According to a report from Texas A&M University, the median price of homes in Texas reached a new record high in July 2021.
Whether you’re thinking about buying another Texas property or cashing out and leaving the state entirely, you might be dreaming of what you’ll do with all of the profit you make from your home sale.
However, there are a number of costs to selling a home, including the realtor commission in Texas.
How much commission does a realtor make in Texas, and how much should you expect to pay when selling your home? Let’s take a look at what you need to know.
How Much Is the Realtor Commission in Texas?
The average realtor commission in Texas is 5.76%. However, commissions can range between 4% and 7%. The national average for real estate agent commissions is 5.5%.
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When you are selling a house, the commission to the real estate agents is usually the largest cost you will face. For example, if your realtor commission is the average 5.76% and you sell your house for $300,000, you will pay $17,280 in realtor fees.
How Much Commission Does a Realtor Make in Texas?
While you’ll likely find yourself paying 5-6% of the final sales price of your home in realtor commissions, your real estate agent isn’t getting all of this money. This is because there are normally two agents involved in the sale of a home, the seller’s agent and the buyer’s agent.
It is common for both realtors to split the commission on the sale of a home. On top of that, real estate agents often work with brokers. Real estate agents typically give a percentage of their half of the commission to their brokers, meaning that your agent is only getting a portion of the total fee.
Who Pays For the Real Estate Agent Commission in Texas?
The home seller typically pays the Texas realtor commission rates. This money comes out of the final sale proceeds. However, one could argue that the buyer is at least paying part of the commission because the price of the home is likely higher in order to factor in the cost of commission.
(Are you wondering if a seller can back out of a house sale contract? Take a look at this article to learn more.)
Can You Negotiate Texas Realtor Commission Rates?
It is always possible to try and negotiate a lower realtor commission rate. However, depending on your circumstance and the market you might be more or less successful.
For example, if you’re selling a high-value home, an agent might be willing to lower their rate. They also might be willing to work with you on their fee if you have a personal relationship with them or if you can offer repeat business (such as using them as your agent when you buy another property.)
Additionally, the state of the market can also impact your chances of negotiating a lower fee. For example, if home values are rising or homes are selling quickly in your area, the agent might be fine lowering their rate. They also might be more likely to negotiate on their rate if there is relatively low inventory in your area.
If the market is a seller’s market, then it makes the listing agents’ job a lot easier. This is because there will be more interest in homes listed for sale and they will likely sell faster and for a higher price. In this circumstance, a real estate agent might be willing to lower their fee.
You will want to look at three factors to help you judge the current state of your real estate market. These are months of inventory numbers, sale to list price ratio, and home value trends.
On the flip side, it might be hard to convince your real estate agent to accept a lower fee if your area is in a buyer’s market.
Can You Sell a Texas Property Without a Real Estate Agent?
Some home sellers might not want to give such a big chunk of their profits to a real estate agent. For this reason, they turn to selling their home without the help of a real estate professional. When you sell your house without a realtor, it is known as listing your property For Sale By Owner (FSBO).
This can be a reasonable option for experienced home sellers who are willing to put in the effort and time in order to maximize their profits from the sale of their home.
However, there are a number of risks involved with selling your home FSBO. For example, research has found that homes sold this way usually sell for roughly 6% less than those that are listed by real estate agents. On top of that, you will likely still have to pay a commission to the buyer’s agent.
The data suggest that FSBO homes can take longer to sell. Additionally, it’s more likely that you will have a deal fall through after accepting an offer when you sell FSBO.
All of this means that you might end up making more money and selling your home faster when you use a real estate agent vs. selling FSBO.
Going the FSBO route isn’t your only option for avoiding real estate agent commission fees, though. Another viable choice is selling your home to an iBuyer. When you sell to an iBuyer, the process is faster and a lot less stressful.
Do you want to learn more about how selling to an iBuyer compares to hiring a real estate agent? If so, check out this article.
What Are the Benefits of Selling Your Home Without a Texas Realtor?
If you are choosing to sell FSBO, there are a number of benefits you can enjoy.
One of the advantages of selling FSBO is that it gives you direct control over the sale of your home. Everything from the showing schedule, pricing strategy, and the negotiation process is completely up to you.
Another big benefit is that you don’t have to pay a listing commission. However, as mentioned above, you’ll probably still be on the hook for the buyer’s agent commission.
If you’re able to find a buyer that doesn’t have an agent, then you can save even more money this way. The average buyer’s agent commission rate in Texas is 2.93%, and when you add that to the average listing agent commission of 2.85%, it means that you’re saving 5.88% of your home’s sale price.
In Texas, you aren’t required to hire a real estate attorney as a part of the process. However, you will have to deal with a lot of the paperwork on your own and work hard to ensure that you complete all of the required disclosures and paperwork correctly.
What Are the Responsibilities of Selling a Texas Property FSBO?
There are a lot of tasks you will be responsible for if you choose to list your home on the open market without a real estate agent. These include:
- Getting your home ready for listing by cleaning, staging, and making necessary repairs
- Pricing your home accurately and competitively
- Advertising your home by taking high-quality photos, writing a listing description, promoting your home, listing your home on different sites, and more
- Vetting buyers to make sure that they are financially qualified
- Dealing with all of the negotiations including the contingencies, final price, repair concessions, and more
- Filling out all of the necessary paperwork properly that is required for Texas real estate transactions
Selling your home FSBO can basically be like having another full-time job. If you’re interested in avoiding paying realtor commissions in Texas but don’t want to take on the responsibilities of selling FSBO, you might want to learn more about selling your home to an iBuyer.
What Are the Risks of Selling FSBO in Texas?
There are also a lot of potential risks you are taking on when you choose to sell your house FSBO on the market.
For one, you might find that real estate agents aren’t willing to show your home to prospective buyers. They might also discourage their clients from making an offer because they have had issues working with FSBO sellers in the past.
Real estate agents also might know all too well that FSBO sellers can have a hard time separating their emotional attachment to the home from the reality that selling a house is a business deal.
Another risk is simply biting off more than you can chew. You’re taking on a full-time job when you choose to sell your own house without the help of a real estate professional.
On top of that, you’re also held back by the fact that you don’t have access to real estate agents’ large networks. This means that you might struggle to get the word out about your property as effectively as a realtor would be able to.
You should also be concerned about your ability to weed out unqualified buyers. You could end up doing a lot of showings for people who aren’t seriously considering buying your house, or any house for that matter. Realtors are trained to ask questions that help determine whether buyers are serious and qualified, saving everyone time.
It can also make it awkward for potential buyers if they are being shown a house by the sellers themselves. You’ll likely find that buyers end up rushing through the house because it’s uncomfortable to be there with the owners.
Negotiations are also something to be concerned with. Negotiating a home sale is serious business, and if you’re up against an experienced buyer’s agent you might find that you don’t get as good of a deal as you want in the end.
FSBO sellers can also tend to ignore the flaws of a home when they are selling it. Real estate agents can help you understand what changes you can make to improve the value of your home. However, since you live in your home and love it, it can be hard to see what could be improved upon.
Lastly, you’re also exposed to legal risks when you sell FSBO. You will be completely on your own when it comes to filling out the seller’s disclosures and a number of other important legal paperwork if you don’t have a realtor to help you out.
A real estate agent likely knows more about the disclosure laws than you do unless you are a real estate attorney or professional yourself. You can end up being held liable for negligence, fraud, or breach of contract if the seller doesn’t properly disclose issues with the property that could materially affect the desirability or the value.
Is It Time For You to Sell Your Texas House?
There are few things in life that are as stressful as selling a home. Not only do you have to make costly repairs, clean your home, and make improvements to boost your curb appeal, but the process of having endless showings and open houses can be an ongoing nightmare. On top of that, once you do finally find a buyer, there can be many sleepless nights where you are hoping that their financing doesn’t fall through.
All of this can only be exacerbated by the fact that you have to pay a steep realtor commission in Texas if you hire a real estate agent. This can really cut into your profits and make the whole process seem daunting.
If you’re looking for a faster and easier way to sell your house that doesn’t leave you suffering from daily headaches, consider selling to an iBuyer. These buyers will purchase your home as-is, meaning that you don’t have to put time, energy, and money into getting the house fixed up and clean for the market. Since they pay cash for your home, the closing date can occur way sooner than when you’re waiting for a buyer to obtain financing.
Are you wondering how much an iBuyer would pay for your home? Check out our free home valuation tool here!