Real Estate Commissions on Land Sales - Answers to 9 Common Questions

If you're getting ready to sell your land, you may be wondering how much commission fees will take away from the sale price. Below we answer this and other frequently asked questions about commissions for raw land sales.

Key Takeaways

  • Commissions for selling vacant land can range from 5-10%
  • Seller typically pays the commission at closing
  • Commission rate is usually negotiable.
  • You can avoid commissions by selling to a cash buyer

Common real estate agent commission questions about selling land

What is the typical real estate commission on a land sale?

Commissions for selling vacant land can go as high as 10 percent. A range of 5 to 10 percent is typical. The property's listing price is a major factor in the commission rate. Lower value properties require higher commission rates to make it worthwhile for the agent.

Who pays the commission on a vacant land sale?

Normally, the seller pays the real estate commissions at the time of sale, according to the commission rate specified in the listing agreement.

Are real estate commissions negotiable?

Yes, the real estate commission rate is usually negotiable.

But be aware that some agents may not negotiate. Agents and brokers that are well-established in their market have little reason to negotiate. They know what other agents charge and they are confident they can provide excellent service.

Still, if you are set on a maximum commission you can shop around and probably find an agent with a lower commission. In real estate, there are always new real estate agents looking to gain experience and take on new clients.

Is the real estate commission based on sale price?

Yes, normally the commission is a percentage of the sale price. In some cases, the realtor will charge a flat fee minimum. For example, the real estate broker may charge a commission rate of 6% or $1,500, whichever is higher.

How does a realtor get paid on a land contract?

Land contracts are not typical real estate transactions because the purchase price is not paid in full at the time of sale. Instead, the buyer pays for the property in installment payments.

From the listing agent's perspective, their job is to find a buyer for the property. They can't influence what happens after that. So, sellers should still expect to pay the full commission at closing for land contracts.

In this situation, the dilemma for the seller is that they could pay the agent's commission only to have the buyer stop making payments. The seller would then need to sell the property again and potentially pay another real estate agent.

One way to minimize this risk is to ask for a down payment that is larger than the real estate agent's commission. For example, if the commission rate is 6%, you could request a 10% down payment from the land buyer.

How can you save money on broker fees for land sales?

Sellers can eliminate brokerage fees by selling for sale by owner. Just be aware land is harder to sell than a home and it can be a huge amount of work.

Sellers can also reduce broker fees by using a flat fee MLS service. These services will list your property on the MLS for a flat fee that you pay upfront. however, it's still common to pay a commission to the buyer's agent, if any. So, you really only save on the listing agent's commission.

What is the typical farmland sale commission?

Auction sales are a common way of selling farmland. Auctioneer commissions can range from 1 to 5 percent. These commissions are a bit different from brokerage commissions as they can be paid for by the seller or by the buyer.

Do you need a realtor to sell land?

No, you can sell land without a real estate agent. Many land owners sell their land FSBO. As the land owner, you know what the land can be used for and who may be interested in buying it. It really comes down to whether you want to take the time and energy to market the property for sale.

Why is selling a parcel of land more work and how does that merit 10%?

A 10% commission can seem high, but often the amount will be lower than what an agent makes selling a home. Often, land is also harder to sell than selling your home. There are just fewer potential buyers compared to a home sale. Raw land may also take longer to sell.

Avoid real estate commissions - sell vacant land for cash

If avoiding fees is a concern, consider selling to a cash buyer before you sign a listing agreement. When you sell to a land buyer like us, you won't pay any commission fees or closing costs. It's also the fastest way to sell - we typically buy land within two weeks of making a cash offer.