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Whether you are looking to list a cabin in the Smokies or a bungalow in the Scruffy City (Knoxville), selling a home comes with a price tag. For decades, the biggest line item on a seller’s closing statement has been the real estate commission.
However, if you’ve been following the news lately, you know the rules have changed. The “elephant in the room” is the recent National Association of Realtors (NAR) settlement, which officially shook up how agents get paid starting in late 2024. It has caused a fair bit of confusion for buyers and sellers alike from Chattanooga to the Tri-Cities.
Historically, people assumed a 6% fee was set in stone, but the reality is that commissions have always been negotiable. The difference now is that the structure is more transparent, and the negotiation happens much earlier in the process. You can likely negotiate better rates today, but you need to understand the new “decoupled” fee structure to do it effectively.
What Is the Average Real Estate Commission in East Tennessee?
Let’s get right to the numbers. While there is no government-mandated “standard” rate, the typical total commission in our market generally lands between 5% and 6% of the final sale price.
In the past, you would agree to a total fee (say, 6%), and your listing agent would split that with the buyer’s agent. That structure is still common, but it’s no longer automatic.
- The Listing Portion: Typically, the agent marketing your home charges around 2.5% to 3%.
- The Buyer Portion: Historically, the other 2.5% to 3% went to the agent bringing the buyer.
Geography plays a role here, too. In competitive urban markets like downtown Knoxville or North Chattanooga, you might see total fees compress closer to 5% or 5.5% because homes turn over quickly. Conversely, if you are selling a unique luxury property in Sevier County or a lakefront home that requires drone photography and international marketing, agents often hold firm at 6% to cover those higher upfront costs.
Who Pays the Commission Now? (Post-NAR Settlement)
This is the part that is confusing everyone. Under the old system, sellers almost always paid the fees for both their own agent and the buyer’s agent.
The New Rules: Technically, sellers are no longer required to pay the buyer’s agent. The new rules effectively “decouple” the fees. Furthermore, listing agents are strictly prohibited from publishing an offer of compensation to buyer agents on the Multiple Listing Service (MLS). You won’t see “3% to buyer’s agent” listed on the MLS anymore.
The Reality on the Ground: Even though you aren’t forced to pay the buyer’s agent, many sellers in East Tennessee still choose to offer “seller concessions” or pay the fee at closing anyway.
Why? Because most buyers—especially first-timers—are already stretched thin coming up with a down payment. If you refuse to cover their agent’s fee, they have to pay it out of pocket. That might cause them to skip your house entirely and look at a neighbor’s house where the seller is helping out.
For buyers, this means you must now sign a Buyer Representation Agreement before you even tour a home. This contract states exactly how much your agent gets paid, and if the seller refuses to cover it, you are on the hook for the difference.
Real-World Cost Examples: How Much Will You Pay?
Percentages are great, but seeing the actual dollar amount helps you budget. Remember, these fees usually come out of your sale proceeds at the closing table—you generally don’t write a check for them upfront. To get these numbers right, everything starts with an accurate property valuation; East Tennessee sellers should look at these three common price points to see how the math actually shakes out:
- Scenario A: The Starter Home ($300,000) At this price point, margins are tighter for agents, so fees often stick closer to the historical average.
- Sale Price: $300,000
- Total Commission (at 6%): $18,000
- What you keep (gross): $282,000
- Scenario B: The Median Home ($500,000) This is a typical price for a nice home in Farragut or a renovated spot in Chattanooga.
- Sale Price: $500,000
- Total Commission (at 5.5%): $27,500
- What you keep (gross): $472,500
- Scenario C: Luxury or Lakefront ($800,000) Higher-priced homes often have more room for commission negotiation, though the marketing costs are higher.
- Sale Price: $800,000
- Total Commission (at 5%): $40,000
- What you keep (gross): $760,000
Beyond Commissions: Other Seller Closing Costs in TN
The commission is the big number, but it’s not the only number. When you are calculating your net proceeds, you need to factor in the rest of the cost of living in East Tennessee regarding real estate transactions.
In total, you should expect closing costs plus commissions to eat up about 7% to 10% of your sale price.
- State Transfer Taxes: Tennessee charges a transfer tax (or deed stamp tax) of $0.37 per $100 of value. On a $300,000 house, that is roughly $1,110.
- Title Insurance & Fees: While this varies by county, the seller often pays for the owner’s title insurance policy and the closing agent’s settlement fee (usually $300–$600).
- Prorated Property Taxes: You will owe property taxes for the portion of the year you owned the home up until the day of closing.
Alternatives to Traditional Commissions
If the numbers above make you flinch, you do have options. The market has evolved to offer different levels of service for different fees.
Flat Fee MLS Services like ResultsMLS or various national chains allow you to pay a flat rate (often $99 to $500) just to get your home listed on the MLS. This gets your home in front of buyers, but you are essentially on your own for everything else—photos, scheduling showings, and negotiating contracts.
Discount Brokers These are the “1%” or “1.5%” listing agents (like Redfin or local hybrids). They handle the paperwork and photos but operate on volume. The trade-off is often less personalized attention. This can work for a cookie-cutter home in a hot market, but might be risky for unique properties.
For Sale By Owner (FSBO) You can pay 0% in listing commission by doing it yourself. However, statistics consistently show that FSBO homes tend to sell for less than agent-listed homes, often negating the commission savings. It is also a lot of work. If your property needs significant repairs and you don’t want to deal with showings, you might look into selling a house as-is to an investor, though that usually means accepting a lower cash offer.
Tennessee Real Estate Commission (TREC) Rules to Know
The Tennessee Real Estate Commission (TREC) sets the ground rules to protect consumers. There are a few regulations every seller should be aware of.
No “Net Listings” It is illegal in Tennessee for an agent to say, “I’ll sell your house for $400,000, and I get to keep everything over that amount.” Commissions must be a set percentage or a flat fee agreed upon in writing.
Disclosure is Mandatory Agents must clearly disclose who they represent. If an agent is representing both the buyer and the seller (Dual Agency), both parties must agree to it in writing. This is strictly regulated because it limits the agent’s ability to advocate fully for either side.
Wholesaling and “Equitable Interest” As of 2024, Tennessee tightened laws on wholesaling (where someone puts a house under contract just to sell the contract to someone else). Sellers must now be told if the buyer holds an “equitable interest” rather than a legal title. This prevents predatory flipping practices that can tie up a seller’s property.
How to Negotiate Real Estate Fees in East Tennessee
You absolutely can, and should, discuss fees with your agent. Here is how to do it without things getting awkward.
First, interview multiple agents. Don’t just ask “What do you charge?” Ask “What is your flexible commission structure?” Some agents offer a tiered system depending on how much marketing you need.
Second, look for variable rates. Ask the listing agent: “If you find the buyer yourself and don’t have to split the fee with another agent, will you reduce the total commission?” Many agents will drop the total fee from 6% to 4% or 5% in this specific scenario since they are doing both jobs.
Finally, don’t fixate on the rate alone. A “cheap” agent who lists your home at the wrong price or takes bad photos can cost you tens of thousands of dollars in final sale price. Paying 6% to an agent who sets a bidding war record is often more profitable than paying 5% to an agent who lets the listing sit stale for months.
FAQs
Does the seller have to pay the buyer’s agent in Tennessee?
No, sellers are not legally required to pay the buyer’s agent. However, refusing to offer a concession for the buyer’s agent fee can limit your pool of potential buyers, as many cannot afford to pay their agent out of pocket on top of a down payment.
What is the standard real estate commission in Knoxville, TN?
There is no fixed “standard” commission rate, as fees are always negotiable. However, the historical norm in Knoxville and surrounding East Tennessee areas has typically been around 5% to 6% of the sale price, split between the listing and buyer agents.
Can I put buyer agent compensation on the MLS in Tennessee?
No. Following the NAR settlement changes in late 2024, listing agents are prohibited from publishing offers of buyer agent compensation on the MLS. Any offer to pay the buyer’s agent must be negotiated off-MLS or through concessions in the purchase agreement.
Are real estate commissions taxable in Tennessee?
Real estate commissions are not subject to sales tax for the home seller. However, the commission is considered taxable income for the real estate agent receiving it.
