You’ve touched up the paint and planted some flowers; now your home is ready to put on the market. The next step is to hire a real estate agent. However, if you want to maximize your profits on the sale, you might also want to think about how much commission your real estate agent will make off the sale.

So how much is it?

On average, 5% - 6% of a home’s sale price is paid in commission to real estate agents. This is usually split equally between the listing agent and the buyer’s agent. This may seem like a small percentage, but on a $200,000 house sale, the commission can be $10,000 or more. This percentage varies somewhat depending on the market, and there is a general trend downward. The downward trend in commission rates has occurred because of an extended period of depressed home values and because of an influx of discount and flat fee brokers willing to sell houses for less.

Why does it cost so much?

No one is going to sell your house for free, and the listing agent (the one whose name is on the sign in your front yard) does more than just print up flyers with the cost of your house. A good listing agent first does a property analysis and comparison to determine appropriate pricing for your market and neighborhood. He or she should also give recommendations for improving your home’s curb appeal and attracting buyers. The agent should also schedule and attend open houses. All this is before an offer is rendered. Once the paperwork starts, the agent handles writing counteroffers.

That still seems like a lot of money

It is a lot of money, which is why you should negotiate the commission fees as part of hiring an agent. Most people are not turning a huge profit on their homes, so every thousand dollars saved makes a difference. Negotiate by asking the agent to accept a 5% commission and let the agent know you are negotiating with other agents as well, and that commission is a primary factor in your decision.

Before you decide

It helps to have an idea about averages in your particular market and to know how quickly your house is likely to sell. A house that stays on the market a long time does not make an agent as much money as one that sells quickly.