How Do Real Estate Agents Get Paid? Commission Guide

Real estate agents get paid through commissions, which are a percentage of the home's sale price, and they only receive payment when the transaction successfully closes. The commission is typically 5-6% of the sale price, split between the listing agent and buyer's agent, and then each agent shares a portion with their brokerage. Under the 2024 NAR settlement, buyers may now be responsible for their agent's commission unless the seller agrees to cover it.

Who Pays the Commission: Buyer or Seller?

Traditionally, the seller paid the entire commission for both the listing agent and the buyer's agent, with the amount deducted from the sale proceeds at closing. However, following the National Association of Realtors (NAR) settlement in March 2024, effective August 17, 2024, this practice has changed. Sellers are no longer required to offer compensation to the buyer's agent, and buyers may now be responsible for paying their own agent. That said, sellers can still choose to cover the buyer's agent commission as a concession, and many do to attract buyers. According to a survey cited by GoCRR, approximately 92% of agents in Florida report that sellers still offer compensation to the buyer's agent. The specific arrangement is negotiable and should be outlined in the listing agreement and buyer representation agreement.

How Commission Splits Work

The total commission is typically split four ways: between the listing agent, the buyer's agent, and their respective brokerages. For example, on a $300,000 home with a 6% commission ($18,000), the listing agent and buyer's agent might each receive 3% ($9,000). Then, each agent splits their share with their brokerage according to their agreement. A common split is 80/20, where the agent keeps 80% and the brokerage takes 20%. In that scenario, the agent would take home $7,200 from the $9,000. Commission splits vary by brokerage and can be negotiated based on experience and production, as explained by Key Realty School.

When Do Agents Get Paid?

Agents are paid only after the transaction is fully completed: the loan is funded, the deed is recorded, and the title company disburses funds. This typically occurs within 24 to 72 hours after closing, according to Speicher Group. The commission is paid to the brokerage, which then pays the agent according to their split agreement. Agents do not receive a salary or hourly wage; they are independent contractors who earn income only when a sale closes. If a deal falls through, the agent typically earns nothing, regardless of the time invested.

Typical Commission Rates and Negotiability

Commission rates are not fixed by law and are fully negotiable. While 5-6% is common, rates can vary based on location, property type, and market conditions. For example, luxury properties may have lower percentage rates (4-5%) but higher total commissions due to the sale price. Discount brokerages may offer reduced rates for limited services. Sellers and buyers should discuss commission terms upfront and understand that they can negotiate. As Realtor.com notes, there are no federal or state laws mandating a fixed commission rate.

Impact of the 2024 NAR Settlement

The NAR settlement introduced two key changes: (1) offers of compensation to buyer's agents can no longer be displayed on the MLS, and (2) buyers must sign a written agreement with their agent before touring homes, outlining the agent's compensation. These changes aim to increase transparency and give buyers more control over their agent's fees. Sellers can still offer buyer concessions on the MLS, such as contributing to closing costs. The long-term impact is still unfolding, but agents must now clearly demonstrate their value to clients, as highlighted by Key Realty School.

Common Questions About Agent Pay

Do agents get paid if a house doesn't sell?

No. Agents work on a contingency basis and only earn a commission if the sale closes. If a listing expires or a deal falls through, the agent receives no commission, though they may be reimbursed for certain marketing expenses if specified in the listing agreement.

Can agents keep earnest money if a deal fails?

No. Earnest money is held in escrow and is either returned to the buyer or paid to the seller according to the contract terms. Agents do not receive earnest money as compensation.

Do agents get paid monthly?

No. Agents are paid per transaction at closing, so their income can be irregular. Some months may have multiple closings, while others may have none.

How much does an agent make on a $200,000 home?

Using a 6% commission, the total commission is $12,000. If split evenly between listing and buyer's agents, each side gets $6,000. After an 80/20 brokerage split, the individual agent would take home $4,800.