How Real Estate Agent Commission Works (And Who Pays It)
The total commission is usually 5–6% of the sale price, split between two agents. But after the 2024 NAR settlement, who pays what has shifted — here's exactly how to calculate what you'll walk away with.
Real estate agent commission is typically 5–6% of the sale price, split roughly 50/50 between the listing agent and the buyer's agent. On a $500,000 home with a 5.5% total commission, that's $27,500 — $13,750 to each side. The seller traditionally pays both, though the NAR 2024 settlement changed how buyer-side fees are disclosed and negotiated.
Use our agent commission calculator to see the exact split and net proceeds for your sale price.
The Commission Formula
Each Agent's Share = Total Commission × Their Split %
The commission percentage is applied to the final agreed sale price, not the list price. If a $550,000 listed home sells for $530,000 and the agreed rate is 5.5%, the commission is $29,150 — not $30,250. That difference matters on higher-priced properties.
What the Typical Rate Looks Like in Numbers
| Sale Price | 5% Commission | 5.5% Commission | 6% Commission |
|---|---|---|---|
| $300,000 | $15,000 | $16,500 | $18,000 |
| $500,000 | $25,000 | $27,500 | $30,000 |
| $750,000 | $37,500 | $41,250 | $45,000 |
| $1,000,000 | $50,000 | $55,000 | $60,000 |
These figures represent the total commission before the seller-side and buyer-side split. Each agent then splits their half with their brokerage — typically a 70/30 or 60/40 arrangement — so neither agent personally pockets the full amount shown above.
How the Split Works
A standard 5.5% commission on a $500,000 sale creates a chain of splits:
- $27,500 total commission is collected from the seller's proceeds at closing.
- The listing brokerage receives $13,750 (50%) and pays the buyer's brokerage $13,750 (50%).
- Each agent then splits their share with their brokerage. At a 70/30 split, each agent personally receives $9,625.
The 2024 NAR Settlement Changed Buyer-Side Rules
Before August 2024, sellers typically offered the buyer's agent commission through MLS, and it was bundled into the sale. Now, buyers must sign a written agreement with their agent specifying the compensation before touring homes. Sellers are no longer required to offer a buyer's agent commission through MLS — though many still do to attract more buyers. The practical effect: buyer's agent fees are now more openly negotiated, and buyers can sometimes negotiate a lower rate or request the seller cover it as a concession.
What Commission Is Actually Negotiable
Negotiable
- The listing agent's rate (often 2.5–3%)
- The buyer's agent commission (now negotiated directly)
- Flat-fee or tiered arrangements with discount brokerages
- Commission rebates from buyer's agents in states that allow them
Less Flexible
- Brokerage minimums — agents must meet their firm's floor
- Seller concessions that effectively fund buyer-agent fees
- Dual agency arrangements, which carry disclosure requirements
A 1% reduction in the total commission rate saves $5,000 on a $500,000 sale. For sellers in competitive markets with a desirable property, negotiating from 6% to 5% or even 4.5% is genuinely achievable — especially with an experienced listing agent who moves properties quickly.
How Net Proceeds Are Calculated
Commission is just one part of what comes out at closing. Sellers also pay:
- Transfer taxes (varies by state and city — commonly 0.1% to 2% of the sale price)
- Title insurance (seller typically pays in many states — $500 to $2,000+)
- Attorney or escrow fees ($500 to $2,000)
- Any concessions offered to the buyer (repairs, closing cost credits)
- Outstanding mortgage balance
On a $600,000 sale with a 5.5% commission ($33,000), $8,000 in other closing costs, and a $350,000 remaining mortgage, net proceeds would be approximately $209,000 — not the headline $600,000. Use our commission calculator to map out the full picture before you list.
Flat Fee vs. Percentage Commission: Which Is Better?
Discount brokerages and flat-fee MLS services charge a fixed amount — say $3,000 to list on MLS — rather than a percentage. This works best for:
- Sellers in hot markets where the property sells itself quickly
- Higher-priced homes where the percentage savings are largest
- Sellers who are experienced with real estate transactions and need less hand-holding
A $1,500 flat-fee listing on a $800,000 home is dramatically cheaper than a 2.5% listing commission ($20,000). The trade-off: you handle more of the process yourself — showings, negotiations, counteroffers, and paperwork coordination. For complex sales or sellers who need guidance through a first transaction, a full-service commission often pays for itself.
Worked Example: $475,000 Sale
| Item | Amount |
|---|---|
| Sale Price | $475,000 |
| Total Commission (5.5%) | −$26,125 |
| Listing agent share (2.75%) | $13,062 |
| Buyer's agent share (2.75%) | $13,062 |
| Other closing costs (est.) | −$7,500 |
| Remaining mortgage | −$280,000 |
| Estimated net proceeds | $161,375 |
Frequently Asked Questions
What is the standard real estate agent commission?
The typical total commission is 5–6% of the sale price, traditionally split 50/50 between the seller's agent and buyer's agent. After NAR's August 2024 settlement, buyers must agree to their agent's compensation in writing before touring homes, and sellers are no longer required to offer a buyer-agent commission through MLS — though most still do to attract buyers.
Who pays the real estate commission?
Traditionally the seller pays both sides of the commission from the sale proceeds. After the NAR 2024 rule change, buyers can negotiate their agent's fee directly — meaning commission may now come from the buyer, the seller, or be split. In practice, most sellers still offer a buyer's agent commission to attract more buyers.
Can you negotiate real estate commission?
Yes. Commission has always been negotiable and is never legally fixed. Sellers can negotiate a lower listing-side rate, offer a flat fee, or use a discount brokerage. A 1% reduction on a $500,000 sale saves $5,000.
What does a 70/30 commission split mean?
The split refers to how the agent shares their portion of the commission with their brokerage — 70% to the agent, 30% to the firm. This is an internal arrangement; the total commission paid by the seller doesn't change based on how the agent's firm splits it.
What are net proceeds from a home sale?
Net proceeds are what the seller receives after deducting the total commission, closing costs, any outstanding mortgage balance, and other fees. On a $600,000 sale with a 5.5% commission and $12,000 in other closing costs, net proceeds before mortgage payoff would be roughly $555,000.