Selling a home in Arizona? One of the biggest costs sellers face is the real estate commission. Here’s a breakdown of how these fees work, recent changes in who pays for them, and tips on saving when you’re ready to list.
What’s the Average Real Estate Commission in Arizona?
In Arizona, the average real estate commission is 5.4%, which includes 2.78% for the listing agent and 2.62% for the buyer’s agent. This commission rate can add up significantly depending on your home’s sale price. Here’s what that looks like in real numbers:- On a $320,000 home: approximately $17,280 in commissions
- On a $650,000 home: about $35,100 in commissions
- On a $1,080,000 home: around $58,320 in commissions
A New Shift in Real Estate Commissions: Who Pays for What?
Traditionally, Arizona sellers covered both the listing agent’s and the buyer’s agent’s commissions. However, a new ruling affecting the National Association of Realtors (NAR) means buyer’s agents in Arizona will now need to negotiate their commission directly with the buyers they represent, instead of relying on the seller for payment. This shift, effective as of August 2024, may change who is responsible for the buyer's agent fees.While many buyers may still request sellers to cover the buyer's agent commission as part of the transaction, some sellers might have more negotiating power, especially in a competitive market. However, if you're selling, it’s wise to budget for covering the buyer's agent commission, as this concession can make your property more attractive to potential buyers.How Much Do Real Estate Commissions Cost in Arizona?
Your final commission cost will depend on the sale price, the specifics of your property, and the services you choose with your agent. Here’s a general estimate for commissions on a typical Arizona home, priced around $430,658:- Listing Agent: ~2.78%
- Buyer’s Agent: ~2.62%
- Total Commission: ~5.4%
Tips to Save on Real Estate Commission
Saving on commission fees is possible, especially if you’re willing to compare options or negotiate. Here are a few strategies to consider:- Use a Referral Service: Some services offer reduced listing fees by partnering with top local agents. For instance, a 1.5% listing fee could provide full service at a reduced rate, potentially saving you thousands.
- Negotiate with Your Agent: Real estate commission rates are often negotiable. If you’re in a seller’s market where homes are moving quickly, you might have leverage to ask for a lower rate.
- Consider Market Trends: Selling in a hot market? If demand is high, agents might be willing to lower their fees, knowing your home will likely sell faster.
How the NAR Ruling Affects Arizona Buyers and Sellers
The recent NAR ruling introduces new requirements for buyer’s agents, including presenting a clear agency agreement with their services and fee structure. This agreement must be settled directly with the buyer, and sellers are no longer required to advertise the buyer’s agent fee on listings. However, in competitive situations, sellers might still choose to cover buyer agent fees to attract more buyers.In 2024, as buyers may need to shoulder their agent’s commission, budgeting for these costs becomes more important. While sellers might still be willing to cover the buyer’s agent fees as part of negotiations, particularly in buyer’s markets, the responsibility of paying these fees could shift toward the buyer in some cases.Why Arizona Commission Rates Are Set the Way They Are
While the average commission rate in Arizona is around 5.4%, real estate agents face various costs, which influence their pricing. Here are some common expenses agents consider:- Brokerage Fees: Many agents split their commission with their brokerage, sometimes up to 50%.
- MLS and Association Fees: Access to the MLS (Multiple Listing Service) and local association memberships cost several hundred dollars yearly.
- Marketing Expenses: Agents may cover marketing out of pocket, including professional photography, open houses, and social media ads.
- Administrative Support: Agents often employ administrative support to help manage listings and transactions, adding to their overhead costs.
- Self-Employment Tax: Real estate agents are considered self-employed, and they pay a 15.3% self-employment tax on earnings.