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Agent commissions are a normal part of real estate transactions—but when you’re an investor doing multiple deals a year, they can feel like a big line item. The key is understanding how commissions work and how to make sure you’re getting value for what you’re paying.
Here’s what investors need to know.
1. Who Pays the Commission?
Typically, the seller pays both the buyer’s and listing agent commissions. These are usually split 50/50 and come out of the sale proceeds.
For buyers, that means you’re not technically paying out of pocket—but that cost is baked into the property price.
For sellers, commission is a real expense that affects your net proceeds.
2. Typical Commission Rates
Standard commissions are:
- 5% to 6% of the purchase price (total)
- 2.5% to 3% to each side (buyer’s and seller’s agent)
These are negotiable—but in hot markets or lower-priced deals, you may find less flexibility.
3. How Commissions Affect ROI
As an investor, commission impacts your:
- Cash-on-cash return (if buying at higher prices)
- Net proceeds when selling
- Total transaction costs (especially on flips)
That’s why it’s critical to work with agents who help you maximize your return—not just close deals.
4. When It’s Worth Paying Full Commission
Great investor agents can:
- Find underpriced or off-market deals
- Move fast to secure high-ROI opportunities
- Help you avoid costly mistakes in rehab or financing
If an agent adds $20K in value to a deal and earns $9K in commission, that’s a win-win.
5. How to Negotiate as an Investor
If you plan to do multiple deals with an agent, you may be able to negotiate:
- Lower listing fees for flips
- Reduced commission on repeat purchases
- Flat fees or performance-based incentives
Pro tip: Don’t lead with commission requests. Prove you’re a serious, repeat client first.
6. Dual Agency Considerations
Some agents act as both buyer’s and seller’s rep. This can:
- Reduce total commission costs (some discount for dual roles)
- Create potential conflicts of interest
Always ask how they handle negotiations and transparency if acting as a dual agent.
The Bottom Line: Value Over Price
A great agent should help you:
- Win better deals
- Close faster
- Maximize returns
When they do that, their commission is a smart investment—not a sunk cost.
Want to Work With an Agent Who Delivers ROI?
We’ll connect you with an investor-savvy real estate agent who knows how to help you scale.
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Read Next:
- Why Most Agents Can’t Help Investors
- The Top 10 Questions Real Estate Investors Should Ask an Agent
- How to Use a HELOC to Buy Your Next Rental Property
Find Your Ideal Investment Agent
- Connect with agents who are also investors
- Get matched with local market experts
- Tailored support for strategies like BRRRR, house hacking, and flips
- Leverage insights from a community of 3M+ investors
Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.
