Is a 1% Commission Real Estate Agent Right for Your Home Sale?

When you’re preparing to sell your home, every dollar counts. It’s natural to have questions about how to maximize your proceeds. One option you might have come across is the “1 percent commission real estate agent” or the “1% listing fee” company.

It sounds enticing, but will it really save you money? What kind of services can you expect at this rate, and how does it all work?

In this guide, we’ll navigate the landscape of 1% commission rates and help you decide if it’s right for you. We’ll also look at ways you can walk away from your home sale with the most proceeds.

How does a 1% real estate commission work?

Low-commission agents, or 1% commission fee companies, are increasingly catching the attention of home sellers. These agents or brokerages offer to list and sell your home for a significantly reduced commission rate of just 1%. At first glance, this rate appears to be a substantial discount from the standard 5% to 6% commission normally charged by real estate agents.

However, it’s important to note that this reduced rate primarily affects only the listing agent’s typical 3% commission. In the end, it works out to be a roughly 2% discount because it only applies to half of the transaction. Sellers are also responsible for the buyer’s agent commission, which is usually around 3%.

You’ll pay more than 1% commission

Carl Medford, a full-commission, top-performing California agent with more than 23 years of experience, says that the “1 percent commission real estate” label can be misleading.

“It gives the seller the impression that they can get their house sold for 1%, which is simply not true. Those companies that are advertising 1% commissions are only telling half the story.”

When you account for the buyer’s agent fee, Medford says most sellers using a 1% service will likely end up paying up to 4% in commissions.

You may receive ‘discount’ service

While saving on commission can seem like a direct path to increased profits from your home sale, the reality might be more nuanced. The 1% rate, while potentially saving you thousands on the transaction, could also have implications for the overall success and profitability of your sale.

Reduced commission rates can sometimes mean limited services or less experienced agents, factors that might influence the final sale price and, consequently, your net earnings. Understanding these trade-offs is key to evaluating whether a 1% commission agent is the right choice for your home sale.

What is the average real estate commission rate?

The current national average real estate agent commission rate is 5.8%, based on transaction data compiled by HomeLight from thousands of home sales throughout the country each year. But commission rates vary by region.