Real Estate Agent Commissions Explained (2026)
Commission is usually the single largest cost in selling a home, and it is one of the most misunderstood. Who pays it, how much it is, and whether you can negotiate it all changed following a major 2024 legal settlement. This guide explains how commissions work today, what is typical, and how to think about the fee as a buyer or a seller.
The short version
- Total commissions have typically run around 5 percent to 6 percent of the sale price, split between the two sides.
- Commission is always negotiable — there is no legally fixed rate.
- The 2024 settlement changed how buyer-agent pay is disclosed and negotiated.
- The commission usually comes out of the sale proceeds at closing, not your pocket up front.
- A lower rate is not automatically a better deal if it means weaker marketing or negotiation.
How commission is structured
Real estate commission is a percentage of the final sale price paid to the brokerages involved, not a flat fee. Historically the seller agreed to a total commission with their listing agent — commonly in the neighborhood of 5 percent to 6 percent — and that total was then split between the listing brokerage and the buyer’s brokerage. Each brokerage in turn splits its share with the individual agent based on the agent’s own arrangement.
On a home selling for $400,000 at a 5.5 percent total commission, that is $22,000, often divided so each side’s brokerage receives around $11,000 before their internal splits. The exact numbers vary widely by market, price point, and negotiation.
| Sale price | At 5 percent | At 6 percent |
|---|---|---|
| $300,000 | $15,000 | $18,000 |
| $450,000 | $22,500 | $27,000 |
| $600,000 | $30,000 | $36,000 |
These figures are illustrative. Treat any percentage as a starting point for discussion rather than a fixed rate, because rates genuinely vary by agent, region, and the services included.
What changed in 2024
For decades, the seller typically advertised a set amount of compensation to the buyer’s agent through the MLS, which critics argued kept rates artificially bundled. A 2024 legal settlement involving the National Association of Realtors ended that practice. Two practical changes matter most: offers of buyer-agent compensation can no longer be posted on the MLS the old way, and buyers now generally sign a written agreement with their agent stating how that agent will be paid before touring homes.
The result is more open negotiation. Buyer compensation is now discussed directly rather than assumed, and who ultimately pays it — seller, buyer, or a mix — is part of the deal terms. See our companion guide on how commissions are changing for a fuller breakdown.
Who actually pays
In most closings the commission is deducted from the seller’s proceeds at the settlement table, so the seller funds it out of the sale price rather than writing a separate check. After 2024, it is increasingly common for buyers and sellers to negotiate how the buyer-agent portion is handled: a seller may agree to cover it as a concession, or a buyer may pay their own agent directly. Because arrangements now vary, both sides should confirm in writing who pays what before going under contract.
Pro tip — negotiate on value, not just percentage
Rather than simply pushing for the lowest number, ask what each agent’s commission actually buys — professional photography, staging advice, paid marketing, negotiation skill, and their recent list-to-sale results. A full-service agent who nets you a higher final price can be cheaper in real terms than a discount agent who saves you a point but under-sells the home.
Are discount and flat-fee models worth it?
Several alternatives exist: discount brokerages that charge a reduced percentage, flat-fee services that list your home for a set price, and limited-service options that handle only part of the process. These can save money, especially in a fast market where homes sell quickly. The trade-off is usually less hands-on marketing, pricing help, and negotiation. Whether the savings are worth it depends on your experience, your local market, and how much of the work you are prepared to do yourself.
FAQ
Is real estate commission negotiable?
Yes. There is no legally set commission rate, and agents can and do agree to different amounts. Your leverage is greater on higher-priced homes, in hot markets, or when you bring repeat business. Ask what the fee includes so you are comparing value, not just the number.
Do buyers pay commission now?
Sometimes. After the 2024 changes, buyers sign an agreement stating what their agent earns, and who covers it is negotiated per deal. A seller may still agree to pay it as a concession, or a buyer may pay their agent directly. Confirm the arrangement in writing before you make an offer.
When is the commission paid?
At closing. The commission is typically deducted from the sale proceeds and paid to the brokerages as part of the settlement, so a seller does not pay it up front. It comes off the top of what the sale generates.
Can I sell without paying any commission?
You can sell for sale by owner and avoid a listing-side commission, but you take on pricing, marketing, showings, and negotiation yourself, and you may still deal with a buyer’s agent’s compensation. Many owners find the time, exposure, and negotiation trade-offs outweigh the savings, but it depends on your situation.
General information for buyers and sellers — not legal, financial, or tax advice. Real estate laws, agent commissions, and costs vary by state and change over time; consult a licensed agent or attorney for your situation.
