Buyers Agent Commissions Explained for First-Time Shoppers

Are agents always paid on commission?

Nope! This is definitely the most popular business model for real estate agents, but some agents and brokerages will charge a flat fee instead of a commission.

While a flat fee agent can seem like a better deal upfront, you may be sacrificing some level of service in favor of a lower commission fee. Scouring listings for your dream home can be a time-consuming process, and with a lower fee on the line, agents may have to take on more clients to break even, which can mean less time available to spend on your house hunt.

Some agents offer tiered pricing for their flat fees, which might be a good compromise, depending on your budget and criteria for your future home.

Who pays the buyer’s real estate agent commission?

This gets a bit complicated: Both the listing agent (representing the seller) and the buyer’s agent (representing the buyer) get paid at the closing table, when money changes hands from buyer to seller.

Historically, the seller paid both the buyer’s agent and the listing agent’s commission. However, the 2024 NAR settlement changed this structure. Now, sellers are no longer required to cover the buyer’s agent’s fees. Instead, buyers must negotiate commissions directly with their agents.

Still, those commissions are coming out of the money that you paid for the house as the buyer. So, in a sense, they are packaged into the mortgage loan that you take out to buy the house.

Are commissions included in buyer closing costs?

Realtor fees are usually not part of the buyer’s closing costs, as sellers have traditionally covered them. However, as mentioned, the new rules eliminated the requirement for sellers to pay the buyer’s agent’s commission.

Even then, buyers can negotiate with sellers, and in a buyer’s market, sellers may be more willing to make concessions and cover the buyer’s agent’s compensation to attract buyers and help move the sale along more quickly.

Also, as mentioned above, the commission is often factored into the overall sale price and folded into your mortgage.

As a buyer, your closing costs will typically range between 2% and 5% of the purchase price, and this is an additional expense or fee that you pay on top of the agent’s commission.

How much is the typical buyer’s real estate agent commission?

Historically, agent commissions have been around 5% to 6% of the home’s sale price, typically split between the buyer’s and seller’s agents. However, since the 2024 NAR settlement changed the structure and urged buyers to negotiate directly with their agents, the exact fees can vary. Based on traditional rates, buyers can expect to pay up to 3% of the home’s sale price in agent commissions.

Individual agents have different commission rates. Some individual agents might charge as much as 5% on their own, while others may take as little as 1%. Don’t forget, a lower fee might also mean fewer services.

Let’s ballpark some commission rates based on median and average sales prices in different parts of the country to give you an idea of what this might look like for you. For easy reference, we’ll use the 6% commission rate.

Area	Median Sales Price	Total Commission (6%)	Buyer Agent Commission (3%)
National	420,400	25,224	12,612
Northeast	639,800	38,388	19,194
Midwest	384,500	23,070	11,535
South	376,300	22,578	11,289
West	549,200	32,952	16,476

Area	Average Sales Price	Total Commission (6%)	Buyer Agent Commission (3%)
National	501,100	30,066	15,033
Northeast	883,000	52,980	26,490
Midwest	424,300	25,458	12,729
South	447,200	26,832	13,416
West	610,300	36,618	18,309

As a luxury real estate agent, Walkerleib’s numbers can be much higher, even at the standard 3% commission. “On a $1 million home, $30,000 is the commission check. On a $2 million home, it’s $60,000. It continues to go up and up and up.”

And to justify his commission, he keeps asking himself, “So what are you bringing to the table that is worth that kind of money?”  It’s a good question your agent should be able to answer, too.

Does the buyer’s agent keep the entire commission?

Here’s a secret most people don’t know: The buyer’s agent almost never keeps the entire commission they earn on a deal.

In most real estate agencies, a buyer’s agent is supervised by a broker, who typically takes between 30% and 50% of the buyer’s agent’s commission as the broker’s fee.

This can drop the buyer’s agent’s commission to between just 0.5% (at the low end) and 2% (at the high end) of your home’s sale price for all those hours of legwork.

What’s included in the buyer’s agent commission?

A buyer’s agent commission is earned by all the extra work they do for you, some of which you might not even be aware is happening in the background.

A buyer’s agent will typically help you…

Figure out what types of homes and areas will work best for your needs, saving you time and energy on doing this research yourself.

Set you up with access to the multiple listing service (MLS) and help you find homes in your budget. If you’ve moved areas, the MLS you need now may be different from your previous one, as they vary by location. Your budget also may have changed, and how much house you can buy might have changed with it.

Arrange to walk through homes that especially interest you. As they do so, they’ll be able to share insights about the home, area, or neighborhood that they know from other showings of the same home or in the same area.

Answer your questions about the market in general and specific homes in particular. Agents will know more about the area than you’ll be able to learn during your house hunt. They’ve worked in it over the course of months or years.

They also have access to insights from other agents, including the listing agent, that may be hard to come by. And they’ll be happy to share them all with you if you just ask.

Determine an offer price. A buyer’s agent is your advocate and will help you figure out the intersection of how much a realistic and good price for you for a particular house is. You may want to offer a little more or less depending on the features of the house, and an agent will help you figure out the numbers that make the most sense for you and for this house.

Write the offer. Once you know that number, you need to write the offer in a way that makes the seller likely to accept it. Your agent will do that for you.

Negotiate with the seller. Your offer price may be lower than the listed price. At that point, your agent will need to negotiate with the seller on your behalf and help them see why their listed price is too high and why your offer price (or something close to it) is reasonable and fair.

Handle earnest money and escrow. When you make an offer for a house, you need to put the deposit money into escrow until you exit negotiations (and the money is either returned to you or claimed by the seller), or you close on the house (and the money is delivered to the seller.)

Set a timeline for the deal to close. The average timeline for closing with a standard mortgage is 44 days. During that time, you will have several things you need to do to ensure you’re paying a good price for the house. Fortunately, your agent will be helping you with several of them.

Attend inspections. Even if you’re buying a home with cash and don’t have to have an official home inspection, do it anyway. An inspection will surface current and potential issues that you should be aware of, even if it’s only for informational purposes.

Negotiate post-inspection repairs. Your inspection may uncover issues or concerns that should be repaired before you move into your new home. Your agent will help you figure out which repairs need to happen now, and which ones can wait.

Discuss post-appraisal price adjustments. Your home appraisal might value your dream home differently than you just agreed to pay. If that’s the case and you need to renegotiate your offer price, your agent will help you with that.

Complete the final walkthrough. You may be distracted by the emotions of walking through your soon-to-be home. Having your agent on hand to help you confirm that basic home systems are working and which unfinished repairs you’re taking on can be really helpful.

Hold your hand at closing. If you’re feeling emotional, your agent can literally or figuratively hold your hand through this big step. They’ll also reassure you by performing an unemotional final check of all the documents to ensure everything is accurate and error-free.

Is commission ever negotiable?

Yes, and some agents will take less than 2% to 3% from the get-go. It’s usually smart to ask what kinds of services you’ll be provided so you can make sure the agent isn’t cutting corners anywhere significant. You’ll want to ask for the same services list from flat-fee agents, as well.

Some brokerages or platforms will also offer you a rebate at closing for a portion of the commission. If you work with an agency that offers a rebate, then at closing, you’ll get a portion of the buyer’s agent’s commission to use for whatever you want, including closing costs. As this is usually percentage-based, how much you get back will depend on your house budget.

However, Evan Roberts, real estate investor and owner of Dependable Homebuyers in Baltimore, Maryland, offers a good reason not to negotiate your buyer’s agent commission:

“We never negotiate the fee. That’s them telling us what they need to be motivated and hustle to get us the contract. With that in mind, the higher their fee, the better the deal that they bring us has to be — the numbers have to work.”

What if the same agent represents both the buyer and seller — will I get a break on commission?

In theory, yes. But it’s more complicated than it seems.

When a buyer and seller use the same agent to complete a home sale transaction, it’s called dual agency. Most states allow dual agency situations, but there are nine states where dual agency is illegal to greater or lesser degrees:

• Alaska
• Colorado
• Florida
• Kansas
• Oklahoma
• Maryland
• Texas
• Wyoming
• Vermont

When two agents at the same brokerage are representing both the buyer and the seller, it’s known as designated representation, and it’s not legal in some states.

States where designated agency is illegal include:

• Colorado
• Florida
• Kansas
• Oklahoma

Some states allow brokerages to designate a brokerage licensee to represent the buyer and one to represent the seller, and each brokerage licensee would have a fiduciary responsibility to their party. The states that don’t allow dual agency but do allow designated representation include:

• Alaska
• Maryland
• Texas
• Wyoming
• Vermont

The agent might advertise dual agency as a deal because the total commission paid is lower — perhaps 4% instead of 6% — but it’s all going to the same agent, so they’re earning more overall — 4% in this case, instead of half of 6% (which is 3%.)

Think carefully before going this route. A dual agent can’t truly represent your best interests if there’s a conflict of interest in the deal.

More so than in any other deal, a dual agent may be motivated to close the deal, earn the commission, and satisfy two clients at once, even if neither client gets as good a deal as they might have with their own agent acting wholly in their best interests.

The price of professional services

Buyers’ agents are compensated for their expertise, market knowledge, and negotiation skills, typically earning around 2% to 3% of the home’s sale price. With the new homebuying rules rolled out, you can now negotiate your agent’s commission directly, giving you more control. Take advantage of the benefits of working with an experienced agent — it can save time, money, and stress throughout the buying process.

Ready to make your move? Partner with a top agent today and let their expertise guide you to the perfect home.

Header Image Source: (Athena Sandrini/ Pexels)