Real Estate Commissions Are Changing: What Buyers and Sellers Should Expect

If you’re buying or selling a home in Colorado, you may have noticed that real estate commissions aren’t quite what they used to be. Traditionally, the seller paid both the listing agent’s and the buyer’s agent’s commissions, typically around 5-6% of the sale price. But today, things are shifting, and these changes could impact both buyers and sellers in significant ways.

Let’s break down what’s happening in the world of real estate commissions and what you can expect as you navigate this new landscape.

The Traditional Commission Model

For years, the standard commission structure in Colorado, as in most places, has been fairly straightforward: the seller agrees to pay a percentage of the final sale price, which is split between their agent (the listing agent) and the buyer’s agent. This commission, while negotiable, usually hovered around 5-6%. Sellers factored this cost into their pricing, and buyers were largely off the hook for agent fees. It was a system everyone understood.

The Rise of Discount Brokerages

Enter discount brokerages. These companies have shaken up the traditional commission model by offering sellers lower rates to list their homes. Instead of paying 5-6%, sellers might only pay a flat fee or a reduced percentage, sometimes as low as 1-2%. In Colorado’s competitive market, where home prices have soared, this can represent significant savings for sellers.

But here’s the trade-off: with a discount brokerage, the level of service you receive may vary. Some offer limited support, fewer marketing efforts, or charge extra for services like professional photography or open houses. For some sellers, this is perfectly acceptable—especially in a hot market where homes can sell quickly. However, if you need a more hands-on approach or personalized service, you may find that traditional full-service agents still have a lot to offer.

Flat-Fee Models: A Growing Trend

Another trend that’s catching on in Colorado is the flat-fee model. Some brokerages charge sellers a set amount, regardless of the home’s price. This structure can be particularly appealing for higher-priced homes, where a traditional commission would be a substantial chunk of the sale price.

With a flat-fee model, you know exactly what you’re paying upfront. This can be great for budgeting, but it’s important to understand what’s included in that fee. Some flat-fee brokerages offer full-service representation, while others provide more limited services. As with discount brokerages, you’ll want to weigh the level of service against the cost savings.

Technology-Driven Platforms Are Reshaping the Market

Technology is playing a huge role in how real estate agents are compensated today. Platforms like Redfin, for example, have introduced models that reduce commission rates by using technology to streamline the buying and selling process. These tech-driven platforms offer a mix of agent assistance and DIY options, giving consumers more control—and often, a smaller bill.

Buyers in Colorado who work with Redfin, for instance, may receive a rebate on their commission. This means they can pocket a portion of what would have been the buyer’s agent’s fee. Sellers, on the other hand, might pay a lower commission because Redfin agents handle more clients at once, leveraging technology to manage transactions more efficiently.

The “Buyer Pays” Commission Model

One of the biggest changes on the horizon is the shift towards a “buyer pays” model. In this structure, buyers are responsible for paying their agent’s commission directly, rather than having it rolled into the home’s purchase price through the seller. This shift could fundamentally alter how homes are bought and sold, with buyers needing to budget for agent fees out of pocket.

This model is still relatively new but is gaining traction as more buyers recognize that they’re essentially already paying their agent’s commission—it’s just bundled into the sale price of the home. With the “buyer pays” model, buyers may have more leverage in negotiating commissions and could potentially lower their costs, but it will also require more upfront financial planning.

What Buyers and Sellers Should Expect

For sellers, the new commission structures mean more flexibility and control over costs. You can shop around for different models and find an arrangement that works best for your situation. However, be mindful of the level of service you’re getting for the price. While saving on commissions is appealing, you don’t want to skimp on the support you need to get your home sold quickly and for top dollar.

For buyers, it’s important to understand how the commission structures are changing and what that means for your budget. If the “buyer pays” model continues to gain ground, you’ll need to factor agent fees into your financial planning. However, with discount brokerages and tech-driven platforms, you may find opportunities to save money, especially if you’re willing to take a more hands-on approach to your home search.

Final Thoughts

Real estate commissions in Colorado are evolving, and these changes are opening up new possibilities for buyers and sellers alike. Whether you’re drawn to discount brokerages, flat-fee models, or technology-driven platforms, it’s clear that the old commission structures are no longer your only option. By understanding the different models and what they offer, you can make a more informed decision—and potentially save money in the process.

At the end of the day, it’s about finding the balance between cost savings and the level of service you need to achieve your real estate goals.