Does A Buyer’s Agent Get a Commission?

How much does a buyer’s agent make from a home purchase?

Traditionally, real estate agents earned an average of 5% to 6% commission on a home sale, split evenly at 2.5% to 3% per agent. However, following the NAR settlement, the average rate is yet to be determined.

Not all agents are paid on commission, however, and not all agents will be paid the same amount on every transaction. Depending on how the commission was negotiated, it is possible that a seller’s agent or a buyer’s agent will receive 3% of the purchase price as a commission while the other only receives 2% from the same transaction.

Are all agents paid with the same fee structure?

Nope! There are three common ways real estate agents get paid:

Commission: This is the most common fee structure, wherein an agent receives a percentage of the final sale price of a home as their commission. Because this fee is a percentage, the amount an agent will receive can change depending on the final sale price of the home.

Flat Fee: This is a set amount of money agreed upon to compensate the agents for their work. It’s usually a couple thousand dollars, depending on the agent’s level of service. This number will not be impacted by the final sale price of the home, so it is usually a less expensive option. Opting out of the full range of services that a real estate agent provides, however, is not always a good idea.

Salary + Bonus: With this fee structure, the agent receives an annual salary, and their company awards bonuses to incentivize their agents to sell more homes. Bonuses may be awarded for things like receiving a five-star client review or hitting a sales target.

What exactly are you paying your agent to do?

Looking for your picture-perfect dream home can be a time-consuming, tiring, and complicated endeavor, especially in competitive markets.

Hiring a top real estate agent when you’re ready to buy a home gives you the upper hand as a homebuyer. But don’t take our word for it, NAR found that 88% of buyers who purchased a home in 2024 did so with the help of a real estate agent or broker.

By hiring an agent to help you buy a home, you’ll be working with a professional who’s privy to local insider knowledge about an area’s current market and has a network of trusted specialists such as mortgage lenders, inspectors, contractors, and more.

As a homebuyer, you are entrusting your buyer’s agent to do the following:

• Help you write a compelling purchase offer
• Evaluate the (true) worth of a home based on current market conditions
• Find a home that may not be on the market yet (thanks to that insider knowledge mentioned above)
• Get in touch with the right services — movers, contractors, and home maintenance professionals
• Keep a lookout for any red flags when viewing or researching a property
• Provide a personalized list of homes based on your criteria: budget, location, style, size, and nearby amenities
• Reach out to listing agents to schedule home tours and gather information about each property
• Attend all inspections to ensure that nothing gets left out
• Answer your questions and address any issues that arise throughout the homebuying process
• Coordinate the signing of the purchase contract and handle any legal issues that come up
• Keep tabs on the closing timeline to make sure you make it to the closing table on time

At what stage of the process do agents get paid?

Payment typically takes place after closing, explains Grosskopf. This is after the sale of the house has been finalized and all required loan documents and deeds have been signed. Once funds are wired by the buyer and their lender to escrow, the escrow company will disburse the commissions.

The commission, otherwise known as realtor fees, is subtracted from the proceeds of the home sale. The funds are first passed to the agent’s brokerages, who then pay the agents (…or agent, as we’ll learn more about below) involved in the transaction.

What if the deal falls through?

There are several reasons a home sale may never make it across the finish line. A few of the most common reasons home sales fall through are:

1. The buyer runs into financing issues, such as not qualifying for a mortgage
2. The home inspection reveals some unexpected, big-ticket problems
3. The title review reveals that the seller cannot legally sell the home or there is a missing owner
4. The appraisal comes in low, and the buyer does not have enough cash to pay the difference between the appraised value and the sale price
5. The buyer can’t secure homeowners insurance because the property is in a high-risk area
6. The buyer decides the house simply isn’t for them, after all

Many buyers include contingencies in their purchase agreement that allow them to back out of a sale, penalty-free if certain issues with the house arise during the home inspection, appraisal, or mortgage qualification.

“It’s not typical that a buyer’s agent is going to get paid if a deal falls through,” says Grosskopf, but it all comes down to what’s stated in the contract between the buyer’s agent and buyer. If a buyer backs out and the home sale is never finalized, unless required per the contract, the buyer’s agent will more than likely not receive a commission.

Does a buyer’s agent pay their own taxes on their commission?

Many real estate agents who receive commissions are considered self-employed in the eyes of the IRS and they are in charge of paying their own taxes on their commission. Neither the seller nor the buyer is responsible for paying income taxes on the agent’s commission fee. 

What if just one agent is handling the transaction, aka a dual agent?

Dual agency occurs when a single real estate agent represents both the buyer and seller in a single home sale transaction. In this scenario, if the sale is successful, the agent keeps the full commission. Historically, the standard commission has ranged from 5% to 6% of the sale price, though it can be lower depending on the agent and the specifics of the deal.

This type of representation might not be legal in your state, however. Dual agency is currently illegal in the following eight states:

1. Alaska
2. Colorado
3. Florida
4. Kansas
5. Maryland
6. Texas
7. Vermont
8. Wyoming

In states where dual agency is legal, the agent is required to disclose to both the buyer and seller that they are working as a dual agent. Both parties must agree to this representation and sign a disclosure stating that they have been informed.

Can a buyer’s agent turn down taking on a new client?

Before a buyer’s agent decides to work with a new client, they’ll have a few details to consider. They need to decide not only if they’re the right fit for that particular buyer, but also if they’re willing to take on the risks that come with representing a new client.

A few of these risks that real estate agents typically weigh include:

• The time required to conduct local market research and arrange home showings
• Transportation and personal vehicle expenses (2024 NAR report shows that the largest expense for most real estate professionals was vehicle expenses, averaging $1,650 annually)

If an agent simply does not have the bandwidth to provide quality customer service, they might feel it necessary to decline representing a potential buyer.

However, real estate agents cannot turn down potential buyers (or any client) using discriminatory practices. The Fair Housing Act prohibits real estate agents from discriminating against buyers based on their race, color, national origin, sex, religion, disability, or familial status. Sexual orientation and gender identity are also protected characteristics in 21 states and the District of Columbia.

Find the right agent

When working with a buyer’s agent, it’s important to remember that not all agent commissions are set in stone. Commissions are often negotiable, and it’s wise to discuss the percentage or terms with your agent before finalizing any agreement.

Prior to beginning your home search, schedule a sit-down with your real estate agent so you can ask questions and get any agreed-upon terms clearly outlined in your contract.

If you’re still on the lookout for the right agent to help you find your new home, take the stress out of house-hunting with HomeLight’s agent match. Let us know what you’re looking for in a home and in a real estate agent, and we’ll do the research. We only recommend the top-performing real estate agents working in your area – those with a proven track record of success handling needs like yours.

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