How Do Realtors Get Paid? (See What’s Changed)
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Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
Two initial questions home sellers ask are “How much will my home sell for?” and “How much will it cost me to sell?” But a third query often arises: “How do Realtors get paid?”
Agent commissions can be a touchy subject, but the rules have changed, and the shift is in your favor as a seller. Following a landmark court settlement, sellers are no longer automatically expected to pay both the listing agent and buyer’s agent Realtor fees, which combined were traditionally 5%- 6% of the home’s sale price.
This post will break down how Realtors earn their income, explain what’s changed, and offer examples to help you understand your options in today’s evolving housing market.
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How do Realtors get paid?
Realtors earn their income through commissions — a percentage of the final sale price of the home. This commission is typically split between the listing agent and the buyer’s agent. Historically, the total commission ranged from 5%-6% of the sale price. For example:
- On a $430,000 home, a 6% total commission would amount to $25,800.
- This amount would be split equally between the listing agent and the buyer’s agent, with each receiving $12,900.
The agents’ brokerages often take a portion of the commission, with the remaining balance going to the individual agents. Both agents typically receive their compensation after the sale is closed and the keys (and title) to the home have changed hands.
It should be noted that many listing agents invest their own money to market a home long before they receive a commission paycheck. This often includes paying a professional photographer for photos, videos, and drone footage, printing flyers and postcards, and even buying refreshments for open houses.
Who traditionally pays Realtor commissions?
For generations, sellers were responsible for paying both the listing agent’s and buyer’s agent’s commissions. This arrangement was designed to make it easier for buyers to afford professional representation without needing to pay out of pocket.
This nearly 100-year-old model of seller-paid Realtor fees is undergoing a dramatic transformation as buyers are now expected to negotiate with their own agents for compensation.
What’s changed with Realtor commission rules?
Following a recent court settlement involving the National Association of Realtors (NAR), buyers are now generally expected to pay their own agent’s fees. Sellers are typically responsible for covering only their listing agent’s commission, which averages 2.5%-3% of the sale price. Buyers’ agent fees, also averaging 2.5%-3%, are now the buyer’s responsibility unless the seller agrees to negotiate this expense.
For sellers, this change means lower upfront commission costs. However, in slower markets, agents may encourage sellers to offer to cover the buyer’s agent fees to attract more buyers. For instance:
- If you’re selling your $430,000 home, you will typically pay your listing agent’s fee of 3% ($12,900).
- In a slower market, you might also offer to pay 2.5% ($10,750) to the buyer’s agent, bringing your total commission expense to $23,650 — still slightly less than the traditional 6% model.
Negotiating agent commissions as a seller
While Realtor fees have always been negotiable, the NAR settlement gives sellers more flexibility in negotiating commission structures. The new rules can also give more weight to seller concessions or credits — incentives that you as a seller can offer to buyers to sweeten the pot.
Offering to pay both commissions could make your home more attractive to buyers, especially first-time buyers who may not have the budget to pay their agent directly.
Or if you are in a more active market with a desirable property, not having to pay 2.5%–3% to the buyer’s agent can increase your net proceeds on the sale.
Seller concession limits: Mortgage lenders restrict the amount a seller can contribute to help their homebuyer. These concession limits vary by loan type and the size of the buyer’s deposit but typically range from 3% to 9% of the home’s selling price. For example, if a buyer offers you $430,000, and the lender’s concession limit is 3%, you can only offer to contribute up to $12,900 toward your buyer’s closing costs. The caps help ensure seller contributions don’t negatively impact the loan’s integrity or the property’s market value.
Agent commission examples by home price
The table below illustrates how much you might pay in real estate agent commissions based on your home’s selling price. You can see estimates in three seller scenarios:
- You agree to pay both your listing and the buyer’s agent’s commission
- You only pay your listing agent’s commission
- The Buyer pays their own Realtor fees
For simplicity, one column estimates a combined 6% seller-paid commission fee, and the others show the separate, decoupled buyer and seller agent commissions.
| Sold price | Combined 6% fee | 3% listing agent fee | 3% buyer’s agent fee |
| $100,000 | $6,000 | $3,000 | $3,000 |
| $200,000 | $12,000 | $6,000 | $6,000 |
| $300,000 | $18,000 | $9,000 | $9,000 |
| $400,000 | $24,000 | $12,000 | $12,000 |
| $500,000 | $30,000 | $15,000 | $15,000 |
| $600,000 | $36,000 | $18,000 | $18,000 |
| $700,000 | $42,000 | $21,000 | $21,000 |
| $800,000 | $48,000 | $24,000 | $24,000 |
| $900,000 | $54,000 | $27,000 | $27,000 |
| $1,000,000 | $60,000 | $30,000 | $30,000 |
| $1,500,000 | $90,000 | $45,000 | $45,000 |
| $2,000,000 | $120,000 | $60,000 | $60,000 |
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Ways to reduce real estate agent commission costs
There are some ways you can try to reduce how much money you spend on Realtor fees. We’ll share some options below, however, keep in mind that you may get discount service with a discount agent.
- Negotiate the commission rate: Discuss commission rates with your agent. In some markets, you may find an experienced agent willing to lower their rate. This can be especially true in a less complex sale or with a desirable property in a coveted location.
- Use a low-commission agent or brokerage: Numerous discount real estate groups offer lower fees. Make sure you understand their listing packages and weigh the pros and cons.
- Use a flat-fee service: Some companies offer limited or flat-fee service to list your home on the multiple listing service (MLS) and assist with the sale.
- Offer incentives strategically: By limiting the number of concessions you offer to the buyer, you can increase your proceeds to offset commissions.
Do Realtors get paid if the home doesn’t sell?
In most cases, Realtors only earn their commission when the home sells. If your home doesn’t sell, you generally won’t owe your agent a commission. However, some listing agreements may include fees for marketing or other services. It’s important to review your contract carefully and discuss any potential costs with your agent upfront.
How can I estimate my home sale proceeds?
To get a ballpark estimate of how much you might make on your home sale, use HomeLight’s Net Proceeds Calculator. This free tool lets you enter the percentage of Realtor fees you expect to negotiate with your agent as well as closing costs and what’s left to pay off on your mortgage.
Here are additional free tools offered by HomeLight to help you plan your home sale:
- Find a Top Agent
- Home Value Estimator
- Agent Commissions Calculator
- Home Affordability Calculator
- Best Time to Sell Calculator
Key takeaways for home sellers
We hope this brief post gave you a better understanding of how Realtors get paid and the impact of recent changes to commission rules. Here’s a quick recap:
- Realtors earn their income through commissions, typically calculated as a percentage of the home’s sale price.
- Historically, sellers covered both the listing agent’s and buyer’s agent’s fees, totaling 5%-6% of the sale price.
- Following the NAR settlement, buyers are now expected to pay their agent’s fees unless otherwise negotiated.
- Sellers can negotiate their listing agent’s commission and decide whether to offer to pay the buyer’s agent’s fee to attract more offers.
- Discuss commission structures with your agent early to understand your options and tailor a strategy that works best for your situation.
If you’re preparing to sell your home and want to partner with a top agent, HomeLight can connect you with a proven expert in your city. Our partner agents have exceptional sale-to-list ratios — meaning they have a track record of helping their clients earn the highest proceeds possible.
At HomeLight, we analyze over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs. Our data shows that the top 5% of real estate agents sell homes faster and for up to 10% more than average agents.
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