When selling a home in Texas, one of the largest expenses you’ll face isn’t closing costs or repairs, are the real estate commissions. Recent data reveals that Texas home sellers are paying an average of 5.85% in total realtor fees, notably higher than the national average of 5.57%. For a state known for its relatively affordable housing and business-friendly climate, this premium on agent services represents a significant cost that can eat into sellers’ profits by tens of thousands of dollars.
Understanding how these real estate commissions work, why Texas rates run higher than the national average, and what options exist for reducing these costs has become increasingly important in 2025, particularly following industry-changing reforms that have reshaped how commissions are negotiated and paid.
Breaking Down the 5.85%
The 5.85% average commission in Texas typically splits into 2.88% for the listing agent and 2.97% for the buyer’s agent. To put these percentages into perspective, the financial impact escalates quickly with home value. On a $230,000 home, sellers pay approximately $13,455 in realtor commissions; on a $450,000 home, that figure jumps to $26,325; and for a $750,000 property, commission costs reach $43,875.
These aren’t trivial amounts. For many homeowners, commission fees represent one of the single largest deductions from their home sale proceeds, often exceeding what they paid in closing costs and potentially consuming a substantial portion of their equity gains.
The commission structure traditionally follows a four-way split. Each agent, the listing agent representing the seller and the buyer’s agent, shares their portion with their respective brokerages. The exact split between agent and brokerage varies based on individual contracts negotiated during the hiring process, but it’s not uncommon for experienced agents to retain 70-80% of their commission while newer agents might only keep 50-60%.
Why Texas Commissions Run Higher
Several factors contribute to Texas’s above-average commission rates. The state’s vast geographic size means properties can be spread across enormous metropolitan areas, requiring more extensive marketing efforts and longer travel times for showings. Cities like Houston, Dallas-Fort Worth, Austin, and San Antonio each sprawl across hundreds of square miles, making an agent’s job more demanding than in more compact markets.
Commission rates also vary slightly by city within Texas. Dallas averages 5.88%, slightly higher than the state average, while Houston comes in at 5.81%. These variations reflect local market conditions, competition among agents, and the relative difficulty of selling homes in different areas.
Texas’s strong seller’s market conditions in recent years have also supported higher commission rates. As of October 2025, Texas has approximately 7.15 months of housing inventory, indicating relatively balanced market conditions. When homes sell quickly and competition among buyers remains strong, agents have less incentive to reduce their fees.
The 2024 NAR Settlement Changes Everything
The landscape of real estate commissions fundamentally shifted in 2024 following the National Association of Realtors settlement. Prior to these changes, the standard practice involved sellers paying both their own agent’s commission and the buyer’s agent’s commission, with the total amount deducted from the seller’s proceeds at closing.
Now, as of 2024, buyers in Texas must sign a written agreement with their agent that outlines exactly what services will be provided and how the agent will be paid. This represents a dramatic departure from previous practices where buyer’s agent compensation was simply assumed and advertised on MLS listings.
If a seller chooses not to offer a buyer’s agent commission, the buyer may be responsible for paying that amount themselves, typically 2% to 3% of the purchase price. This shift gives sellers unprecedented flexibility in how they structure commission payments, but it also introduces new strategic considerations. Sellers who decline to offer buyer’s agent compensation may find their homes less attractive to buyers who must now factor in an additional 2-3% cost beyond their down payment and closing costs.
Strategies for Reducing Commission Costs
Despite the averages, commission rates in Texas are entirely negotiable. Federal antitrust law prohibits setting standard rates, and in practice the commission varies by property, market, and brokerage service model. This legal framework means sellers have more negotiating power than many realize.
Market conditions significantly influence your negotiating position. In a seller’s market where homes move quickly and agents compete for listings, you have greater leverage to negotiate lower rates. Conversely, in a buyer’s market where properties sit longer and require more marketing effort, agents are less likely to accept reduced commissions.
Several alternative service models have emerged that challenge traditional commission structures. Some brokerages now offer listing fees as low as 1.5%, with referral services pre-negotiating these reduced rates with top-performing agents. Redfin advertises a 1.5% listing fee, or 1% if you also buy with them within 365 days, representing substantial savings compared to traditional 2.8-3% listing commissions.
Flat-fee MLS services represent another option, where sellers pay a fixed amount (often just a few hundred dollars) to list their home on the Multiple Listing Service while handling other aspects of the sale themselves. Some services charge as little as $249 to list a home on the MLS. However, sellers choosing this route must be prepared to manage showings, negotiations, paperwork, and other tasks typically handled by listing agents.
For-sale-by-owner (FSBO) transactions eliminate listing agent commissions entirely, but come with significant tradeoffs. While you save thousands in listing fees, you still typically need to pay the buyer’s agent commission, and you assume responsibility for pricing strategy, marketing, legal compliance, and negotiation, areas where professional expertise often proves valuable.
When Negotiation Makes Sense
Certain circumstances strengthen your position when negotiating commission rates with agents. If your home is in excellent condition and likely to sell quickly, agents may accept lower rates since their time investment and marketing costs will be minimal. Similarly, if you’re selling a high-value property, the dollar amount of even a reduced percentage commission remains substantial, making it attractive to agents.
Repeat clients often receive preferential rates. If you’ve worked with an agent before or are simultaneously buying and selling, you have more leverage to negotiate package deals with reduced overall commissions. Some agents also reduce their fees for homes in hot neighborhoods where properties sell quickly with minimal effort.
Your personal preparedness also matters. Sellers who’ve already addressed major repairs, professionally staged their homes, and gathered necessary documentation make an agent’s job easier, potentially justifying a lower commission rate.
The Hidden Costs of Going Too Low
While reducing commissions can save money, there’s a point of diminishing returns. An agent working for a rock-bottom commission may provide minimal marketing, conduct fewer showings, or negotiate less aggressively on your behalf. In some cases, the money saved on commission can be lost through a lower final sale price or longer time on the market.
Additionally, offering little or no buyer’s agent commission can backfire. Buyer’s agents may be less enthusiastic about showing your property if they know they’ll earn significantly less than on comparable listings. In a competitive market with multiple similar homes available, this could mean fewer showings and a longer time to sale.
Looking at the Bigger Picture
On average, sellers in Texas pay about 3.51% of the home’s purchase price in additional closing costs beyond commission. When combined with the 5.85% commission, total selling costs approach 9-10% of the home’s value. For a $400,000 home, that translates to roughly $36,000-40,000 in total selling expenses.
Despite these costs, real estate agents in Texas earn an average base salary of about $91,585 per year, though earnings vary widely based on sales volume, location, and experience. Top performers earn substantially more, while many agents struggle to close enough transactions to generate full-time income.
The commission system creates a performance-based compensation model that theoretically aligns agent incentives with seller goals, the higher the sale price, the more the agent earns. However, critics argue the system can encourage agents to push for quick sales rather than holding out for maximum value, since the marginal commission increase from a higher price may not justify weeks or months of additional effort.
The Path Forward
As Texas real estate markets evolve and industry reforms continue reshaping commission structures, sellers have more options than ever before. The key is understanding that the 5.85% average represents neither a requirement nor a fixed standard. Commissions are negotiable, alternative service models exist, and market conditions constantly shift the balance of power between buyers, sellers, and agents.
Successful negotiation requires preparation. Research your local market conditions, understand your home’s strengths and potential challenges, and approach multiple agents to compare not just commission rates but the full scope of services offered. Sometimes paying a slightly higher commission to an exceptional agent results in a faster sale at a higher price, more than offsetting the increased fee.
The 2024 NAR settlement has introduced new complexity but also new opportunity. Sellers can now structure commission arrangements creatively, potentially saving thousands while still providing adequate compensation to attract qualified buyers and their agents. As this new system matures, expect further innovation in how real estate services are priced and delivered.
For Texas home sellers, the message is clear: 5.85% is an average, not a mandate. With knowledge, preparation, and strategic negotiation, you can reduce your commission costs while still receiving the professional representation that helps maximize your home’s sale price and minimizes the stress of what remains one of life’s most significant financial transactions.
