A real estate agent's commission is usually paid by the seller of a property, since that is, after all, who is going to benefit from the profit of the sale. The rates of an agent's commission are not set by law, and therefore vary among different areas. The percentage an agent earns is also determined by the selling price of the property and the type of property that is being sold. The average percentage on houses usually ranges from 4 to 7%, but commissions on vacant land can go much higher, even up to 10%. It is important to note that since commissions are not legally set, they are negotiable.

There is the option of hiring a discount broker to sell your house, rather than a full-service broker, but this requires substantially more time and effort on the part of the seller and might not be worth the small percentage cut in the broker's fees. Overall, a full-service broker determines the value of your home, aids in the preparation of the sale, and handles all advertising, including hosting open houses and private showings. Your broker will also negotiate with the prospective buyer to get you the best price possible and will work closely with you right up to your settlement day.

Discount brokers will either charge an hourly fee for whatever the aspects of selling the home you require assistance with, or they will charge a flat fee for whatever particular services are rendered.

Before negotiating commissions, be informed of the going rate from commissions in your area. The current real estate market will also affect your ability to negotiate a lower commission. If it is currently a buyer's market, and the agent has many listings but few buyers, there is not much room for negotiation. In a seller's market, however, agents are more likely to reduce commissions since they are working with few listings.

A seller can save money by negotiating a good commission reduction, but commission reductions can also have an adverse effect--they can delay the sale of your home if the broker does not have a significant incentive to work toward selling your home.

Another way in which a commission cut can work against you is if the broker offers to sell the house at a very low percentage but refuses to cooperate with any other agents. This drastically reduces your home's exposure on the market and can greatly prolong the length of time it takes to sell.

Ultimately, the quality of service you receive from your broker is far more important than the amount of money you spend on commission.