Understanding how real estate commissions work is crucial for anyone entering the Minnesota housing market, whether you’re buying or selling a property. In 2024, significant changes were introduced nationwide to how commissions are handled, with a focus on enhancing transparency. These adjustments are meant to empower both buyers and sellers to make informed financial choices.

This guide will clarify real estate commissions in Minnesota, outline recent regulatory changes, and provide practical tips for effectively managing these expenses.

Current state of the Minnesota housing market

Before examining the specifics of commissions, it’s beneficial to review the current housing market in Minnesota:

Median Home Sale Price $359,000
Housing Supply 20,043 (+4.9% YoY)
Homes Sold Above List Price 33.1% (-10.2 pts YoY)

Understanding real estate commissions in Minnesota

What are real estate commissions?

Real estate commissions are the fees agents receive for assisting in the sale or purchase of a home. These fees are usually calculated as a percentage of the sale price and are settled at the time of closing.

Who pays the commission?

Historically, the seller bore the costs of both their own agent’s commission and that of the buyer’s agent. However, new regulations effective August 17, 2024, require buyers in Minnesota to agree in writing to their agent’s commission prior to viewing properties. 

Although buyers can continue to ask sellers to cover their agent’s commission when making an offer, this change allows for variability in the amount a seller may pay for a buyer’s agent, and is fully negotiable.

St. Paul and Mississippi River in Minnesota

Average real estate commission rates in Minnesota

Commission rates in Minnesota are not fixed and can fluctuate based on several factors, including the nature of the transaction, the involved agents, and the negotiation outcomes. Various elements, such as property location, market dynamics, and the services provided by the agent, influence these rates.

Below is a summary of standard commission rates based on median home prices in Minnesota’s major cities:

City Median Home Sale Price 1.5% Real Estate Commission 3% Real Estate Commission 5% Real Estate Commission
Minneapolis $350,000 $5,250 $10,500 $17,500
Saint Paul $310,000 $4,650 $9,300 $15,500
Rochester $320,000 $4,800 $9,600 $16,000

At Redfin, we strive to offer competitive rates, with listing fees starting as low as 1%* for sellers. Our fees for buyers vary by location, ensuring that your offer remains attractive in the marketplace.

Can you negotiate real estate commissions in Minnesota? 

Absolutely! Real estate commissions are negotiable in Minnesota, as there are no laws regulating these fees. This flexibility allows buyers and sellers to engage in discussions about commission rates with their agents. 

When discussing real estate commissions, it’s crucial to evaluate the agent’s level of service, their marketing strategies, and their familiarity with the local market. Sellers might have the opportunity to secure lower rates if their property is particularly attractive or anticipated to sell rapidly. Furthermore, in a dual agency scenario where one agent represents both the buyer and the seller, there may be additional potential for reducing commission fees since only one agent is handling the transaction.

Tips for a successful negotiation

  • Do your research: Look at various agents and compare their services and commission structures before deciding.
  • Think about performance incentives: Consider negotiating for bonuses based on quicker sales or higher sale prices.
  • Utilize your property’s attractiveness: Sellers of highly sought-after homes might have greater leverage to negotiate lower fees.

Minnesota real estate commission FAQs

What are the changes to real estate commission? Two primary changes have taken effect: buyers are now required to sign an agreement outlining their agent’s commission before they can tour homes, and many markets no longer display buyer agent compensation on MLS listings. Learn more about the real estate commission changes here

How do the changes impact buyers in Minnesota? Buyers must now agree in writing to their agent’s commission prior to starting home tours. However, they can still negotiate with sellers to cover these fees as part of their offer.

How do the changes impact sellers in Minnesota? Sellers have gained more negotiating power regarding the commissions they offer to buyer’s agents. They also have the ability to assess and negotiate any commission requests included in a buyer’s offer.

How do you find a real estate agent in Minnesota? If you’re ready to make a move in the Minnesota housing market, whether you’re buying or selling, Redfin’s knowledgeable agents are here to help. 

How can you avoid fees? Selling a home without an agent—often referred to as For Sale by Owner (FSBO)—is one way to bypass commission fees. However, this approach places all responsibilities, including marketing, showings, and paperwork, solely on the seller.

*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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