Most real estate agents do not earn a regular salary and work solely on commission. The commission-based system has been in place since the 1950s.
Usually, seller’s agents agree to provide services to their clients for a set commission rate. Once the transaction is complete, the commission rate is multiplied by the property sale price to determine how much the agents earn.
For real estate agents following the traditional commission structure, the amount they earn is based on the property’s sale price. According to Zillow data through November 2025, the average home value in Tennessee is $326,998. Since the average negotiated commission rate in Tennessee is 5.8%, real estate professionals will receive approximately $18,966 for offering services related to the transaction.
Regardless of how you are paid, the more you sell as a real estate agent, the more you earn!
Key Takeaways
- Average Home Value: The average home value in Tennessee is $326,998 as of November 2025, according to Zillow data.
- Standard Commission Rate: The standard commission rate for real estate agents in Tennessee is approximately 5.8%, leading to earnings of around $18,966 per transaction.
- Income Potential: Real estate agent income is directly proportional to sales volume—the more you sell, the more you earn
How Commissions are Split Between Agents and Brokerages
The 5.8% TN real estate commission is typically shared between the buyer’s and seller’s agents—and their respective brokerages.
Prior to August 2024, it was standard practice for the listing agent to share a portion of their commission with the buyer’s agent. Following the NAR settlement, this sharing is no longer assumed or advertised on the MLS, though sellers can still choose to offer concessions or compensation off-MLS.
Here’s an example of what a traditional commission split might look like for an average transaction in Tennessee.
Example of Commission Splits for a $326,998 Property
| Sale Price of home | $326,998 |
| Total commission (5.8%) | $18,966 |
| Seller’s agent commission (based on a 50/50 split of total) | $4,741.50 |
| Seller’s agent’s brokerage commission | $4,741.50 |
| Buyer’s agent commission (based on a 50/50 split of total) | $4,741.50 |
| Buyer’s agent’s brokerage commission | $4,741.50 |
Note: The above assumes a 50/50 split between the agent and their broker. Split models vary widely by brokerage.
Current Average Commission Rates in Tennessee
The average real estate commission rate in Tennessee is 5.8%.
While this is the average, rates can vary by city and region. In highly competitive urban markets like Nashville, rates might be pressured slightly downward due to competition, whereas in rural areas with lower turnover, rates might remain firmer to compensate agents for longer marketing times.
Below is the average home value in Tennessee’s ten most populated cities using Zillow data through November 2025. Based on a 5.8% commission rate, here’s how much total gross commission is generated by selling an average Tennessee property.
Average Real Estate Commission for 10 Tennessee Cities
| City | Average Home Value | 5.8% Real Estate Commission |
| Nashville, TN | $431,040 | $25,000 |
| Memphis, TN | $143,363 | $8,315 |
| Knoxville, TN | $363,101 | $21,060 |
| Chattanooga, TN | $314,829 | $18,260 |
| Clarksville, TN | $318,119 | $18,451 |
| Murfreesboro, TN | $422,083 | $24,481 |
| Franklin, TN | $894,314 | $51,870 |
| Johnson City, TN | $286,732 | $16,630 |
| Jackson, TN | $219,513 | $12,732 |
| Hendersonville, TN | $511,441 | $29,664 |
Source for Average Home Value: Zillow, Data through November 30, 2025
Impact of the NAR Settlement on Tennessee Commissions
The real estate landscape shifted significantly in August 2024 due to the National Association of REALTORS® (NAR) settlement. Here’s how it impacts Tennessee agents and consumers:
- No Compensation on MLS: Seller’s agents can no longer advertise the buyer’s agent commission on the Multiple Listing Service (MLS).
- Written Buyer Agreements: Agents working with a buyer must enter into a written agreement before touring a home. This agreement must clearly spell out the agent’s compensation.
- Negotiation is Key: Compensation has always been negotiable, but these changes make that negotiation more transparent. Buyers may now be directly responsible for paying their agents if the seller chooses not to offer compensation.
Factors Influencing Commission Rates
Commission rates are not fixed by law; they fluctuate based on several factors:
- Market Conditions: In a hot seller’s market, properties sell fast, and sellers may negotiate lower fees. In a buyer’s market, sellers might offer higher commissions to incentivize agents.
- Property Type: Commercial real estate commissions often differ from residential. Some use a graduated scale (e.g., 5% on the first $1M, 4% on the next), while others use flat fees.
- Property Value: High-value luxury homes may sometimes command a lower percentage rate, though the total dollar amount remains high.
- Agent Experience: Highly experienced agents with a proven track record may refuse to lower their rates, while newer agents might be more flexible to gain clients.
Low-Commission and Discount Real Estate Companies in Tennessee
As you navigate your career, you will encounter discount brokers and flat-fee services. These companies typically offer a reduced commission (e.g., 1% to list) or a flat rate (e.g., $500 for MLS entry only) in exchange for reduced services.
- Discount Brokers: They may handle the transaction but offer less marketing or hands-on support.
- Flat-Fee MLS Services: These services simply list the home on the MLS, leaving the seller to handle showings, negotiations, and paperwork.
While these models appeal to cost-conscious sellers, they highlight the value of a full-service agent who manages the complex legal, marketing, and negotiation aspects of a sale.
Strategies to Negotiate and Save on Commission Costs
Whether you are an agent explaining your value or a consumer looking to save, understanding negotiation is vital.
- Highlight Value: Agents can protect their commission by clearly articulating their marketing plan, staging services, and negotiation expertise.
- Bundle Services: Some agents offer a lower rate if they represent the client in both selling their current home and buying a new one.
- Understand the “Net”: Sellers often focus on the commission percentage, but a skilled agent often nets the seller more money by securing a higher sales price, which offsets the cost of the commission.
Frequently Asked Questions about Real Estate Commissions in Tennessee
Who pays the real estate commission in Tennessee?
Historically, the seller paid the commission for both agents from the proceeds of the sale. Following the NAR settlement, this is shifting. Sellers often still pay, but buyers may now be responsible for their agent’s fee if the seller does not agree to cover it.
What services are included in a commission?
A full-service commission typically covers:
- Market analysis and pricing strategy
- Professional photography and marketing
- Listing on the MLS and major real estate sites
- Coordination of showings and open houses
- Negotiation of offers and repairs
- Transaction management through closing
Can I negotiate the commission rate?
Yes. Real estate commissions in Tennessee are fully negotiable. There is no standard or set rate required by law.
Does the real estate commission rate in Tennessee fluctuate over time?
Despite increased competition and new business models, commission rates have remained relatively steady at the national average, though the payment structure is evolving.
Start Your Tennessee Real Estate Career Today
Being a real estate agent is a rewarding profession with unlimited income potential. The sooner you start the licensing process, the faster you can begin earning these impressive commissions.
Colibri Real Estate provides online, self-paced Tennessee real estate classes. With courses designed by local experts, you’ll get a quality education to help you succeed on your schedule.
