Since real estate commission is typically one of the most sizable expenses you face when deciding to sell your home, knowing the average commission rate in both your state and the nation is an essential first step to ensuring you don’t end up overpaying. In 2022, the average rate for real estate commission in Texas was 5.59% — which means over $17,500 of the average home sale went to cover this cost.1
While Realtor fees in Texas have historically fluctuated from year to year, this is still a dollar amount that might surprise you. What are the factors at work in dictating this average, and what can you do as you plan for selling your home in order to save as much money as possible?
Here’s everything you need to know about the 2023 real estate commission in Texas and the steps you can take to reduce the rate you pay as much as possible once your home sells.
One of the first steps in putting your home on the market is to enlist the help of a real estate agent. You’ll work with them to prepare your home to sell, determine how much you should list your home for, and market it to potential buyers. The real estate agent takes care of many tasks related to selling a home — they also bring the notoriety and connections of their brokerage to the table, expanding the reach and reputation of your home’s listing.
For their hard work, your real estate agent receives Realtor fees in Texas for the sale of your home. The commission isn’t paid up front, so you don’t need to worry about having the money on hand at the time you begin working together. Once your home is sold, the agreed-upon percentage will be taken off the top and divided between the buying and selling agents as part of the closing process.
Typically, this is approximately a 50/50 split, though not always — and depending on where the agent works, an additional portion of their commission may be paid to their brokerage. This means that an agent selling a $500,000 home with a 5% real estate commission will generally walk away with $12,500 for them and their employer.
While there are national real estate commission averages (5.37% in 2022) and state averages (5.59% was the average Realtor fee in Texas in 2022), these are not static numbers, and they’re also not written in stone.1 As a home seller, you have plenty of opportunities to reduce what you pay in real estate commission. When you begin working together, you and your real estate agent negotiate until you arrive at a commission rate that works for both of you.
The national average commission rate has fluctuated somewhere between 4% and 6% since the early 1990s, but in general, it’s been consistently declining. The exception was during the Great Recession, when commission rates once again climbed higher.2 While you may expect that a recession would drive the real estate commission rate even lower, interestingly enough, it seems that often in moments of widespread financial difficulty, people have historically been more willing to pay real estate agents a higher commission rate.
There are several factors driving the decline in commission rates, including increased competition from discount brokers and the fact that buyers and sellers alike have greater access to information than they once did.
Buyers were once at the mercy of real estate agents when it came to discovering new homes for sale — nowadays, anyone with an internet connection can browse listings. The real estate agent is less likely to be seen as the sole (or even the primary) source of information regarding the market. This has created conditions where buyers and sellers have more negotiating power when it comes to real estate commission.
In Texas, it’s well within your rights to negotiate the average real estate commission rate down to a lower percentage. However, because there is a state-wide average, it’s important to know that you may not get a better deal with a different agent if you push too hard. Here are a few things to consider that could make lowering the commission rate a great deal for both you and your agent:
There is no surefire way to reduce your real estate commission rate in Texas. We aren’t able to predict with complete certainty or control the forces that cause national and state-wide rates to fluctuate over time — but knowing the things we can control is important. Although every negotiation is unique, and each one hinges on a variety of factors aligning just so, being prepared will pay off in the end.
If you can, become informed on the current housing market, where your neighborhood falls in relation to others in terms of desirability, and what unique characteristics give your home extra selling power. These things will allow you to negotiate the best possible real estate commission in Texas, no matter the other factors at play.
Source 1: Real Estate Witch: "Average Real Estate Commission in Texas." Accessed January 25, 2023.
Source 2: BankRate: "Real estate commissions fall to new lows as homes fly off the market." Accessed January 25, 2023.
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