Tennessee real estate commission rates are an average of 5.8% of the purchase price, according to a 2024 survey conducted by FastExpert. This is slightly higher than the average real estate commission in the U.S., which is 5.57%. If you want to become a real estate agent in The Volunteer State, this information may help you understand how many properties you need to help sell to make your desired income.
Keep reading as we do a deep dive into how to calculate real estate commission in Tennessee. We’ll tell you how they are calculated, who pays them, and the average real estate commission in Tennessee in the top 10 most populated cities. We’ll also discuss how the proposed National Association of REALTORS® settlement may affect the real estate commission rate in Tennessee and the rest of the country.
How Real Estate Agent Commission Works in Tennessee
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. There may be changes to this system, especially for buyer’s agents, following the recent NAR lawsuit. However, this is still to be determined.
Regardless of how commission changes may affect the Tennesse market in months to come, you’ll share your commission with your brokerage. Learn more about commission splits by reading How Do REALTORS Get Paid? What Every Agent Needs to Know!
Regardless of how you are paid, the more you sell as a real estate agent, the more you earn! Now, let’s examine how a real estate commission in Tennessee is calculated.
How is real estate commission in Tennessee calculated?
Typically, seller’s agents agree to provide services to their clients for a set commission rate. The seller’s agent often shares this commission with the buyer’s agent. Once the transaction is complete, the commission rate is multiplied by the property sale price to determine how much the agents earn.
This system may change. Seller’s agents can no longer advertise the buyer’s agent commission on the MLS. However, they may still share their commissions with agents who find buyers for their listings. In some cases, a buyer’s agent may work for a flat fee.
For real estate agents following the traditional commission structure, the amount they earn is based on the property’s sale price. According to Zillow, the average home value in Tennessee is currently $321,755. Since the average negotiated commission rate in Tennessee is 5.8%, real estate professionals will receive $18,661 for offering services related to the transaction.
Who pays the real estate commission in Tennessee?
The seller typically pays the real estate commission in Tennessee. Although, technically, the seller may ask more for a property knowing that part of their profits will go to pay the real estate agents.
Again, this fee structure may change as a result of the recent NAR settlement. More buyer agents may be paid a flat fee (or percentage commission) directly by their buyer clients.
Does the real estate commission rate in Tennessee fluctuate over time?
Despite recent headlines and increased competition from online real estate companies, the real estate commission rates in Tennessee and the rest of the country have remained relatively steady in the U.S. – at around 6%.
Average Real Estate Commission Rate in Tennessee
The average real estate commission rate in Tennessee is 5.8%.
According to data collected by Colibri Real Estate, the average income of a real estate agent in Tennessee is $93,135.
Average Tennessee real estate commission rate by city
Below is the average home value in Tennessee’s ten most populated cities. Based on a 5.8% commission rate, here’s how much real estate professionals earn 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 | $441,700 | $25,619 |
| Memphis, TN | $151,054 | $8,761 |
| Knoxville, TN | $353,242 | $20,488 |
| Chattanooga, TN | $303,387 | $17,596 |
| Clarksville, TN | $304,885 | $17,683 |
| Murfreesboro, TN | $409,935 | $23,776 |
| Franklin, TN | $875,018 | $50,751 |
| Johnson City, TN | $276,204 | $16,020 |
| Jackson, TN | $219,768 | $12,747 |
| Hendersonville, TN | $501,469 | $29,085 |
Source for Average Home Value: Zillow. June 2024
As mentioned earlier, this 5.8% commission is typically split between the buyer’s and seller’s agents and their brokerages. Also, real estate agents must pay taxes from those earnings.
Average Tennessee real estate commission rate by property type
So far, we have focused on residential real estate commissions in TN. However, some real estate agents focus on commercial real estate – or another niche.
Some commercial real estate transactions use the same 6% commission rate. Other commercial commissions are graduated (5% up to $1M, 4% of $1M-$5M, for example). Finally, some commercial real estate agents in Tennessee negotiate for a flat fee. Commercial real estate commissions vary depending on the property’s location, market conditions, and the complexity of the deal.
If you focus on commercial real estate in Tennessee, take as many Tennessee continuing education courses and specialized training as possible to help you better serve this industry segment.
How Is the Commission Divided Between Agents in Tennessee?
The 5.8% TN real estate commission is typically shared between the buyer’s and seller’s agents – and their respective brokerages. Here’s an example of what this commission split may look like for an average transaction.
Example of How Commission Splits Work in Tennessee Real Estate for a $321,755 Property
| Item | Amount |
|---|---|
| Sale Price of home | $321,755 |
| Total commission paid to real estate professionals | $18,661 |
| Seller’s agent commission (based on a 50/50 split) | $4,665 |
| Seller’s agent’s brokerage commission | $4,665 |
| Buyer’s agent commission (based on a 50/50 split) | $4,665 |
| Buyer’s agent’s brokerage commission | $4,665 |
We hope these numbers give you some understanding of how much you may expect to earn working as a real estate agent in Tennessee.
Being a real estate agent is a rewarding profession or side gig with unlimited income potential. The sooner you start the licensing process, the faster you can earn these impressive commissions. So, sign up today for your pre-licensing courses with Colibri Real Estate School.
Colibri Real Estate offers two ways to take your Tennesee real estate classes – online at your own pace or via virtual livestream. (We now offer audio real estate courses! Learn during your commute or while waiting for your kid to finish piano lessons.) No matter what format you choose, you can be assured that you’ll receive a quality education designed by local experts.
Sources:
1. “Tennessee Home Prices & Home Values.” June 1, 2024. Zillow. Tennessee Home Prices & Home Values | Zillow
2. Matarazzo, Steph. “Average Real Estate Agent Commissions by State (2024 Survey).” FastExpert. January 23, 2024. https://www.fastexpert.com/blog/real-estate-agent-commissions-by-state/.
