Agent commissions are a normal part of real estate transactions—but when you're an investor doing multiple deals a year, they can feel like a big line item. The key is understanding how commissions work and how to make sure you're getting value for what you're paying.
Here’s what investors need to know.
1. Who Pays the Commission?
Typically, the seller pays both the buyer’s and listing agent commissions. These are usually split 50/50 and come out of the sale proceeds.
For buyers, that means you’re not technically paying out of pocket—but that cost is baked into the property price.
For sellers, commission is a real expense that affects your net proceeds.
2. Typical Commission Rates
Standard commissions are:
- 5% to 6% of the purchase price (total)
- 2.5% to 3% to each side (buyer’s and seller’s agent)
These are negotiable—but in hot markets or lower-priced deals, you may find less flexibility.
3. How Commissions Affect ROI
As an investor, commission impacts your:
- Cash-on-cash return (if buying at higher prices)
- when selling
