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Considering how high both mortgage rates and home prices have gotten, buying a home is more expensive than ever before. But it\u2019s not just buyers who are hurting in the homebuying process\u2014sellers dole out tens of thousands of dollars on the transaction, too.\u00a0<\/p>\n
Americans report spending nearly $55,000 on home-selling expenses for a median-priced home, and 40% of that figure represents commissions paid to realtors. Other expenses include repairs, improvements, renovations, closing costs, concessions, moving costs, marketing, and signage, according to a report<\/a> released on Monday by Clever Real Estate<\/a>, a platform that connects buyers and sellers with real estate agents.\u00a0<\/p>\n The total cost surprised 64% of sellers\u2014and had they known the true cost of selling their home, 89% of them would have made a different decision. The report is based on a survey of more than 1,000 Americans who sold a home between 2022 and 2024.<\/p>\n \u201cHome values have increased at a cadence that has outpaced wages year-over-year for too long. Yet, despite this, the seller of a home is still expected to pay a 2%-to-3% commission to both the listing agent and the selling agent,\u201d Christopher M. Naghibi, executive vice president and chief operating officer of First Foundation<\/a> Bank, tells Fortune<\/em>. While take-home commissions are rising due to increasing home prices, realtors\u2019 amount of work hasn\u2019t necessarily increased. \u201cThis nuance is lost on many sellers until they sell their first property, but that has been the practice for decades.\u201d Naghibi is also a real estate broker and owns his own brokerage.\u00a0<\/p>\n Indeed, some of the largest costs associated with selling a home include the listing-and-buyer agents\u2019 commissions, which average between $10,000 and $11,000, according to the Clever Real Estate study. Other top costs include repairs, improvements, and renovations, which total $10,000 on average; closing costs, which set sellers back $8,000; and concessions to the buyer, which cost about $7,200.\u00a0<\/p>\n \u201cThe real estate commissions are the price you pay to have a professional manage your transaction\u2014just like a lawyer if you\u2019re being sued or a dentist if you have a toothache,\u201d\u00a0<\/p>\n Melinda Gunther<\/a>, a global adviser with Premier Sotheby\u2019s International Realty<\/a>, tells Fortune<\/em>. \u201cIf they didn\u2019t like the service they received, that\u2019s one thing, but to expect someone to manage your sale for free professionally is not realistic.\u201d<\/p>\n Back in March, the National Association of Realtors, one of the country\u2019s largest industry associations, reached a groundbreaking $418 million settlement<\/a> over an alleged conspiracy<\/a> to inflate realtors\u2019 commissions. While NAR still denies any wrongdoing in these cases, the organization said it would prevent broker compensation offers on MLS and require users to complete written representation contracts<\/a> with buyers.<\/p>\n What this means for homeowners and prospective buyers is that a change in commission structure is possible. That could be particularly helpful for sellers.\u00a0<\/p>\n \u201cBy far and away the most expensive aspect of selling a home is paying for both the listing agent and selling agents\u2019 commissions,\u201d Naghibi says. \u201cBoth of those fees are paid by the seller.\u201d<\/p>\n However, changes to commission structures could cost-burden buyers instead, Amanda Orson, founder of off-market property marketplace Galleon<\/a>, tells Fortune<\/em>.\u00a0<\/p>\n \u201cThe NAR [settlement], which may lead to changes in how commissions are structured, could potentially shift more of the cost burden to buyers,\u201d Orson says. \u201cThis might alleviate some costs for sellers, but will require both buyers and sellers to be more informed and prepared for these financial dynamics.\u201d\u00a0<\/p>\n Because of this, Orson encourages buyers to understand the commission structure before signing a buyer\u2019s agent agreement. Orson\u2019s company takes the agent out of the home-buying equation, allowing buyers and sellers to connect directly for the transaction. She equates Galleon with Expedia<\/a>, which \u201cmade travel booking easier,\u201d and Robinhood, which \u201csimplified stock trading,\u201d by making it easier for \u201cexperienced buyers to navigate the home buying process autonomously, efficiently, and cost-effectively,\u201d Orson says.<\/p>\n It\u2019s not surprising for real estate veterans that the market is turning this way. Over time, Naghibi has seen technology give consumers more access to the tools necessary to understand their local real estate market and list their own property.\u00a0<\/p>\n \u201cThese were tasks that were historically a significant part of a real estate agent\u2019s job,\u201d Naghibi says. \u201cA good real estate agent is incredibly valuable, but as home values have risen, so have their respective commissions.\u201d<\/p>\n<\/div>\nHow the NAR settlement could change the cost of having a realtor<\/h2>\n
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