Real Estate Commission Explained: What It Is and How to Keep It Low

Ever wonder why you see an extra line item called "commission" when you buy or sell a house? It’s basically the fee a real‑estate agent earns for doing the work that gets a property moved from one owner to another. Understanding how that fee is calculated, who actually pays it, and where you can shave a few percent off can save you hundreds or even thousands of pounds.

Typical commission rates and who pays

In the UK most agents charge between 1% and 3% of the final sale price. For a £300,000 home that’s anywhere from £3,000 to £9,000. The seller usually foots the bill, but the cost is often baked into the asking price, so buyers end up covering it indirectly. Some letting agents work on a fixed‑fee basis for rentals, while others still use a percentage of the rent.

There are two main models: a "full‑service" agency that handles everything from marketing to negotiations, and a "discount" or "online" agency that offers fewer services for a lower fee. The more hands‑on the agent, the higher the percentage tends to be.

How to negotiate a better deal

Don’t assume the quoted rate is set in stone. Here are three quick ways to lower the commission:

• Shop around. Get quotes from at least three agencies. Even a small difference in percentage adds up.
• Ask for a tiered structure. Some agents will reduce their fee if the sale price exceeds a target they set.
• Offer to handle part of the work. If you’re comfortable with photography, virtual tours or drafting the listing, you can ask for a discount for taking those tasks off their plate.

When you’re negotiating, be clear about your budget and timeline. Agents are more willing to cut fees if they know a quick sale is likely.

Another tip: if you’re buying a property, see if the buyer’s agent can share their commission with you. In some cases, the seller’s agent will split the fee, meaning the buyer ends up paying less.

Finally, read the contract closely. Look for hidden charges like marketing fees, admin costs or early‑termination penalties. Ask the agent to explain any line you don’t understand before you sign.

Bottom line: Real estate commission is a standard part of the transaction, but you have plenty of room to negotiate. By comparing rates, offering to take on some tasks, and watching for hidden fees, you can keep more money in your pocket for the things that really matter – like furnishing your new home.