheby’s International Realtytold Assets“If they’re not happy with the service they received, that’s one thing. But expecting someone to handle your sale for free and professionally isn’t realistic.”
How the NAR settlement could affect an actual estate agent’s costs
Back in March, the National Association of Realtors, one among the biggest industry associations within the country, agreed to a $418 million settlement over an alleged conspiracy to extend broker commissions. While the NAR still denies any wrongdoing in these cases, the organization said it might prevent broker compensation offers on MLS and require users to conclude written representation contracts with buyers.
For homeowners and prospective buyers, which means a change within the commission structure is feasible. This might be particularly helpful for sellers.
“By far the most expensive aspect of selling a home is the commissions for the agent and the seller,” says Naghibi. “Both fees are paid by the seller.”
However, changes in commission structures could end in a price burden for buyers, says Amanda Orson, founding father of the off-market real estate marketplace galleontold Assets.
“The NAR [settlement]which can end in changes within the structure of commissions, could potentially shift more of the price burden onto buyers,” says Orson. “This could reduce some costs for sellers, but requires each buyers and sellers to be higher informed and ready for these financial dynamics.”
For this reason, Orson recommends buyers familiarize themselves with the commission structure before signing a brokerage agreement. Orson’s company takes the broker out of the home-buying process and allows buyers and sellers to interact directly with one another to finish the transaction. She compares Galleon to Expedia, which “made travel bookings easier,” and Robinhood, which “simplified stock trading” by making it “easier for experienced buyers to navigate the home-buying process autonomously, efficiently and affordably,” Orson says.
For real estate veterans, it’s no surprise that the market is moving on this direction. Over time, Naghibi has observed that technology is giving consumers more access to the tools mandatory to know their local real estate market and list their very own property.
“These were tasks that have always been an essential part of a real estate agent’s job,” says Naghibi. “A good real estate agent is incredibly valuable, but as real estate prices have risen, so have the corresponding commissions.”
