If you’re planning to buy or sell a house in Florida, then you probably already know that there are several different costs involved.
For example, if you’re buying a home in Florida, then you need to pay the down payment before you start making monthly mortgage payments. You also might have to invest in mortgage insurance once you get your mortgage loan.
If you’re selling your home in Florida, then you may want to start making some renovations in your home or look into help with staging. You may also have to pay for escrow fees, remaining HOA dues, and more.
In either case, both sellers and buyers need to be wary of one especially important cost involved: the real estate commission in Florida.
How Real Estate Agents Make Money In Florida
According to the National Association of Realtors, 89% of sellers used a real estate agent to help them sell their homes last year.
The vast majority of those real estate agents charged their clients the same way, too: on commission.
Just how much those clients were charged depends on the real estate agent themselves. They might charge more as a reflection of their experience level, the high-end market they work in, or because they specialize in serving a very specific clientele.
For the most part, though, the average real estate commission in Florida is around 5-6% of the home’s price. This includes both the buyer agent commission and the listing agent. So, if a home sells for $300,000, and the agents charge 5%, then they would collect $15,000 at closing.
Again, some experienced real estate agents may be able to justify charging anywhere from 6-7% or more for their services, however this is becoming less and less common and typically only occurs with very high end homes, or large estates.
Low-commission real estate agents are growing in popularity, too. With these agents, you can find options like listing your home for as low as 1% without sacrificing results. We feel this is the direction that most consumers will trend towards in the next 5- 10 years. In other words, home sellers will not be forced to choose between paying 6% to sell their home or opting to go with a FSBO (for sale by owner) service.
At SimpleShowing, we offer a 1% listing fee that saves Florida home sellers about $7,500 in commission. We provide experienced, local real estate agents, professional photography, an MLS listing, help with negotiation, paperwork management and contract support. Keep reading to learn more about how Realtor commissions work and how some brokerages charge the seller differently. If you're interested in getting more info, click here to get a free online home valuation.
Real Estate Agents Don't Keep 100% of the Commission
In the example above, the total commissions paid by seller may be $15,000 at closing, but the listing agent is not actually keeping all of it.
First, the buyer typically hires their own agent, so the total commission is split between both the listing agent and the buyer's agent. Using the earlier example, if the commission was split in half, the seller’s agent would keep $7,500 and the buyer's agent would get $7,500.
Second, if the agent works for a brokerage – and most do – they typically have to pay that broker for holding/carrying their license. Just how much they have to kick back to the broker usually depends on the brokerage and it's individual rates or fees. In some cases, those who sell more homes every year are usually allowed to keep a larger percentage of their commissions.
Some brokers charge their agents a flat fee per sale or even just a flat monthly fee. The majority charge a commission, though, which can easily range from 20-50% of what the agent made on a sale. So, although you may have to pay the agents 5% of what you sold your home for, they might have to split that with the other agent and then split the rest with their broker.
The Real Estate Commission in Florida
Now that you understand how real estate agents get paid, let’s talk about what kinds of commissions you can expect them to charge in Florida.
The average real estate commission in Florida is right around 5%. That’s the lower end of the average that we mentioned above, but keep in mind that Florida's real estate market is very hot at the moment.
In Florida, it pays – literally – to hire an experienced agent who can make the most of these opportunities.
Fortunately, as we mentioned earlier, you can greatly reduce your real estate commission in Florida by choosing an agent who only charges 1% to sell or looking for an agent who offers incentives when you buy, such as a Homebuyer Refund.
Who Pays a Real Estate Agent's Commission in Florida?
On occasion in some real estate transactions, one agent will work for both the buyer and the seller in Florida. Other times, the homeowner may handle the sale of their house, but “for-sale-by-owner” is losing fans.
However, most of the time, sellers and buyers both have their own real estate agents in Florida. Each agent is tasked with looking out for their respective client’s best interests while also working together toward the common goal of finalizing the sale of the home.
You already know that a seller’s agent charges their client a commission once the home is sold.
However, many homebuyers in Florida hear this and assume that means they don’t have to pay their agent. Many agents even market themselves by explaining to potential clients that their services are free.
As it turns out, that’s not completely true.
Instead, it’s probably more accurate to say that both the buyer and the seller end up paying the real estate agents, albeit in a fairly roundabout way.
Put yourself in the shoes of the seller’s agent for a minute.
If you knew you had to split your commission with someone else before you had to then pass along another large percentage to your broker, what would you do?
Like most other agents, you’d factor that cost into your total price.
So, while technically the seller pays the real estate agent’s commission in Florida, the buyer is contributing their fair share, as well. It’s just baked into the price they’re paying for the home.
How to Keep the Real Estate Commission in Florida to a Minimum
On paper, the real estate commission in Florida can appear fairly straightforward, but you now know that there’s a lot that goes on behind the scenes. Even though it might seem high, agents have to charge at least 5% just to make a decent living.
Or do they?
At SimpleShowing, we are pioneering a new way of helping homeowners save a lot of money when they hire experienced agents to sell their homes. SimpleShowing is currently operates in the Orlando, Tampa, Miami, Ft Lauderdale, Atlanta and Dallas, TX markets. To get started, request a free home valuation.
Contact us today to learn all about how we keep the real estate commission in Florida to a minimum.