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Remodeling your home to make it more accessible for a disabled family member (or, simply better suited for “aging in place”) allows you to stay in your home longer and makes it easier for everyone to perform their everyday tasks. But where do you even begin?

Creating a wheelchair-friendly home generally involves removing barriers and making daily necessities more accessible. It might involve some DIY tweaks to a few rooms or could require hiring a contractor and making more extensive renovations.

While the Americans with Disabilities Act (ADA) doesn’t cover private, single-family homes, it offers helpful guidelines you may want to keep in mind as you work on making your home more accessible.

What follows is a simple (and ADA-compliant) guide to home modifications you may want to make for someone who is disabled, including costs involved and financing options.

How Much Do Handicap Home Modifications Cost?

How much you’ll spend on renovations to make your home accessible will depend on your accessibility needs, your home’s current state, and the size of your home.

According to Angi (formerly Angie’s List), the cost of making your home more accessible can range anywhere from $751 to $8,553, with $4,652 being the national average. If you opt to do significant home renovations, however, costs can run considerably more. Installing an elevator, for instance, can set you back $2,500 to $60,000.

It’s a good idea to figure out which renovations you want to do and then work with a contractor to price them out. You can then adjust the scope of the project based on your budget.

Here’s a breakdown of some of the renovation costs that may be involved in making your home more accessible.

Types of Accessible Home Renovations

What follows are some key accessibility modifications that can help give aging parents or family members who require help getting around via wheelchair, cane, or walker more independence within your living space.

1. Doorways

Widening doorways is crucial to accommodate wheelchair users. The ADA requires doorways to have a clear opening of 32” when the door is open 90 degrees for wheelchairs to pass easily.

Widening a doorway can run $700 to $2,500 if you require new doors or if you need to create larger openings. However, you may be able to provide accessibility for a lot less by installing offset or swing-clear hinges to allow the door to swing clear of the entryway,

2. Door Handles

Round door knobs can be difficult to open from a wheelchair. To make it easier for those with mobility impairments, consider installing lever door handles. These handles are easier to grip and operate, providing improved accessibility throughout your home.

3. Showers

Converting a traditional bathtub into a roll-in shower with a wide entry and grab bars can greatly enhance accessibility. The ADA recommends that your shower stall be at least 36” by 36” for wheelchair accessibility. Adding a fold-down shower seat and adjustable handheld showerhead (the ADA recommends a 60” hose) further improves safety and convenience.

The price of retrofitting an existing shower or installing a new one can run anywhere from $2,000 to $7,500

Recommended: Tips for the Perfect Small Bathroom Remodel

4. Baths

Instead of a shower, you might consider a handicap-accessible bathtub. The ADA requires clear floor space in front of the bath, a seat in the bath at the head of the tub, along with grab bars and a 60” hose.

Converting a bathtub into a walk-in tub can run anywhere from $350 to $1,000

5. Ramps

If your home currently has stairs you need to climb to get inside, you’ll need to build a ramp if you want it to be wheelchair accessible. Ramps should have a gradual incline, non-slip surfaces, and handrails for stability. Per the ADA, the width of the ramp has to be a minimum of 36”.

The cost of constructing a ramp will depend on the entrance layout of your particular home, but you could expect to pay between $1,000 and $4,000.

6. Flooring

Choosing smooth and slip-resistant flooring materials throughout the house is essential for individuals with mobility aids or wheelchairs. You’ll want to remove any carpets or rugs that could pose tripping hazards or make it hard for wheelchair users to get around. If you use carpet, it should be no more than half an inch. Plusher carpets make it difficult for wheelchairs to maneuver.

Installing non-slip flooring generally runs around $3 to $22 per square foot.

7. Accessible Kitchen Renovations

Modifying the kitchen can significantly improve accessibility. Lowering countertops, installing pull-out shelves, and adding accessible sinks and appliances can make meal preparation easier for individuals with disabilities.

Converting a kitchen to comply with the ADA guidelines can run $9,000–$40,000. To cut costs, you might consider creating a dedicated area for accessible cooking and meal prep, leaving the rest of the kitchen as-is.

Recommended: What Is the Average Cost to Remodel a Kitchen?

8. Toilets

Bathrooms should have enough room for a wheelchair to maneuver inside and room for a wheelchair user to move their chair next to the toilet to transfer themselves from the chair to the toilet easily. There should be grab bars mounted securely to the walls to facilitate the process and increase safety.

Depending on mobility needs, you might consider installing raised or comfort-height toilets and adding a bidet attachment. Installing a modified toilet can run $400 to $1,000.

Recommended: 10 Steps for the Perfect Bathroom Remodel

9. Sinks

Accessible sinks should have open space underneath to accommodate a wheelchair. Installing lever-style, push, or touch-operated faucets and ensuring adequate knee clearance further improves accessibility.

Installing a new sink and faucet can run $100 to $1,000

Financing Options for Home Modifications for the Disabled

The cost involved in making home accessibility renovations can add up quickly. And, you might not necessarily have the funds you need just in your savings account. Fortunately, there are a number of funding options, including grants and loans, available. You may also be able to deduct some of the costs on your taxes.

Here’s a look at some of your options.

Specially Adapted Housing (SAH) Grants

The U.S. Department of Veterans Affairs offers Specially Adapted Housing (SAH) grants for eligible veterans with disabilities. These grants provide financial assistance to modify or build homes to meet their specific accessibility needs.

IRS Deductions for Home Accessibility Renovations

Home renovations are not generally tax deductible. However, accessibility modifications to your home can be included as medical expenses if they are medically necessary and you itemize your deductions. Keep in mind that the deduction amounts must be reasonable, and if the amount spent increases the value of your home, they cannot be claimed as a medical expense.

The Internal Revenue Service (IRS) also allows disabled people and their friends and family to save money to pay for the disabled person’s expenses in ABLE accounts. You’ll want to consult a tax profession or refer to the IRS Publication 907 to learn more about the specific requirements and limitations.

Options to Finance Accessible Home Renovations

Various financing options are available for accessible home renovations. Here are some you may want to investigate.

Personal Loans

A personal loan is typically an unsecured loan (meaning you don’t have to put an asset to secure the loan) that can be used for a wide variety of purposes, including home renovation projects. The advantage of this type of loan is that you don’t need to have built up equity in your home to qualify for financing.

Some personal loans are actually specifically designed to cover the cost of home remodeling (they are often called home improvement loans). Either type of personal loan can provide the necessary funds for home accessibility renovations. It’s a good idea to compare interest rates, terms, and repayment options to find the best personal loan option for your project.

Recommended: How Do Home Improvement Loans Work?

Reverse Mortgages

If you’re aged 62 or older, you might want to consider a reverse mortgage. This type of mortgage allows seniors to borrow against the equity in their home. These funds can be used for home modifications, and repayment is typically deferred until the homeowner moves or passes away.

Just keep in mind that reverse mortgages often come with relatively high fees that are rolled into the loan. Also, your equity in your home will likely decrease, leaving you with less in your estate to leave to your heirs.

Fannie Mae and the Federal Housing Administration (FHA)

Fannie Mae’s HomeStyle Renovation Mortgage and the FHA’s 203(k) Rehabilitation Mortgage Insurance Program offer financing options for purchasing or refinancing a home that needs accessibility renovations.

Fannie Mae’s HomeStyle program is available for buyers who want to get money to buy and renovate a home in one loan or to those who want to refinance their home loans and get cash for renovations. The FHA’s 203(k) renovation loan is similar to Fannie’s but has more flexible qualification requirements.

Refinancing

Refinancing an existing mortgage can provide additional funds for home accessibility modifications. By taking advantage of lower interest rates or extending the term of your loan, homeowners can free up cash for renovations. Keep in mind, though, that extending the term of your loan can increase the total cost of your mortgage.

Nonprofit Assistance

Certain nonprofit organizations provide grants or low-interest loans for home accessibility renovations. These organizations focus on supporting individuals with disabilities and improving their living conditions.

One you may want to look into is Rebuilding Together . This is a national organization dedicated to helping homeowners build, rebuild, or modify their homes. They have a history of working with families to make their homes more accessible.

Other helpful resources include:

•   The National Resource Center on Supportive Housing and Home Modification

•   Local Independent Living Center Affiliates

•   Local Easter Seals chapters

Medical Waivers

Many states have Medicaid programs that cover home modifications for disabled or elderly people. These programs are often used for people who are currently in nursing homes but may want to return to a private home. The money could help them make home modifications to ensure their safety at home. Eligibility requirements and coverage vary by state, so it’s important to research available programs in your area

Home Equity Line of Credit (HELOC)

If you own your home, you might be able to use your existing equity to get a home equity line of credit (HELOC). A HELOC is a revolving line of credit (backed by your equity in your home) that works in a similar way to a credit card. You can borrow what you need for your home accessibility renovations as you make them (up to a set credit limit) and only pay interest on what you borrow.

The Takeaway

Creating an accessible home through thoughtful renovations provides independence and a higher quality of life for individuals with disabilities or mobility limitations. Making changes through your home, such as widening doorways or installing ramps, can significantly improve accessibility.

Financing options like grants and loans, along with possible tax deductions, can help make these renovations more affordable. It’s important to explore all available resources and consult with professionals to determine the best financing solution for your handicap home modifications.

If you think a personal loan could be helpful, SoFi’s home improvement loans range from $5K to $100K, and you may be able to get same-day funding. Plus, there are no fees required.

FAQ

Does Medicare or Medicaid cover accessible home renovations?

Medicare does not cover home modifications. However, Medicare Part B does cover durable medical equipment (such as hospital beds) if it’s medically necessary for use at home.

In some states, disabled individuals who are eligible for Medicaid may benefit from Home and Community-Based Services (HCBS) programs. You will need to check with your state if it offers HCBS benefits.

How do I make my home ADA compliant?

The Americans With Disabilities Act (ADA) seeks to ensure that persons with disabilities have equal access to — and convenience in — public spaces via a range of codes and recommendations. While the ADA doesn’t cover private, single-family homes, it offers helpful guidance for making your home accessible. Following the Guide to the ADA Accessibility Standards when making modifications could also be helpful for your home’s resale.

Are ADA renovations tax deductible?

ADA renovations may be tax deductible as medical expenses, provided they are medically necessary and you itemize your deductions.

Just keep in mind that the amounts must be reasonable and any expenses incurred for aesthetic or architectural reasons cannot be deducted. Also, any amount you spend for accessibility modifications that increase the value of your home cannot be claimed as a medical-related expense.

Are there home loans that cover handicap home modifications?

Yes. The USDA’s Single Family Housing Repair Loans & Grants programs provides loans to very-low-income homeowners to repair, improve or modernize their homes or grants to elderly very-low-income homeowners to remove health and safety hazards.

The U.S. Department of Housing and Urban Development’s 203(K) Rehab Mortgage Insurance program allows you to finance (or refinance) a mortgage and include the costs of home improvements in your balance.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Closing costs average 3% to 6% of your mortgage loan principal. So even if you’ve saved for a down payment on a new place, you are likely going to have to dig somewhat deeper to afford to seal the deal. How deep, you ask? For buyers, closing costs can add up to a significant sum.

Whether you are a first-time homebuyer or a seasoned property purchaser, it’s wise to know what to expect, in terms of both money and process, when it’s time to gather at the closing table. Payments will be due from both the buyer and the seller.

Get ready to delve into this important home-buying topic and learn:

•   What are closing costs?

•   How much are closing costs on a house?

•   Who pays closing costs?

•   How much are closing costs for the buyer and the seller?

•   How can you lower closing costs?

What Are Closing Costs?

Closing costs are the fees needed to pay the professionals and businesses involved in securing a new home. These range from fees charged by appraisers, real estate agents, and title companies, to lender and home warranty fees.

Here are some key points to know:

•   When you apply for a mortgage loan, each lender must provide a loan estimate within three business days. This will give you information such as closing costs, interest rate, and monthly payment. Review those closing costs carefully.

•   Your closing costs will depend on the sale price of the home, the fees the chosen lender charges, the type of loan and property, and your credit score.

•   Closing costs are traditionally divided between the buyer and seller, so you won’t necessarily be on the hook for the whole bill. That said, the exact division between buyer and seller will depend on your individual circumstances and can even be a point of negotiation when you make an offer on a house.

How Much Are Closing Costs?

As noted above, average closing costs on a house typically range from 3% to 6% of the mortgage principal. Let’s say you take out a $300,000 mortgage loan to buy a house with an agreed-upon sale price of $350,000. Your closing costs could be between $9,000 and $18,000, or 3% and 6%.

Be aware that a “no closing cost mortgage” often means a higher rate and a lot more interest paid over the life of the loan. The lender will pay for many of the initial closing costs and fees but charge a higher interest rate.

Good news if you are buying a HUD home: HUD will pay some of the closing costs as well as the real estate commission fee usually paid by the seller.

Recommended: First-Time Homebuyer Guide

Calculate Closing Costs

The tool below is a home affordability calculator, and it’s a great way to also see what the potential closing costs and additional monthly costs would be based on how much home you can afford.

Who Pays Closing Costs?

Typically, closing costs are paid by both the buyer and the seller. Each has their own responsibilities to uphold.

Some fees are specific to the purchase and are payable by the buyer. These include title search, prepaid interest on the mortgage loan, and more.

Other costs are the seller’s responsibility: paying the real estate agent and so forth. Read on to learn more about who pays for what when closing on a home sale.

How Much Are Closing Costs for a Buyer?

Typically, the buyer pays the following closing costs:

•   Abstract and recording fees: These fees relate to summarizing the title search (more on that below) and then filing deeds and documentation with the local department of public records. You may find that abstract fees can cost anywhere from $200 to $1,000, and recording fees in the range of $125.

•   Application fee: Your lender may charge you to process your application for a home mortgage loan. This could cost up to $500.

•   Appraisal and survey fees: It is easy to be wooed by pristine wood floors and dining room walls covered in vintage wallpaper, but surface good looks will only get you so far. You and your lender want to make sure that your potential new home is actually worth the purchase price. This means paying professionals to delve more deeply and provide a current market value. These home appraisal and survey fees are typically due at closing. This is usually in the $300 to $400 range, but could be considerably higher, depending on the home, its location, and other factors.

•   Attorney costs: Working with a real estate attorney to review and vet documents may be an hourly rate (typically $150 to $400 per hour) or a project fee ($500 to $2,000). The specifics will vary depending on the individual professional you use, your location, and how complex your purchase is.

•   Credit reporting, underwriting, and origination fees: The lender may charge anywhere from $10 to $100 per applicant to check their credit score; underwriting fees (often in the $400 to $900 range) may also be added to closing costs. Origination fees can be about 1% of your loan’s value and cover the costs of the lender creating your loan documents.

•   Flood certification fee: The lender may require a flood certification, which states the flood zone status of the property. This could cost anywhere from $20 to $300, depending on your state.

•   Home inspection fee: This will likely cost between $300 and $500, but it could go higher. This is paid by the buyer, who is commissioning the work to learn about the home’s condition. In some cases, it may be paid at the time of service vs. at closing.

•   Homeowners insurance: Your lender may require you to take out homeowners insurance. The first payment may be due at closing. The exact amount will depend on your home value and other specifics of your policy.

•   Home warranty: A home warranty is optional and can be purchased to protect against major mechanical problems. A warranty plan may be offered by the seller as part of the deal, or a buyer can purchase one from a private company. Your lender, however, will not require a home warranty.

•   Mortgage points: Each mortgage point you choose to buy costs 1% of your mortgage amount and typically lowers your mortgage rate by 0.25% per point. That point money you are paying upfront is due at closing. All the mortgage fees will be spelled out in the mortgage note at the closing.

•   Prepaid interest: Some interest on your mortgage is probably going to accrue between your closing date and when the first payment is due on your loan. That will vary with your principal and interest rate, but will be due at closing.

•   Private mortgage insurance: Often lenders require PMI if you make a down payment that is less than 20% of the purchase price. Putting less money down can make a buyer look less reliable when it comes to repaying debt in the eyes of lenders. They require this premium to protect themselves. This is usually a fee that you pay monthly, but the first year’s premium can also be paid at the time of closing. Expect a full year to cost between .5% and 2% of the original loan amount.

•   Title search and title insurance fees: When a title search is done to see if there are any other claims on the property in question, the buyer typically pays the fee, which is usually in the $75 to $200 range. The lender often requires title insurance as a protection. This is likely a one-time fee that costs between 0.5% and 1% of the sale price. If your house costs $400,000, the title insurance could be between $2,000 and $4,000.

As you see, some of these fees will vary greatly depending on your specific situation, but they do add up. You’ll want to be sure to estimate how much closing costs are for a buyer and then budget for them before you head to your closing.

Recommended: How Long Does It Take to Close on a House

How Much Are Closing Costs for a Seller?

You may also wonder what closing costs are if you are selling your home. Here are some of the fees you are likely liable for at closing:

•   Real estate agent commission: Typically, the seller pays the agent a percentage of the sale price of the home at closing, often out of the proceeds from the sale. The commission is likely to be in the 5% to 6% range, and may be equally split between the buyer’s and seller’s agents.

•   Homeowners association fees: If the home being sold is in a location with a homeowners association (HOA), any unpaid fees must be taken care of by the seller at closing. The actual cost will depend upon the home being sold and the HOA’s charges.

•   Property taxes: The seller must keep these fees current at closing and not leave the buyer with any unpaid charges. These charges will vary depending on the property and location.

•   Title fees: The seller will probably pay for the costs associated with transferring the title for the property.

It’s important for sellers to anticipate these costs in order to know just how much they will walk away with after selling a home.

How to Reduce Closing Costs

Closing costs can certainly add up. Here are some ways to potentially lower your costs.

•   Shop around. Compare lenders not just on the basis of interest rates but also the fees they charge. Not every mortgage lender will charge, say, an application, rate lock, loan processing, and underwriting fee. See where you can get a competitive rate and avoid excess fees.

•   Schedule your closing for the end of the month. This can lower your prepaid interest charges.

•   Seek help from your seller. You might be able to get the seller to pay some of your closing costs if they are motivated to push the deal through. For instance, if the property had sat for a while, they might be open to covering some fees to nudge the deal along.

•   Transfer some costs into your mortgage payments. You may be able to roll some costs into the mortgage loan. But beware: You’ll be raising your principal and interest payments, and might even get stuck with a higher interest rate. Proceed with caution.

Other Costs of Buying a Home

In addition to your down payment and closing costs, you also need to make sure that you can afford the full monthly costs of your new home. That means figuring out not only your monthly mortgage payment but all the ancillary costs that go along with it.

Understanding and preparing for these costs can help ensure that you are in sound financial shape for your first few years of homeownership:

Principal and interest. Your principal and interest payment is the amount that you are paying on your home loan. This can be estimated by plugging your sales price, down payment, and interest rate into a mortgage calculator. This number is likely to be the biggest monthly expense of homeownership.

Insurance. Your homeowners insurance cost should be factored into your monthly ownership expenses. Your insurance agent can provide you with details on what this policy will cover.

Property taxes. Property tax rates vary throughout the country. The rates are typically set by the local taxing authorities and may include county and city taxes. It’s important to factor in these costs as you think about your ongoing home-related expenses.

Private mortgage insurance. As mentioned, PMI may be required with a down payment of less than 20%. PMI is usually required until you have at least 20% equity in your home based on your original loan terms.

Homeowners association fees. If you live in a condo or planned community, you may also be responsible for a monthly homeowners association fee for upkeep in the common areas in your community.

Of course, these are just some of the things to budget for after buying a home. Your needs will depend on whether you are moving a long distance, whether you have owned a home before, and other factors. It’s a lot to think about, but it’s an exciting time.

The Takeaway

Before buyers can close the door to their new home behind them and exhale, they must be able to afford their down payment, qualify for a mortgage loan, and pay the closing costs — usually 3% to 6% of the loan amount. A home loan hunter may want to compare estimated closing costs in addition to rates when choosing a lender. It can be a wise way to keep expenses down.

SoFi Mortgage Loans offer competitive rates and a simple online application process. What’s more, qualifying first-time homebuyers can put as little as 3% down.

FAQ

How can I estimate closing costs?

Typically, closing costs will cost between 3% and 6% of your home loan’s amount.

When do I pay closing costs?

Your closing costs are typically paid at your closing. That is when you take ownership of the property and when your home mortgage officially begins.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Real estate agents — both on the seller’s side and the buyer’s side — typically get paid at closing from the seller’s proceeds. The majority of real estate agents are paid via a commission vs. a set fee, which means the higher the sales price, the more money the agent gets paid.

Commissions are split evenly between the buyer’s and seller’s agents. The brokerage each real estate agent or Realtor® works for snags a portion of the commission as well. (Realtors are real estate agents who belong to the National Association of Realtors, requiring them to adhere to a certain code of ethics; we’ll use the terms interchangeably here.) Here’s an example of how a Realtor gets paid.

Real Estate Commission: An Example

Let’s say a home sells for $500,000 with a typical commission of 6%:

Total commission fee: $500,000 X 6% = $30,000

The commission is split evenly between the two sides:

•   Listing agent side = $15,000

•   Buyer’s agent side = $15,000

Real estate agents share their commissions with the brokers representing them. (A broker is an agent who also has an additional license to supervise other agents.) Let’s assume that the broker fee is 1% of the sales price (the broker’s split can go up to 50%, but we’ll use an easy 1% split here).

•   $500,000 sale price X 1% broker’s fee = $5,000

Subtract the broker fee from the total commission and the agent ends up with the rest.

•   $15,000 total commission – $5,000 broker’s fee = $10,000 agent commission

Typically, four people get paid from the seller-paid real estate commission. It may look something like this:

•   Listing agent = $10,000 (2% of sales price)

•   Listing agent broker = $5,000 (1% of sales price)

•   Buyer agent = $10,000 (2% of sales price)

•   Buyer agent broker = $5,000 (1% of sales price)

A Real Estate Agent’s Responsibilities

To earn their commission, real estate agents often have a lot of responsibilities. Their duties include:

•   Providing market data and helping to set a listing price

•   Placing ads and putting up yard signs

•   Photographing the property

•   Listing the property in the MLS, a listings database

•   Scheduling showings

•   Placing lock boxes

•   Guiding first-time home buyers

•   Smoothing over difficult relationships

•   Navigating offers and counter offers

•   Negotiating home contracts

Making a living through commissions can be challenging for real estate agents, but it can also be very rewarding.

Recommended: How to Find a Real Estate Agent

Who Pays the Realtor Commission?

It is expected that the seller pays the real estate agent commission fee for both the buyer’s and seller’s agents. At settlement (also called the “closing”), the money for the commission comes out of the seller’s proceeds. If the sales price of a home is $500,000 and the sellers owe $250,000 on their mortgage, then the commission and other fees would be subtracted from the $250,000 that remains after the sellers pay off their mortgage.

How Much Are Realtor Fees?

It is common to see real estate agent commission fees between 5% and 6%. This includes both the seller’s and the buyer’s real estate agents’ fees. The money is usually split evenly between the two sides. If the commission is 6%, for example, 3% would go to each side.

Can You Negotiate Who Pays the Real Estate Agent?

The Realtor fee is negotiable, though it is extremely rare for a buyer to pay it. Some ideas to help reduce your fee if you are selling your home:

•   Barter. Do you have a photographer friend who can take photos of your home? Offer up skills in exchange for a lower commission.

•   Hire a newer agent. A newer agent may accept a lower commission to gain experience.

•   Pay attention to market conditions. If homes aren’t moving in your market, you may be able to negotiate a lower commission.

Take time to interview potential Realtors using these suggested questions. When you’re buying a home, look for an agent with a strong network. (These agents may be the first to hear about so-called “whisper listings.”) Be sure the commission outlined in the listing agreement you sign matches what you agreed on.

How Is an Agent’s Commission Determined?

An agent’s commission is determined by the compensation agreement they have with their brokerage. As noted above, after the commission is split between the buyer’s and the seller’s agents, it’s then split again between the agent and the broker.

When Do Agents Receive Their Commission?

Agents usually receive their commission after the home mortgage loan has been funded and the sale closes. Their brokerage receives a wire with the funds and the agent’s portion of the commission is released to them shortly thereafter.

How Do the Agents Share Their Commission?

It is customary for agents to share the commission 50/50. If the listing has a 6% commission on it, 3% would go to the buyer’s agent and 3% would go to the seller’s agent.

What Is Dual Agency?

Dual agency is when a real estate agent represents both the seller and the buyer in a transaction. It must be disclosed to both parties because real estate agents are bound by a fiduciary duty to serve their clients. An agent who represents both seller and buyer will earn more commission.

Is Paying a Real Estate Commission Worth It for the Seller?

For many sellers, it’s painful to look at the closing documents and see how much of the sales price goes to different agents, title insurance companies, concessions, and so forth. But a lot of sellers like having someone to guide them through the complexities of real estate law, and sensitive issues that the sale of a home creates.

Recommended: How to Buy a House Without a Realtor

Alternatives to a Percentage-based Commission

There are real estate brokerages that advertise services for a flat fee. Usually, the flat fee is very low and may only include a listing on the MLS with photos. They usually don’t offer to schedule showings or manage the listing in any other way.

The Takeaway

Working with a real estate agent who earns a commission isn’t painful when you’re a buyer because the fee is almost always covered by the seller, and you will have an agent on your side to help you negotiate.

Another way to be money-smart when you’re buying is to get a good rate on a home loan. SoFi Mortgages offer competitive interest rates, low down payment options, and a guaranteed on-time close* (which you and your Realtor will love).

See your home loan rate in minutes.

FAQ

Do sellers pay realtor fees?

Yes, sellers pay realtor fees for both the buyer and the seller.

Do buyers pay Realtor fees in Texas?

No, the seller pays the realtor fees in Texas, with very few exceptions.

Do buyers pay Realtor fees in Washington state?

No, the seller usually pays realtor fees in Washington state, but it is negotiable.

How much does a new Realtor make in Illinois?

According to ZipRecruiter.com, the average pay for a first-year real estate agent in Illinois is $82,481. The range for first-year salaries is between $18,866 and $153,998.

Photo credit: iStock/RyanJLane
SoFi Mortgages
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*^‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.