If you work with a real estate agent to buy or sell a home, that agent earns a commission when the deal closes. It’s worth understanding how much that costs and who pays so you’re prepared for closing.
What is a real estate commission?
A real estate commission is a fee that a realtor earns when their client buys or sells a home. The commission is usually a percentage of the sale price. Both the buyer’s and seller’s agents earn part of the commission, and their brokerages also typically take a cut.
What’s the average real estate commission?
In 2026, the average real estate commission was about 5.70%, according to data from Clever. If you buy a home for $400,000, a 5.70% commission amounts to $22,800 on that transaction.
Fees can be above or below the average in different locations across the U.S. Clever reports that commissions varied between 4.50% and 6.20%.
| Role | Average commission | Who pays it? |
|---|---|---|
| Listing agent | 2.88% | Seller |
| Buyer’s agent | 2.82% | Negotiated — buyer or seller concession |
| Total | 5.7% | Split by agreement |
How the split works: listing vs. buyer’s agents
On average, the real estate agent commission split works out so that about half the commission goes to the listing agent and half goes to the buyer’s agent. According to Clever, the typical listing agent commission is 2.88%, and the typical buyer’s agent commission is 2.82%. The data show that either agent’s commission can be as low as 1.00% or as high as 4.00%.
Who pays it and what changed in 2024?
The seller pays the listing agent commission. The buyer may pay the buyer’s agent commission, or the buyer may negotiate for the seller to pay it as a concession.
That’s a bit different from the way these commissions were typically handled up until a few years ago. It used to be that sellers paid the whole commission, and they advertised the commission and how it would be divided between the agents in the home’s listing.
In 2024, the National Association of Realtors (NAR) settled a series of lawsuits dealing with its commission practices. As part of the settlement, the NAR changed its policies. It now requires the buyer and buyer’s agent to sign a contract specifying the buyer’s agent commission before the buyer shops for a home. And the seller may no longer advertise the commission they’ll pay the buyer’s agent in the multiple listing service (MLS) listing.
Thus, today the buyer has to reach an upfront agreement with their agent on compensation. The seller can still ultimately cover that cost for the buyer, but this concession must be negotiated later, and it’s not guaranteed that the seller will always pay.
How to negotiate your agent’s commission
Real estate agent fees, or commissions, have always been negotiable. But did most buyers and sellers know that? Not so much. We’re guessing it was mostly an industry secret. Now, you can definitely negotiate the fee, either as a percentage of commission based on the sale price of a house or as a flat fee.
Yahoo Finance tip: The buyer’s agent fee is an out-of-pocket expense for home buyers. It typically cannot be rolled into the home loan principal. Buyers pay this fee at closing.
Negotiating with a buyer’s agent
Having somebody on your side in a complicated and expensive sales transaction can be a comfort if you’re a home buyer. A buyer’s agent is committed to acting in your best interest. When signing an agreement with an agent, you will want to learn what services can be expected.
Then, ask about the fee or commission. Let the agent explain their expectations. The contract has to specify an amount, whether zero dollars, a flat fee, a percentage, or an hourly rate.
Negotiating with a listing agent
If you’re the seller, your real estate agent will be a vital part of your pricing and marketing strategy. You want them motivated to do the job. Ask what fee they might accept and if they are willing to apply a portion to the buyer’s agent. Remember, traditionally the listing agent has basically split the commission with the buyer’s agent, so this isn’t anything new.
That incentive will likely pull in more prospective buyers, and while it cannot be advertised on MLSs, it can be promoted in many other ways. Your agent will undoubtedly have ideas on that.
Most importantly, talk to more than one prospective listing agent. Comparison shopping works.
Yahoo Finance tip: In some states, one real estate agent can represent both the buyer and seller. This is called dual agency. However, it can raise conflict-of-interest issues, and your best interests may not be represented.
What do agents actually take home?
How much a realtor makes on buying or selling a house is generally less than the commission they earn.
Real estate agents have to split their commissions with their brokerages according to a set ratio. For example, with a 70/30 split, the real estate agent keeps 70%, and they give 30% to their brokerage. Other possible commission splits include 50/50, 80/20, and 90/10.
This arrangement applies until the amount the agent pays the brokerage reaches an annual cap. After hitting the cap, the agent pays the brokerage a small flat fee for each transaction for the rest of the year.
Realtors also have to pay various expenses out of their commissions. For example, they have to pay for marketing, continuing education, transportation, software, MLS subscriptions, and NAR dues. Those expenses further limit how much realtors actually make on a commission.
Alternatives to paying commissions
If you don’t want to pay the going realtor commission for your area, there are a few ways around it. First, you can list your home for sale yourself. You don’t pay a commission if you go this route, but you have to handle all the marketing, showings, and negotiation with buyers, which can take up a significant amount of your time and may be challenging if you don’t have prior real estate experience. And if you aren’t part of a network of real estate professionals, it may be hard to get your home in front of as many buyers as a realtor could, although you can pay a flat fee to get an MLS listing.
You can use a brokerage that charges discounted fees. Some companies charge fees as low as 1%.
Or, you can try to negotiate a lower commission or a different fee structure with a real estate agent. For example, you and your agent could agree to a flat fee or an hourly rate instead of a percentage of the home’s price.
Answer: Yes, the buyer’s agent fee is an out-of-pocket expense that typically cannot be rolled into the mortgage loan principal and must be paid at closing. However, buyers can negotiate in their purchase offer for the seller to cover this fee as a seller concession, though it is not guaranteed.
Answer: Following the 2024 National Association of Realtors (NAR) settlement, two key rules changed:
Buyers must sign a written agreement with their agent detailing compensation before they start touring homes. Sellers are no longer allowed to advertise the buyer’s agent commission directly on the Multiple Listing Service (MLS).
Answer: Agents rarely keep the full commission earned from a deal. They must share a percentage (e.g., 70/30 or 80/20 splits) with their brokerage until reaching an annual financial cap. Out of their remaining earnings, agents must also pay for business expenses such as marketing, software, MLS subscriptions, and professional dues.
Answer: Commissions are fully negotiable. You can ask agents to accept a lower percentage of the sale price, a flat fee, or an hourly rate instead of the traditional structure. Sellers can also negotiate whether their listing agent will offer a portion of their fee to attract buyer’s agents, and both buyers and sellers should interview multiple agents to compare rates.
Answer: Yes. Alternatives include:
For Sale By Owner (FSBO): Selling the home yourself to avoid listing commissions entirely (though you assume responsibility for marketing, showings, and contract negotiations).
Discount Brokerages: Using real estate companies that charge reduced commission rates (sometimes as low as 1%).
Custom Fee Agreements: Negotiating alternative pricing arrangements, like paying a flat fee or hourly rate for specific services.
Suresh holds a Master of Commerce (M.Com) degree and is a dedicated personal finance researcher and writer. Combining his advanced academic background in commerce with deep industry research, he covers complex topics like taxation, banking systems, credit analysis, and personal finance strategies. As the founder of Tax Assistant (taxassistant.org), Suresh is committed to translating complicated financial guidelines and economic data into simple, accurate, and actionable educational resources for everyday readers.
