How Are Real Estate Agents Paid?

If you are a buyer or seller who wishes to know if you are going to pay your agent, or simply just a reader who’s genuinely curious how they get paid then the answer for that would simply be through commissions.

In this guide, we’ll explain:

• What a real estate commission is
   
• Who pays the realtor
   
• How the money is shared between agents
   
• Why it’s important to understand how realtor pay works
   
• Examples to help you see how it all adds up
   

Let’s break it all down in a way that’s simple and easy to understand. 

What Is a Real Estate Commission?

A commission is a fee that’s paid to a realtor when a home is sold. It’s usually a percentage of the home’s sale price. That means the more expensive the home, the more money they earn.

For example:

• If a home sells for $300,000, and the commission is 6%, then the total commission is $18,000.
   

That $18,000 doesn’t all go to one person though — it gets shared. Let’s look at how that works.

 

Seller’s Agent vs. Buyer’s Agent

There are usually two realtors involved in a home sale:

1. The seller’s agent (also called the listing agent)
    
2. The buyer’s agent
    

1. The Seller’s Agent

This is the realtor who helps the homeowner sell their house. They list the home for sale, take photos, arrange open houses, and work hard to attract buyers.

When a seller hires an agent, they agree on a commission percentage — for example, 5% or 6% of the sale price. This is written into the listing agreement, which is a contract between the seller and the agent’s company (called a brokerage).

2. The Buyer’s Agent

This is the realtor who helps someone buy a home. They set up showings, help the buyer find homes they like, write offers, and give advice throughout the process.

 

Who Pays the Realtor? (And What Changed in 2024)

For many years, home sellers usually paid the full commission — including the part that went to the buyer’s agent. That meant the buyer got professional help finding a home without having to pay their agent directly. But that has changed recently.

What Happened?

In 2024, there was a big legal settlement involving the National Association of Realtors (NAR). A court decided that the old way of handling buyer commissions was unfair and confusing for many people. As a result, new rules were created to make things more open and transparent.

One of the biggest changes? Buyers are now responsible for paying their own agent directly.

 

So… What Does That Mean?

Now, if you're buying a home, you’ll need to talk with your agent ahead of time and agree on:

• How much they will be paid
   
• How that payment will work
   
• Whether you’re paying out-of-pocket or negotiating it as part of your offer
   

This is called a Buyer Representation Agreement, and it’s usually signed before your agent shows you homes. It says what your agent will do for you, and how much their services will cost.

 

Can Buyers Still Ask Sellers to Cover That Cost?

Yes, but it’s not automatic anymore.

Buyers can ask the seller to contribute toward their agent's commission as part of the offer. For example, you might offer to buy the home at full price, but ask the seller to pay a certain dollar amount toward your closing costs — which could include your agent’s fee.

But it’s up to the seller to say yes or no. That’s something your agent can help you negotiate.

 

Why the Change?

The idea behind the 2024 NAR settlement was to:

• Make things more fair and clear
   
• Help buyers understand what they’re paying for
   
• Give people more choice and control over agent fees
   

Instead of everything being bundled into one big commission behind the scenes, now the fees are more out in the open, and buyers and agents must agree to them up front.

 

A Quick Example

Before 2024:

• Home price: $400,000
   
• Seller agrees to 6% commission = $24,000
   
• Seller’s agent gets 3% ($12,000)
   
• Buyer’s agent gets 3% ($12,000)
   
• Buyer pays nothing to their agent directly
   

After 2024:

• Home price: $400,000
   
• Seller still agrees to pay their own agent
   
• Buyer and buyer’s agent must agree on a fee
   
• Buyer may need to pay that fee out-of-pocket, or negotiate it into the offer

 

How Is the Commission Split?

Now let’s look a little closer at what happens to that 3% each agent gets. Most real estate agents work under a broker or brokerage company — this is like their “boss” or office.

The broker gets a portion of the commission too. The split between the agent and the broker depends on their agreement. Here are two common types of splits:

Example A: 50/50 Split

• Agent gets 50%
   
• Broker gets 50%
   

So if the commission is $9,000:

• The agent gets $4,500
   
• The broker gets $4,500
   

Example B: 70/30 Split

Some experienced agents keep more of the commission.

• Agent gets 70%
   
• Broker gets 30%
   

So with $9,000:

• Agent gets $6,300
   
• Broker gets $2,700
   

These numbers can vary. Some agents pay monthly fees to their broker instead of giving them part of the commission.

 

Why Do Realtors Earn Commission?

Selling a home isn’t free or easy! realtors spend a lot of time and money helping you with the sale. Here are some of the things they might pay for out of their own pocket:

• Professional photos of your home
   
• Online ads and social media posts
   
• Printed brochures and flyers
   
• Open house signs and snacks
   
• Time spent showing the home
   
• Phone calls, emails, and follow-ups
   
• Driving to and from showings or meetings
   
• Training, licensing, and insurance fees
   

A lot of this happens before a sale is ever made. If your home doesn’t sell, the agent usually doesn’t get paid at all — even after doing all that work. That’s why commission is so important. It rewards the realtor for a job well done only when the sale is completed.

 

Real-Life Example

Let’s walk through a full example to make it super clear.

House Sale: $400,000

• Commission rate: 6%
   
• Total commission: $24,000
   

Split between seller’s agent and buyer’s agent:

• $12,000 each
   

Agent/broker split (70/30):

• Agent keeps: $8,400
   
• Broker gets: $3,600
   

So each agent takes home about $8,400 before taxes. That money covers the time, effort, and marketing they put in.

 

Why You Should Know How Realtor Pay Works

Understanding how your realtor gets paid can help you:

• Know where your money is going if you're selling a home
   
• Understand your agent’s motivation — they only get paid if the deal closes
   
• Feel confident when discussing commission with your agent
   

It’s okay to ask your realtor how they get paid, what services are included, and what you’re getting for your money. A good agent will be happy to explain everything clearly.