Thinking of buying or selling a home in Florida? Then, you need to understand all the costs involved, including how much you will pay for working with a realtor. The Realtor fee is one of the most notable chunks of money you will set aside when buying or selling a house. So, factoring in the cost can help you avoid financial surprises and unexpected expenses. Plus, knowing how it works and what you’re paying for can help you make informed decisions about an agent or agency and negotiate the best possible commission rate.
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Explaining Realtor fee in Florida
A Realtor fee is paid to real estate agents for the services and expertise they bring to a real estate transaction. This fee is usually a percentage of a property’s final selling price and is pre-decided by the seller and the listing agent when drafting the listing agreement.
So as a seller, you pay the listing agent to promote the home, find a buyer, do all the paperwork, and ensure the transaction goes smoothly. For this, realtors take a cut on your final selling price, say 6%, on a $200,000 home. In this case, real estate agents involved (for both buyer and seller) would be paid $12,000.
There is no benchmark on realtor fees; the commission usually varies between 5 and 6% depending on the locality, micro market conditions, and, of course, the home!
Also, it varies depending on the property you are selling. For example, the commission you will pay a realtor for selling land will be way higher than a house as they take more time to sell.
The seller and the listing agent negotiate the realtor fees at the outset. This commission is factored into the home’s sale price and is only paid at closing. Both agents generally share the commission equally.
How Real Estate Agent Commissions Work in Florida?
The Realtor fee is one of the biggest expenses in a real estate transaction. It can be as much as 6% of the final transactional value. So if you sell a home worth $500,000, you could pay a whopping amount of $30,000 in realtor commission.
While this cost is unavoidable, it is negotiable. Its value changes from county to county and deal to deal depending on various factors, including your negotiation skills, the location of the property, and its condition.
How much is Realtor Fee in Florida?
Realtor fee ranges from 4.5% to 6-7% in Florida. Location, the value of the property, competition among realtors, the FSBO market, etc., determine the realtor fee in Florida.
The average realtor fee in Florida is 5.40%, slightly higher than the national average (5.37%). So, for a typical house in Florida worth $397,280, the agents earn a commission of about $21,453.
Here’s how you can calculate the realtor fee:
Realtor fee amount in Florida = Average home price X Average realtor fee %
= $397,280 X 5.40%
Given the buyer’s agent and listing agent share the commission equally, they get $10,727.
Buyer/Seller agent’s commission = Total commission ➗ 2
= $21,453 ➗ 2
1.2 How Does the Realtor Fee in Florida Compare to the Realtor Fee in Other States?
Realtor fees will vary in different states. Let’s compare the realtor fee in Florida to the realtor fee in other states.
|State||Realtor commission (%)|
1.3 Does the Realtor Fee Vary With Home Price in Florida?
The Realtor fee varies directly with the home price. Here’s a table to help you out!
|Home price range||5% Realtor fee||5.40% Realtor fee||6% Realtor fee|
|$225,000 to $275,000||$11,250 – $13,750||$12,150 – $14,850||$13,500 – $16,500|
|$300,000 to $350,000||$15,000 – $17,500||$16,200 – $18,900||$18,000 – $21,000|
|$375,000 to $425,000||$18,750 – $21,250||$20,250 – $22,950||$22,500 – $25,500|
|$450,000 to $500,000||$22,500 – $25,000||$24,300 – $27,000||$27,000 – $30,000|
|$525,000 to $575,000||$26,250 – $28,750||$28,350 – $31,050||$31,500 – $34,500|
1.4 How much is the realtor fee in the counties of Florida?
Realtor fee varies in the different counties of Florida, depending on the home price in each location. Let’s look at the average home prices and the realtor fee in the top 20 counties to live in Florida.
|County||Typical home price||Average realtor fee as 5%||Average realtor fee as 5.40%||Average realtor fee as 6%|
2. Who Pays the Realtor Commission in Florida?
The seller typically pays the realtor fee in Florida, as is the norm in the rest of the US. Once the buyer pays the price of the home, the seller pays the commission to the listing agent. The listing agent then, in turn, pays the buyer’s agent.
However, since the buyer pays the final price of the home, which includes the commission, it can be argued that technically it is the buyer who pays the commission.
3. Who Pays the Commission for a Rental in Florida?
The landlord pays the agent commission in Florida, like in most parts of the country.
It’s simply a matter of demand and supply. If it is a landlord’s market – where there are few houses for rent and many renters – the landlord is in a stronger position and can ask the tenant to pay the commission. However, in a tenant’s market – where there are more houses for rent than tenants – the landlord will pay the commission to get a tenant.
3.1 How much is the rental commission in Florida?
Different brokerages and agents charge rental commissions in different ways in Florida. Let’s look at some methods in which commission is charged here.
3.1.1 One month’s rent
The typical commission is one month’s rent. So if the monthly rent for an apartment is $1,000, the commission will be $1,000. In this case, the first month’s rent will not be paid to the landlord; it will go directly to the agent.
3.1.2 Percentage of the yearly rent
The commission could also be a percentage of the annual rent. For example, if the monthly rent is $1,000, the yearly rent would be $12,000. If the commission is 10% of the yearly rent, this will work out to $1,200.
Commission = Yearly rent X 10%
= $12,000 X 10%
3.1.3 Extended lease agreement
If the landlord and the tenant decide to extend the lease, the original agreement will mention the commission to be paid to the agent. This is usually the same as was paid when signing the contract.
3.1.4 Property management companies
Sometimes landlords hire property management companies to handle the maintenance and letting out of their houses. These companies will repair, maintain and take care of searching for tenants and letting the house. They charge the landlord around 10% of the annual rent for their services. The tenant does not have to pay the commission in this case.
4. What Is a Commission Split?
Real estate agents cannot accept commission payments directly from a seller. Instead, they need to work under a broker or brokerage. The broker has a higher license to accept the seller/buyer payment. The broker guides and advises agents and often provides them with the infrastructure needed to run their business. For this, they take a percentage of the commission. The commission-sharing ratio between the broker and the agent is called the commission split.
For example, if the agent and broker share the commission equally, the total commission will be shared between the listing agent and their broker and the buyer agent and their broker. If the total commission is $24,000, each agent/broker will receive $6,000.
Agent/broker’s commission = Total commission ➗ 4
= $24,000 ➗ 4
The commission split is higher in the case of an experienced agent. As they gain more experience, the split will keep changing. Splits could be anything like 50/50, 60/40, 70/30, or 80/20. Let’s look at how much this works out in the above case.
|Total commission||Split||Buyer/Seller agent’s share||Buyer/Seller broker’s share|
|$24,000||50:50||$12,000 ($6,000 each)||$12,000 ($6,000 each)|
|$24,000||60:40||$14,400 ($7,200 each)||$9,600 ($4,800 each)|
|$24,000||70:30||$16,800 ($8,400 each)||$7,200 ($3,600 each)|
|$24,000||80:20||$19,200 ($9,600 each)||$4,800 ($2,400 each)|
5. Is the realtor fee negotiable?
The realtor fee is always negotiable. There is no set percentage or fixed rate. It all depends on the market situation and changes from agent to agent. How much you save in commission will depend on how well you negotiate. You need to be cautious because some agents may reduce the commission and the services they generally provide without your knowledge. So to negotiate well, you need to be aware of the services generally provided by a full-service real estate agent.
5.1 What is covered in the realtor’s commission?
Let’s look at the services generally provided by a seller’s agent.
5.1.1 Pricing the property
The agent is the key to pricing the property correctly. If the property is priced too high, you risk the chance of buyer agents ignoring your house altogether, whereas if you price it too low, you may lose thousands of dollars. So it is crucial to quote the right price. An agent is well-versed in the market situation. They will look at similar homes in your area and how much they have sold for recently. They will also look at the amenities, your home condition, etc., and suggest a price that will get you the best deal.
5.1.2 Home staging
Agents can make your home look attractive. They may hire the services of a professional home stager to ensure that the house is decluttered and enticing when prospective buyers come along. The home stager will suggest improvements to each room so that you can quickly spruce up the house at the least cost and add value to get the highest price.
5.1.3 Home measurement and floor plan
The agent will make a floor plan by measuring the home. Prospective buyers highly appreciate this as it gives them an idea of the size of the home. This is also a way for the buyer to confirm the area mentioned in the agreement.
5.1.4 Professional photography
Clicking great pictures is the best way to get prospective buyers to inquire about the home. An agent may hire the services of a professional photographer to get the best images that can be promoted online and offline. These photographers bring in the right equipment and are also great editors who can bring out the best in these images.
5.1.5 Drone photography
This is probably the latest tactic to get even better videos and photos. Since a regular photographer cannot get aerial photographs of the home, drones are used to get great videos of the house covering the surrounding areas – these are features you might otherwise miss through standard photography.
5.1.6 Brochures and fliers
You can make glossy brochures of the home with the best features mentioned and showcased here. The agent may even hire the services of a copywriter to write the best possible description of the house. The description written by the copywriter can also be used while putting up the ad in other media.
5.1.7 Motion virtual tour
Nowadays, you will find you can take virtual tours of homes. Your agent will surely suggest this to you. Buyers can get a feel of the house in this way without even stepping foot outside their homes. Many realtor websites offer this feature, and buyers love to go through such videos as they save time and money by shortlisting homes in this way.
5.1.8 Social media, digital, and offline advertising
The agent will circulate the photographs and descriptions mentioned above in the online and offline media. They know exactly where to advertise to reach the right clientele. Social media, realtor websites, magazines, local newspapers, etc., are all great ways to reach the right audience quickly. They may also showcase the video of your home on Youtube, or make an exclusive website for the home, to showcase its many features. Agents also help each other out and showcase properties across each other’s websites for maximum exposure. They will also put a ‘For Sale sign in your yard to inform one and all that the house is for sale.
5.1.9 Multiple Listing Service (MLS)
Putting your home on the MLS is possibly the best thing agents can do. MLS is a database only accessed by agents, brokers, and realtors to list and search for homes. All the buyer agents will be going through this listing. In addition, Realtor.com and Zillow also pull data from the MLS and showcase it on their websites.
5.1.10 Managing showings and open houses
Agents will arrange showings when prospective buyers approach them to see your house. In addition, they will throw open houses, which are scheduled times when all the prospective buyers can come to the house and see it for themselves. The agent will also accommodate individual buyers when they request a showing and ensure they are present to answer questions.
5.1.11 Electronic lockbox
Agents will keep a log of all who have come to see the home and how long they have been in the house. This is an added layer of safety, and only those with appointments can access the house.
The agent will draw up the final contract, look at prospective buyers’ proposals, sift through them and check if the buyers are pre-approved for loans, and keep all the paperwork ready according to local and state laws. They will ensure that any additional paperwork specific to your location is ready. Agents will advise you on how to evaluate prospective buyers and their offers.
Agents are expert negotiators, and they will advise you on how to negotiate for the best price. They will speak to the buyers and try to get you the highest offer. They may reject offers that do not meet your criteria. This will save considerable time and effort. You will not have to go through all the inquiries from buyers. The agent will answer most of them and screen such questions. They will ensure only the relevant offers and questions come to your attention. Agents will also be present during meetings and negotiations with prospective buyers.
5.1.14 Explaining the process
The agent will explain the whole selling process to you and elaborate on terms you are unfamiliar with. So don’t hesitate to ask any questions. It is the agent’s job to make these complex terms and processes simple for you.
5.2 When to Negotiate Realtor Fee?
Negotiation is a complex and challenging process, to say the least. Mainly because you are negotiating with master negotiators – real estate agents. Getting them to reduce the commission can be quite a task. But there are some situations when you don’t have to try very hard. These situations themselves will help you lower the commission charge with little negotiation. So let’s take a look at these.
5.2.1 Premium or high-priced properties
If yours is a premium or high-priced property, the agent already gets a higher commission than the average. The agent’s work remains the same whether it is a high-priced or low-priced property. Hence they will be open to negotiation to get your business. Having sold a high-priced property also adds to the agent’s profile. Keeping all these ideas in mind, you can present your case for a lower commission and expect a positive outcome.
5.2.2 During off-season
There is usually an off-season time of the year for realtors. During this time, business is slow. If you time your sale during this period, it is possible that you would have to negotiate very little for a lower commission. Agents are looking for business during this period, and there is high competition for the available little.
5.2.3 When your home is well maintained and ready for sale
Agents will be impressed if you have cleaned up your home, given it fresh new paint, and done all the repair work to make it look squeaky neat and clean. Agents usually spend from their pocket to make the home sale-ready and hire staging services. In this case, they will save on costs and be more than happy to pass on the savings as a lower commission when you ask for it. Such homes are also sold quickly, which means the agent will get the commission quickly – an added point in your favor.
5.2.4 When you are selling or buying multiple properties
Usually, a home seller plans to buy a home immediately after. You can offer to route both transactions through the same agent. This will mean multiple businesses from the same customer for the agent. So when you ask for a commission, they will be hard-pressed to refuse your request since they don’t want to lose your business.
5.2.5 When the agent is new
New agents who have just started on their career paths are hungry for business. The higher the number of deals they do, the more they gain experience and higher incomes. Hiring a new agent will also mean you can offer them a lower commission in exchange for letting them work on the sale of your house. So few new agents will be able to refuse the offer. Plus, they will work extra hard to live up to the trust you have put in them.
5.2.6 When homes are selling quickly
If homes are selling quickly in your area, there is high demand. This also means the agent must do very little work to ensure your house is sold. In such a situation, the agent is saving on time and effort, and they will be willing to pass on the savings to you through reduced commissions. Make sure to research the market to find out if this is the case in your area before approaching an agent.
5.2.7 When you don’t require the complete services of an agent
Suppose you have already zeroed in on a buyer and only want the agent to do the rest of the work to complete the deal– in such a case, you can ask the agent to reduce the commission without hesitation. The agent does not have to promote the home or spend on attracting prospective buyers. They will save considerable time and money and be willing to lower the commission.
5.2.8 When an agent wants to enter your locality
Agents usually work in a selected locality. If your home gives them access to a new locality from which they can get more business, they will be willing to compromise on the commission. When you talk to the agent, find out which locality they operate in, which houses they have sold, and whether they are planning to expand to your area. If yes, you can offer them access to your locality on the condition of a reduced commission. There is a good likelihood that they will agree.
5.3 How to Negotiate Realtor Fee?
Knowing when and how to negotiate will make you even more successful. Agents are very good at negotiating, so you will need to brush up on these skills before engaging with them. Let’s look at a few ideas to get you started.
5.3.1 Be prepared to walk away
Perhaps the thing that realtors fear the most is losing business. If you put out there that you are not willing to compromise and are eager to walk away if you are not satisfied, agents will be more prone to back off and accept your offer to work on a lower commission. No law states you must sign a deal with an agent once you begin talking with them. Even if you have signed on with one agent and want to take your business to another, you can terminate the first agreement and move on if you are unhappy.
5.3.2 Talk to more than one agent
Don’t restrict yourself to one agent. Make sure to talk to multiple agents before you sign up with one. Find out more about the market when you speak to different agents, and mention that you are talking to many agents and will sign up with the agent who offers to charge you the lowest commission. You will be surprised how quickly they will accept your offer.
5.3.3 Offer to hold an open house
Open houses are when agents can meet many prospective buyers who come to see your home. This is a plus point for agents since they will be working on selling multiple properties and can showcase their other houses to the same clientele. Plus, prospective buyers can see your house on a single date and time. The more you offer to facilitate the deal, the more willing the agent will be to accommodate your request for a lower commission charge.
5.3.4 Reduce the agent’s expenses
Make sure you tell your agent that you do not want expensive services. For example, if you do not wish for drone photography or costly brochures and only want to advertise on websites, this will result in considerable savings for the agent. You can request them to stick to the basics and go the traditional way. This will make them more likely to reduce the commission for you.
5.3.5 Referrals to friends and family
If you have friends and family who also plan to buy or sell houses shortly, promise the agent that you will put in a word for them and get them more business. This is an added point since the agent can earn more than your commission in the long run. So they won’t mind reducing the commission in your case.
5.3.6 Research on the state of the market
Knowing the current state of the market will help you negotiate better. For example, if you find too many agents and very few houses for sale, you know you can negotiate a good deal if you talk to multiple agents. Similarly, if you find very few homes as large as yours on the market, your home is a premium property. That will make it easier to sell, and there will be much demand for it. In this case, you can also negotiate a lower commission.
5.3.7 Be reasonable
Never offer a rate that will get your offer turned down immediately. Find out what the going rate in your area is. Agents work hard to sell your home, and respecting their services is a good idea. You could probably ask for a commission that is slightly below the average. Make sure to explain why you are asking for a lower commission – maybe you have just renovated your home, making it easy to sell. This will undoubtedly work for the agent.
5.3.8 Let the buyer pay their agent
This is probably not a very good strategy, but in a market like Florida, where homes are much in demand, you could ask the buyer to pay their agent. If the buyer is set on buying your home, they will agree so they don’t have to let go of your house. At the most, they will say no; there’s always time to relent and pay the buyer’s agent if you want the deal to go through.
6. How to Lower the Commission Without Negotiating?
A seller may not always be in a position to negotiate. For example, they might not have the time to speak to many agents or may simply not be inclined to haggle. In such a situation, the seller still has a few options on how to lower the commission without having to negotiate much or not at all.
6.1 A Discount Broker
Discount brokers are brokerages with a team of agents working with multiple clients. They offer you the same services as a full-time agent, but at a fraction of the cost. They can charge you with a lower commission charge because they leverage the volume of transactions. In addition, they streamline the selling process by taking on many clients and can service clients quickly and efficiently. Hence, they can pass on the savings to the seller.
The only problem here could be that since the agents take on many clients, they might not be able to service all of them well. So you may have to compromise with lower quality of services.
Some sellers prefer not to pay any commission, so they don’t hire a selling agent. This is called For Sale by Owner (FSBO). These sellers are usually experienced sellers who know the whole process well and have plenty of time on their hands to do all the things that an agent usually does. They are familiar with the local and state laws and the paperwork required to complete the transaction. They also know how to promote the house to reach a broad audience.
Moreover, they are willing to meet prospective buyers and can handle the showings and negotiations independently. If you are a new seller, you may want to miss this; the selling process is complex, and any mistakes can be costly. Therefore, you could lose more than the commission you are saving.
According to data from the Florida Association of Realtors, only 10% of sellers prefer the FSBO route. When selling a house to friends or family, FSBO is something you can consider, as there are fewer chances of a dispute in this case. However, be prepared for a lower price. According to NAR (National Realtor’s Association), homes sold through FSBO had a median price of $190,000. On the other hand, the median price of homes sold with the help of an agent was $250,000. That’s a huge difference of $60,000. So think wisely before you decide.
Another thing to remember is that you will only be able to save on the seller agent’s commission and still have to pay the buyer agent’s commission. Unless you get a buyer who doesn’t have an agent either, which is rare. But if you get lucky, that means a savings of 5-6% on the home price.
6.2.1 Flat-fee MLS listing service
When selling FSBO, the biggest challenge is listing the home on the local Multiple Listing Service (MLS). The MLS is a database only realtors, brokers, and agents can access for listing and searching for houses. Once you list the home in this database, you can be assured that all the agents can see the details. In addition, websites like Zillow and Realtor also pull data from the MLS to showcase and populate their platforms, ensuring a broad reach.
There’s no need to worry, though. Now, MLS listing companies will list your house on the MLS for a nominal fee. However, these companies will not provide you with any additional service.
6.2.2 Fee-for-service companies
Here’s another option for FSBO sellers – although other sellers can also take advantage of the services these companies provide. Fee-for-service companies will only charge you for the specific services that you require. So, for example, if you are not familiar with the legalities of drawing up a contract, you may use the services of these companies. They will prepare a contract for you for a nominal fee. Or you may want them to handle the marketing while you take care of all the other paperwork—they will be more than happy to oblige without charging you the entire 3% commission charged by traditional agents.
6.3 Agent Matching Services
These companies link you with top agents in their area. They have a good network of agents and even pre-negotiate a lower commission for you, so you don’t have to do any negotiations. Their agent-matching services are free, and there is no obligation to sign up with their agent once you register with them. They provide you with a list of agents you can talk to and see if any of them meet your requirements. If not, you can even ask for another list of agents. If you are still not satisfied, you can walk away with no payment. The agent-matching services are quick and will save you considerable time compared to if you go about looking for agents on your own. Clever Real Estate and UpNest are two well-known examples of such services.
6.4 Sell Your House to an iBuyer
If you don’t have the time to go through the entire sales process, which may take months, you can sell to an iBuyer. These companies leverage technology to quickly connect buyers looking for a bargain and sellers looking to sell their homes instantly – probably at a discount. iBuyers will make you an offer on the house and take care of the entire selling process. Here you are assured of a certain amount in cash, with none of the hassles of the sales process like hunting for a buyer or negotiating with an agent. iBuyers will primarily look for homes that are in good condition and pay you a fair market value. They charge around 5% of the home price as their fee for this service. It’s a good option if you are in a hurry to sell. Some top iBuyer companies include Offerpad, Zillow Offers, Opendoor, RedfinNow, Orchard, UpNest, HomeLight, and Homie.
6.5 Sell to an investor
Investors look for a great deal, so if you are in a hurry to sell your home, no matter the price, this is something you can consider. This usually happens if the seller has recently had a divorce or has to shift because of a job change offering a significant raise.
However, be warned that your price could be up to 40% to 50% lower than the market price. So you would have to have a solid reason to sell quickly if you want to sell to an investor.
7. Are realtor fees tax-deductible?
Realtor fees are not tax-deductible—at least not the way mortgage interest is tax-deductible. The IRS allows the seller to deduct expenses related to the sale of the home from the final price of the house for tax purposes to arrive at the sale basis. The seller pays a capital gains tax on the profit made from the home’s sale. Capital gain is calculated by subtracting the purchase price from the sale basis to arrive at the profit.
For example, if the house is sold for $300,000 and it was purchased for $200,000, the profit or capital gain would be $100,000.
However, if the seller pays a realtor fee of $18,000, then the capital gain would come down by that amount.
Cost basis = Sale price – realtor fees
= $300,000 – $18,000
Capital gain = Cost basis – purchase price
= $282,000 – $200,000
The seller will pay a lower capital gain in Case 2 after deducting the realtor fee from the sale price while calculating the profit.
8.1 Is Dual Agency Legal in Florida?
Dual agency has been banned in Florida. Dual agency is when only one agent represents the buyer and the seller. Understandably, a single agent can’t act in the best interest of both the seller and the buyer. For example, who would the agent represent in a dispute? Hiring a single agent for the transaction is usually done to reduce the commission – when the agent gets a double commission, they are more likely to charge you a lower fee. If you are selling a house to a friend or family member, this would be a good option since there is little chance of a dispute in this case, and the agent is merely facilitating the deal.
Due to the conflict of interest in dual agency, it is banned in some states. Besides Florida, dual agency is illegal in Alaska, Colorado, Kansas, Maryland, Oklahoma, Texas, and Vermont. Even in states where it is allowed, strict laws govern its operations. The agent has to take a written approval from the buyer and the seller, and disclose the dual agency to all the parties involved in the transaction.
8.2 What Happens to Realtor Commission if the Buyer Doesn’t Have an Agent?
The entire commission goes to the listing agent if the buyer doesn’t have an agent. This is because the seller negotiates commission as the whole amount with the listing agent at the outset. The listing agent decides how much is to be paid to the buyer’s agent. If there is no buyer agent, the listing agent is not obligated to return the money to the seller or give the buyer a discount.
However, if the buyer requests, the seller can discuss with the listing agent the possibility of reducing the price of the home. Since the listing agent would have to pay the buyer’s agent if there was one, they might agree to the buyer’s request and reduce the price to close the deal to everyone’s satisfaction.
9. Bottom Line
Selling a home can be tough and the whole process needs to be handled carefully. With the realtor fee being the most significant expense, it makes sense to find ways to reduce this outgo. However, making it the sole criterion for selecting an agent would be wrong. It is more important to ensure that you can work with the real estate agent than to negotiate a reduction in commission. For all you know, a good agent will be able to get you a better deal and make the commission look like small change. For example, suppose you price a home at $250,000 on your own, and the agent advises that if you spruce up the house for a nominal cost, you can get a higher price. If the home finally sells for $350,000 due to the agent’s advice, you are making $100,000. At the same time, a 6% commission on the original price would have only cost you $15,000. Here, it makes sense to hire the agent and pay the full commission.
So make sure you weigh the pros and cons carefully before deciding how to negotiate with an agent.