How do Mass. real estate commissions stack up to other states’?

Home sellers here pay, on average, 5.45% of the value of their home as a commission split between the listing agent and buyer’s agent, according to a new report from Clever Real Estate.

A sale sign stands outside a home on the market Wednesday, April 3, 2024, in Denver. David Zalubowski/AP

April 12, 2024

A lawsuit settlement may change the way real estate agents collect commission fees, but how much do sellers fork over, anyways?

Home sellers in Massachusetts typically 5.45% of the value of their home as a commission split between the listing agent and buyer’s agent, according to a new report from Clever Real Estate. This means sellers pay agents approximately $29,880 upon the sale of a $548,250 house, which The Warren Group said was the median sales price for a single-family home in the Commonwealth in February.

“The exact percentage you’ll pay a realtor depends on several factors, like the normal rate in your area and which agent you choose to work with,” the Clever report reads.

The report calculated commission rates after surveying more than 600 real estate agents across the country, who provided the typical commission rate in their markets. Industry professionals, Clever said, reviewed the report’s findings for accuracy.

The Massachusetts average commission is just 0.04% percentage points less than the nation average of 5.49%, according to Clever. Home sellers in 18 states pay a lower commission rate on their homes than those in the Bay State.

Generally, sellers in the Northeast pay the lowest commission rates in the United States, according to Clever. Sellers in Delaware, Maine, and New Jersey paid rates of 4.88%, 5.17%, and 5.21%, respectively.

“Remember: these rates only represent averages,” the report reads. “Commission rates aren’t standardized in any official capacity, and you can always negotiate realtor fees with your agent or sell with a company that offers pre-negotiated low commission rates.”

A listing agent in the United States typically charges an estimated 2.83% rate on a home, while a buyer’s agent charges 2.66%, the report reads.

The commissions often pay for marketing costs and visibility, Clever said, as a realtor — a real estate agent who’s a member of the National Association of Realtors — will post a seller’s home on the Multiple Listing Service database, and the commission incentivizes buyer’s agents to show a home to their clients.

But the process in which agents collect commissions may soon change following a class-action settlement that requires NAR to pay $418 million over four years and change the way the real estate trade group with more than 1.5 million members handles commissions, Boston.com reported.

Homeowners typically sign a contract when listing a property in which they agree to pay a real estate agent a certain percentage of the sale price, which is negotiable, Boston.com reported, “ but that tidbit of information hasn’t always been shared with the seller.”

Home sellers successfully argued in the lawsuits that they should not pay the buyer’s agent commission because that person doesn’t represent their interests. Now, home sellers won’t have to pay buyer’s agent commissions, and agents have to tell their clients that commission rates are negotiable, Boston.com reported.

Clever said home sellers could work with discount brokerages, negotiate commission rates, or even sell their home without an agent’s help, although the marketplace doesn’t suggest this and warned it could risk a lower sales price, pricing mistakes, as well as legal and financial errors.

“While the benefits of using realtors are clear, there’s still an ongoing debate about the extent of realtor fees,” the report reads. “In the US, real estate commissions are among the highest globally, leading to increased scrutiny and discussion about their fairness and necessity.”

The Wall Street Journal reported back in November that the United States has the third-highest typical real estate commissions on a sale, just behind Japan (6.2%) and Argentina (6%). Commissions in the United Kingdom are typically 1.3%, the lowest on the list.