Real estate commissions play a key role in managing your budget and making informed choices when buying or selling a home in Iowa. In 2024, new guidelines were introduced that have altered how real estate commissions are disclosed. These updates aim to simplify understanding of the costs for both buyers and sellers, allowing for better negotiations and enhanced transparency in real estate transactions.

Whether you’re a first-time homebuyer or a seasoned seller, this guide will walk you through what you need to know about real estate commissions in Iowa.

Current state of the Iowa housing market

Before diving into commission details, here’s a quick look at the current state of Iowa’s housing market:

Median Home Sale Price $240,700
Housing Supply 12,088 (+10.9% YoY)
Homes Sold Above List Price 24.2% (-5.1 pts YoY)

Understanding real estate commissions in Iowa

What are real estate commissions?

Real estate commissions are fees paid to agents when a property sale is completed. Usually a percentage of the home’s selling price, these fees are paid at closing and compensate agents for their work throughout the transaction.

Who pays the commission?

Traditionally, the seller has been responsible for covering both their own agent’s fee and the buyer’s agent’s fee. As of August 17, 2024, buyers must sign an agreement outlining their agent’s commission fee before touring homes.

However, buyers can still negotiate with sellers to cover their agent’s fee, this update means that the amount the seller might pay for a buyer’s agent can vary, and is entirely negotiable.

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Average real estate commission rates in Iowa

In Iowa, real estate commission rates fluctuate based on location and market conditions. While there are typical expectations, commission rates are not fixed and can be adjusted through negotiations. Factors such as the property’s unique features and the level of service provided by the agent can influence the commission structure.

Here’s an example of how commissions might appear in some of Iowa’s major cities:

City Median Home Sale Price 1.5% Real Estate Commission 3% Real Estate Commission 5% Real Estate Commission
Des Moines $218,000 $3,270 $6,540 $10,900
Cedar Rapids $192,250 $2,884 $5,768 $9,613
Davenport $183,500 $2,753 $5,505 $9,175

Redfin offers value to customers by providing sellers with a listing fee that starts as low as 1%*. For buyers, fees depend on the location but remain competitive, helping your offer stand out and improving your chances of success.

Can you negotiate real estate commissions in Iowa? 

Yes, you can! Real estate commissions in Iowa are negotiable. There are no laws enforcing a specific rate, giving both buyers and sellers the flexibility to discuss and settle on a fee.

When negotiating, it’s important to consider the services the agent provides, such as marketing and local expertise, as these elements can influence the commission rate.

If your property is in high demand or likely to sell quickly, you may have more leverage to request a lower commission. Additionally, in situations where one agent represents both the buyer and seller (dual agency), there may be room to further reduce commission costs.

Tips for a successful negotiation

  • Interview multiple agents to compare their services and rates.
  • Consider offering performance-based incentives, like a higher commission for faster sales or exceeding a certain sale price.
  • If your property is located in a desirable area, use this to your advantage when discussing commission reductions.

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Iowa real estate commission FAQs

What are the changes to real estate commission? Two key changes were introduced: first, buyers now need to agree to their agent’s fee in writing before viewing properties. Second, in many markets, the buyer’s agent commission is no longer displayed on MLS listings. Learn more about the real estate commission changes here

How do the changes impact buyers in Iowa? Buyers are required to sign an agreement that details their agent’s commission before they start viewing homes. However, it’s still possible to negotiate with the seller to have them cover this cost.

How do the changes impact sellers in Iowa? Sellers continue to work with their listing agent to determine whether they will contribute to the buyer’s agent’s fee, and how much, if any. Sellers should expect potential negotiations with buyers regarding commission fees.

How do you find a real estate agent in Iowa? If you’re preparing to buy or sell a home in Iowa, get in touch with a Redfin agent for expert guidance throughout the process.

How can you avoid fees? To avoid commission fees, you can sell your home without an agent, which is referred to as For Sale By Owner (FSBO). However, this route requires you to handle all aspects of the sale, including marketing, showings, and legal paperwork, which can be challenging without professional support.

*Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.

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