The fee is set in writing: the listing agreement for a seller’s agent and the buyer agreement for a buyer’s agent. Under NAR’s rules since August 2024, those agreements must say plainly that the fee is fully negotiable and not
How is a real estate commission calculated?
Usually as a percentage of the sale price, a flat fee, or a mix of the two. Some agents charge a base fee plus a smaller percentage, and some use a lower rate above a certain price. Whatever the structure, it’s agreed between you and the brokerage before
There is no standard rate. Fees differ by agent, brokerage, market and the services included, and no law or
The commission is paid to the brokerage, not straight to the agent. The brokerage then pays the agent their share under a commission split, and may pay a referral fee if another agent
Who pays the commission?
Each side’s agreement says what that side’s agent will be paid. Sellers usually pay their listing brokerage from the sale proceeds at closing. Buyers are responsible for what their buyer agreement says, unless the seller agrees to cover some or
Sellers can still agree to pay a buyer’s agent. Since August 17, 2024, that offer can’t appear on the MLS, but it can be made off the MLS, and buyers can ask for it in their offer. These are often called offers of cooperative compensation.
Because commissions come out of the money at closing, they appear on the settlement statement with
What changed with the NAR settlement?
The NAR settlement brought two changes buyers and sellers notice. Offers of compensation to buyer brokers can no longer be published on the MLS. And agents working with a buyer through the MLS need a written agreement before touring a home, with the pay stated as a specific amount or rate,
An agent working with a buyer also can’t receive more than the agreement allows from any source,
Can you negotiate a real estate commission?
Yes. You can ask about the rate, a flat fee, a different fee if one agent handles both sides, or dropping services you don’t need. Compare what’s included, like photography, pricing advice, marketing, open houses and help through closing, not
A lower fee isn’t always the better deal, and a higher one doesn’t guarantee better service. Ask each agent to walk you through what they’ll do and what you’d likely
How the money moves on a $400,000 sale
| Sale price | $400,000 |
|---|---|
| Listing brokerage fee (2.5% in this example) | $10,000 |
| Buyer’s brokerage fee the seller agreed to pay (flat fee in this example) | $7,500 |
| Total commissions paid from the seller’s proceeds | $17,500 |
| Listing agent’s share under a 70/30 split (example) | $7,000 |
| Kept by the listing brokerage | $3,000 |
The rates, flat fee and split are made up to show the math. Every fee is negotiated, and here the seller agreed to cover the buyer’s agent; without that, the buyer would owe their agent under
Common mistakes
- Believing there’s a standard commission rate. There isn’t; every
fee is negotiated. - Assuming the seller always pays the buyer’s agent. The buyer agreement decides what you owe unless the seller
agrees to pay. - Thinking the agent keeps the whole commission. It goes to the brokerage, which pays the
agent their split. - Comparing fees without comparing what each agent
will actually do.
Questions
Are real estate commissions set by law?
No. Commissions are negotiable between you and the brokerage, and no law or association sets them. NAR’s rules now require written agreements
Do buyers pay real estate commissions now?
A buyer owes what their written buyer agreement says, unless the seller agrees to pay some or all of it. Buyers can ask for that
When is the commission paid?
Usually at closing, out of the money that changes hands, and it’s listed on the settlement statement. If the sale doesn’t close, the agreement says whether
How do I see what a commission does to my proceeds?
A seller net sheet subtracts commissions, closing costs and your loan payoff from the sale price to estimate what you’ll
Sources
- NAR: What the settlement means for home buyers and sellers
- NAR: Settlement FAQs
- NAR: Consumer guide to written buyer agreements
Written and checked by the Broker & Agent team on October 2, 2026. General information, not legal, tax or lending advice. Something out of date? Tell us.