iStock-1254584664 (1).jpg

Should You Hire a Low Commission Realtor?

Apr 29, 2024 2:00:00 PM / by Matt McGee

We all love to save money. Ten dollars off your next grocery bill? Sure. A hundred dollars off a new grill? You bet. A couple thousand dollars off a new car? Yes, please! 

It makes sense, then, that you want to pocket as much money as possible when selling your home.

One way you might do that is to hire a low-commission real estate agent. It’s a decision that could save you thousands of dollars. But as attractive as that may sound, you have to understand the pros and cons of such an important decision.

You might assume that most real estate agents look down on so-called “discount agents,” but some agents see them as an important part of the industry.

“I don't think there's a problem with lower cost agents in our marketplace,” says Blair Ballin, a veteran agent in the North Phoenix market. “I think it's necessary. I think it fits people's budgets. What they have to be aware of is what they're getting for that. Sometimes it works out, sometimes it doesn't.”

In this article, we’ll explain what a low-commission agent is and what they might do differently from other agents. We’ll also walk you through the potential risks and rewards of using a discount agent, and discuss some alternative options to save money on the sale of your home.

Blog Display Banner

What is considered a low real estate commission?

Although real estate commissions can range from 1% to 8% (or more) of the property’s sale price, agents typically charge a 5-6% commission to list and sell your home. A low-commission agent is someone who typically charges between 1-3%, which can mean significant savings for you.

Changes to agent commissions might be on the horizon, so let’s briefly discuss how real estate agents typically get paid. 

In most home sales, the listing agent (who represents you) offers to split their 5%-6% commission with the buyer’s agent. In the industry, this is called “cooperative compensation.” That commission is ultimately split four ways: between the listing agent, their broker, the buyer’s agent, and the buyer’s agent’s broker. Historically, this arrangement has made it easier for buyers to afford a home by not having to pay their agent directly.

In March 2024, the National Association of Realtors® proposed a settlement to a long-running class action lawsuit over commissions and the practice of cooperative compensation. If the settlement is approved, it could change both how and how much agents charge and get paid. 

It’s difficult to predict what will happen, but one possibility is that the “typical” listing agent’s commission will drop to 2.5%-3% and buyers will be responsible for paying their agent directly. Any arrangement resembling the current cooperative compensation might still be negotiable between the listing and buyer’s agent.

Types of low-commission real estate agents

So you’re hoping to save some money on the sale of your home, and you’re intrigued by the idea of working with a low-commission Realtor®. The first thing to know is that they’re not all the same. Here are the most common types:

Traditional agents who negotiate commissions: Many traditional agents are willing to negotiate a lower commission rate when they list your home for sale. An agent’s rate may change based on the asking price of your home, the type of property, what services you need from your agent, and even how savvy you are as a homeowner.

Service menu-style agents: These agents offer a menu of services that correspond to different commission rates. For example, for as little as 1%, the agent might do nothing more than list your home in the MLS. Additional services are offered at higher commission levels.

Flat-fee agents: Some agents will charge a fixed fee regardless of your home's selling price.

In addition to the types of agents above, you might encounter discount brokerages where all the agents work for less than a traditional agent. These offices can be local, regional, or national—and some don’t even have physical offices. They often rely on technology and/or streamlined services to lower their commission rates.

How much can you save?

The savings potential depends on your home's value and the agent's commission structure. Here are a few examples:

Home Value

6% Commission

2% Commission










As those examples show, you stand to save a not-insignificant amount of money by using a low-commission real estate agent. 

Risks of hiring a low-commission agent

Saving tens of thousands of dollars is tempting, but there are potential trade-offs to working with a discount agent.

“There might be someone who charges on the listing side only 1%,” Ballin says. “Will their listings sell? Sometimes. Will they sell in hot seller markets? Yes, a monkey could list a home in a hot market and it would probably sell. However, what I think is important to know is that those are going to be discounted services where maybe you don't get something like having someone in your corner helping you negotiate an even better deal.”

Here are some of the risks to consider of using a low-commission real estate agent:

Limited service: A low-commission agent may not offer the full suite of services that a traditional agent provides, like professional staging and photography or an aggressive marketing campaign. This might make your home less appealing when buyers compare it to a traditional agent’s listings.

Less negotiation experience: A low-commission agent may not have the experience needed to negotiate the best price for your home, or may not offer negotiation services at all.

No negotiation incentive: A listing agent who gets paid a percentage of the sales price has goals that are aligned with yours—i.e., to sell the home for the maximum amount possible. If you hire a flat-fee agent who charges the same amount no matter the sales price, that incentive to negotiate goes away.

Hidden costs: Some flat-fee and discount agents might charge extra for individual services. Be sure to read your contract closely.

A slower sale for less money: If you’re not paying for an agent’s tried-and-true marketing plan, your home may not get the visibility it needs to sell on your timeline and for what you believe it’s worth.

“I was just looking at a couple listings that had been on the market for like 100 days, and those were both offering two percent,” says Marti Reeder, a top agent in Kent, Washington, outside of Seattle. “To me, that means they probably hired a listing agent with less experience or maybe not the greatest marketing plan. So they're getting their money's worth, or maybe they're still paying too much for the service they're getting.”

Alternatives to low-commission agents

If you’re not sure a discount real estate agent is right, you do have a few other options to save money when selling your home.

For Sale By Owner (FSBO): You can sell your home yourself and avoid paying commissions. This option has its own risks and challenges—it requires significant time, effort, and real estate knowledge. That’s probably why only 7% of recent sellers sold their homes this way, according to the National Association of Realtors®.

iBuyer and local investors: You can sell your home directly to a local investor or, if they operate in your area, a national or regional iBuyer company. In either case, you’ll avoid many of the hassles of selling a home (showings, repairs, etc.). The flip side is that investors and iBuyers will typically offer significantly less than what your home would fetch on the open market.

Negotiate with a traditional agent: Agent commissions have always been negotiable, and many full-service agents regularly discount their commission while providing their full range of services. You may not get a 3-4% discount as shown in the examples above, but even a 0.5%-1% discount can be a substantial savings.

Find an agent with Redy: Another way to save money when selling your home is to find your agent right here with Redy. We’re the only platform where agents offer you an upfront cash reward for the privilege of listing your home. Homeowners who use Redy to find a listing agent save an average of $5,862—making us a great alternative to using a low-commission agent.

Blog Display Banner

Understand the pros and cons before you decide

Everyone loves to save money, but with something as valuable and important as selling your home, it’s imperative that you consider all the pros and cons before hiring a low-commission real estate agent. 

“Sometimes the Realtor charging the most isn't the best, and sometimes the Realtor charging the least isn't the worst,” Ballin says. “As a homeowner, what's most important is finding someone who’s going to get the job done. And if you happen to have a limited budget, then find a Realtor that can work with that budget.”

Working with a discount real estate agent can mean significant savings, but may include trade-offs like getting less service and attention from your agent, or your home selling more slowly and/or for less money. If you choose to work with a low-commission agent, be sure you understand exactly what you’re getting.

When you work with Redy, you’ll know each agent's commission rate up front, along with their background and transaction history, so you can make an informed decision on the right agent to sell your home. You’ll also get a one-of-a-kind cash reward offer from each agent that represents their commitment to your success.

Learn how Redy’s innovative approach to connecting sellers with top-performing agents can help you unlock the hidden value in your home.

Matt McGee is a writer and editor who's been immersed in the real estate industry his whole life. Matt's dad was an agent for nearly 50 years, his sister is an agent, and his wife has been a Realtor® since 2004.

Recent Posts