We usually associate sticker shock with the price of new cars. 

But ask anyone who’s sold a house before, and they’ll probably tell a tale about the surprise of learning how expensive it is to sell a home. The experts we spoke with say it typically costs about 8-9% of your home’s final sales price—that’s about $35,000 on a $400,000 home.

One area where you might be able to save some money is the cost of hiring a real estate agent. Your Realtor®’s commission will probably be one of the biggest expenses you’ll face when selling your home. 

On the listing side of a transaction, agents historically charge sellers 3% of the home’s final sales price. (They typically offer another 2%-3% to the buyer’s agent, too.) 

But some listing agents discount their services; they may only charge a homeowner 2% of the final sales price. Look hard enough and you’ll probably even find some agents who offer a 1% fee. So it makes sense to at least think about hiring a so-called “discount real estate agent.”

But before you do that, let’s make sure you understand what you’re getting yourself into. Working with an agent who charges a 2% commission (or less) has its pros and cons.

In this article, you’ll learn what services you might get—and which ones you’ll miss out on—if you hire an agent who charges less than the historical commissions and fees that agents have charged. By the end of this guide, you’ll have a better understanding of the right balance between savings and service. 

How real estate agent commissions work

Before we look at the detailed services you might get for a 2% commission, you should understand how real estate commissions work.

In a real estate transaction, the traditional 5%-6% commission is split four ways: the listing agent, the listing agent’s brokerage, the buyer’s agent, and the buyer’s agent’s brokerage. The listing agent and their brokerage will typically get 3%; the other 2%-3% goes to the buyer’s agent and their brokerage. (So even though you’ll commonly see headlines about listing agents making 6% on a home sale, the reality is that their actual earnings are much lower.)

Also, although the majority of agents are paid on a commission basis, that’s not true of all agents. ​​Some get a salary from their brokerage. Others charge a flat fee for a fixed set of services. And still others go a step further by offering a menu of individual, fixed-price services. 

As we discuss what you’ll get for a 2% commission, we’ll also look at what you might get when working with agents using some of those alternative models, too.

But first, the fundamentals of how real estate agents get paid are changing. Here’s what you need to know.

The changing landscape of real estate commissions

Although that typical 5%-6% commission has always been open to discussion, few homeowners and agents ever negotiated it. But the common practices around agent commissions are in limbo right now, and likely to change soon.

Here’s why: In response to a class-action lawsuit over commissions and how Realtors are paid, the National Association of Realtors (NAR) proposed changes as part of a watershed settlement. Though still subject to final court approval, the settlement is due to take effect in August 2024. 

Assuming the settlement is approved, it could impact (among other changes) both how and how much agents are paid. No one can say for sure how the industry will respond, but it’s possible that listing agents and their brokerages will stop sharing the commission with buyer’s agents and their brokerages, or share less of it. Some agents may switch to a flat-fee service, while others might adopt a menu-of-services model where you pay only for the specific services you choose.

So-called “discount real estate agents” offering these alternative payment models have always existed, but they may become more common as the dust settles on these important legal cases. As you’ll see below, some agents are already changing how they work with buyers and sellers.

Let’s take a closer look at these different service models and what you might expect to get at different cost levels and service models.

What you might get from a 2% commission-based real estate agent

At a 3% commission rate, your listing agent should provide their full suite of services: prepping the home, listing it in the MLS, full online and offline marketing, weekly updates on showings and feedback, reviewing offers with you, negotiating concessions and the final sales price, and guiding you through the closing process.

As the listing agent’s commission gets lower, you can expect them to offer fewer services.

For example, a 2% commission listing agent might provide only these services (or less):

• listing your home in the MLS

• limited marketing

• reviewing offers with you

• negotiating concessions and price

• guidance through closing

In that situation, you’ll be responsible for getting your home ready to sell—i.e., cleaning, decluttering, minor repairs, and so forth. Depending on your home's condition, this can be both time-consuming and expensive. You’ll also miss out on the agent’s professional advice on which repairs and upgrades will give you the best return on your investment. You’ll also forgo professional staging, which may not seem like a big deal, but 44% of agents say professional staging increases the dollar amount offered on a home for sale.

You might also come across agents who will list your home for a 1% commission. In that case, the agent might only provide these services (or less):

• listing your home in the MLS

• even more limited marketing, or none at all

In this case, you’re essentially taking the For Sale By Owner route to selling your home, but paying the agent for the benefit of listing your home in the MLS. If this path sounds appealing, be sure you understand the pros and cons of selling your home without a Realtor.

Tiered service model: What you might get for a 2% commission

As you look for a real estate agent, you may come across some who offer services in tiers or packages. In this situation, a group of services will correspond to different commission rates. Here’s what you might expect to get at lower commission levels. We’ll use the common bronze/silver/gold motif to describe different service offers, although agents may have their own naming system.

Bronze Package

Listing agent commission: 1%

What you might get:

• Your home listed in the MLS and syndicated to local and national home listing sites

• A “For Sale” sign in your front yard 

• A weekly or monthly price and feedback review with the listing agent

• Basic transaction management 

Some agents will offer a 1% commission to help sellers who are taking the For Sale By Owner route. In that case, the agent may not use yard signage or provide any marketing help other than putting the home in the MLS. Some agents may also offer to help with paperwork and other transaction management services, while not offering any negotiation help or other guidance through the closing process.

Silver Package

Listing agent commission: 2%

What you might get: All of the above, plus

• Basic professional photography

• Online promotion via the listing agent’s website, social media, email marketing, and Facebook ads 

• Offline promotion via direct mail

• One open house, or a limited number of them

Gold Package

Listing agent commission: 3%

What you might get: All of the above, plus

• Drone video and photography

• Video tour(s) 

• Professional staging

• Professional cleaning, if needed

• Multiple open houses until the home sells

• Additional marketing and advertising as needed

This “Gold” package is an agent’s full suite of services covering the entire transaction. 

Again, there’s no system or structure guiding the creation and use of tiered commission plans. You might encounter tiers with different names, or tiers with more or fewer services than described here. 

You might also come across agents who offer tiers of service, but instead of basing those tiers on a commission, they charge a flat fee. Let’s look at how that can work.

Flat-fee service model: What you might get at different costs

Some agents offer their services on a flat-fee basis to simplify costs for their clients. 

At Eagle’s Nest Realty in Spokane, Washington, Jabez LeBret recently switched to a flat-fee model. They use a tiered system like we described above to give their seller clients clarity about what their services cost and what the client receives.

“You hire us to provide a service; thus, you should be able to know upfront what that service will be and how much it costs,” he says. “There is no difference in the effort to sell a $400,000 home or a $600,000 home, so why the difference in cost under the percentage model? In a simple fee model, you pick the level of service you want and pay for it.” 

LeBret offers clients three listing packages:

• Basic at $8,500

• Gold at $12,000

• Premium at $18,000

Higher tiers tend to include expanded marketing and advertising, prep work to get the home ready to sell, a home warranty, and so forth. (You can see the details of each plan on the Eagle’s Nest Realty website.)

Although LeBret only began using this tiered, flat-fee approach about two months ago, he says consumers are already getting on board. 

“Our pipeline exploded in the last three weeks with people asking about the model. Flat fee isn't new, but it has traditionally been bottom-of-the-barrel or lowest service level possible transactions. People are super excited about higher grade and full-service brokers offering a simple fee approach.” 

Additional options for a 2% real estate commission

Real estate agents are independent contractors, so they have a lot of flexibility when it comes to business operations. Although the options above—standard commission, tiered packages, and flat-fee—might be the most common ways to find an agent who charges a 2% commission (or its equivalent), they’re not the only ways.

Some agents will offer a 2% (or lower) commission only when helping a For Sale By Owner seller. In that situation, 

Blair Ballin, a top agent in Phoenix, says he offers a tiered commission structure to sellers. His commission on the listing side goes down if the seller also uses him to buy their new home. But his advice to sellers is to focus more on finding the right agent than finding the right commission.

“Who you hire matters, period. I don't think the fee matters. It's the person.”

Pros & cons of working with a 2% commission real estate agent

There’s no doubt that you can save money by hiring a real estate agent who offers a 2% commission (or lower) to list your home for sale. On a $500,000 home, paying just one percent less to your agent keeps $5,000 in your pocket.

But there are legitimate trade-offs to consider, too.

• Fewer services: In all likelihood, you won’t find agents offering their full suite of services at a discounted price. If you’re paying them less to help sell your home, you’ll probably get less in return. 

• Less experience: You might find that agents who are willing to discount their commission in order to get your business are newer and may not have the negotiating experience you need to get the most value for your home.

• Longer time to sell your home: As you can see above, many agents will cut back on their marketing services (which can cost thousands of dollars) when they cut the commission or offer a lower-tier option. Without a full marketing plan in place, your home may take longer to sell.

Bottom line: Whether you negotiate your listing agent’s commission down to 2%, or purchase a discounted package from a flat-fee agent, be sure you understand exactly what you’re getting in return.

A better option: Use Redy to find your next real estate agent

At Redy, we understand that you want to keep as much money in your pocket as possible when selling your home. 

When you start the sales process with us, we’ll show you expert, local real estate agents who offer a cash reward for listing your home. You’ll know each agent's commission rate upfront so you can make an informed decision about the right agent to sell your home. Our results speak for themselves: Homeowners who have used Redy to find a listing agent save an average of $5,862.

Feature your home on Redy today to connect with top-performing agents who 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.