How real estate commission works
Commission is usually the largest transaction cost when you sell. The total is split between the agent who listed the home and the agent who brought the buyer.
- Listing agent - Represents you, handles pricing, marketing, showings, and paperwork. Typically 2.5% to 3%.
- Buyer's agent - Represents the buyer through search and closing. Traditionally paid from the seller's proceeds.
- Brokerage split - Each agent shares their commission with their brokerage, often 50/50 to 70/30.
What changed after the 2024 settlement
- Offers are optional - Sellers are no longer required to offer buyer-agent compensation through the MLS.
- Buyer agreements - Buyers sign written agreements specifying their agent's compensation before touring.
- More transparency - Rates are more negotiable, and total commissions are trending lower in many markets.
Ways to save on commission
- Negotiate the rate - Do not assume the first number is final, especially on higher-priced homes.
- Consider a flat fee - A fixed $3,000 to $5,000 can beat a percentage on expensive properties.
- Right-size the buyer offer - Post-settlement you can offer less to the buyer's agent, though it may affect interest.
- Sell to a known buyer - If you already have a buyer, a real estate attorney may handle the paperwork for far less.
Frequently asked questions
How much is a typical real estate commission?
Historically the total has run near 5% to 6%, split between the listing and buyer agents. Since the 2024 NAR settlement, rates are more negotiable and buyer-agent compensation is often agreed separately. Use the calculator to model any combination.
How do flat-fee and discount brokers compare?
A flat fee of $3,000 to $5,000 can save a lot on an expensive home because it does not scale with price. The trade-off is usually a narrower service package. Compare what is included, not just the number: photography, marketing, showings, and negotiation support all cost money to deliver.
How does commission affect my net proceeds?
Commission comes out of the sale price before other costs. On a $400,000 sale with 5.5% total, $22,000 goes to the agents and you keep $378,000 before closing costs and loan payoff. Every half point is $2,000 on that sale.
Who pays the buyer agent after the NAR settlement?
It is negotiable. Sellers are no longer required to offer compensation through the MLS, and buyers sign agreements specifying what their agent earns. Many sellers still offer a concession to keep buyer traffic strong, but the amount is a negotiating decision.
Does commission include closing costs?
No. Commission is a separate line item. Sellers also pay title fees, transfer taxes, prorated property tax, and any concessions. Enter those under Seller's net proceeds to see the true amount you walk away with.
Can I negotiate the commission rate?
Yes. Rates are negotiable and often lower on higher-priced homes or with a limited service package. Ask what changes at a lower rate, get the agreement in writing, and confirm how the buyer-agent side will be handled.
Estimates only. Commission agreements, concessions, and closing costs vary by market and contract. Review the listing agreement before you sign.
