Realtors get paid a percentage of the home’s final sale price at closing. They typically receive their commission via ACH, wire transfer, or check.
Nationwide, buyer's agents earn 2.75% and seller's agents earn 2.82% on average.
Here's how much realtors get paid on a median-priced home sale of $363,505:
- The listing agent would earn $10,251.
- The buyer's agent would earn $9,996.
- The sellers would pay $20,247 in total commissions, assuming they agree to cover the buyer's agent fee on top of their own agent's fee.
The good news: Realtor commissions aren't fixed, so you can always negotiate with your agent. If you don't want to go through that hassle, another option is working with a company that has already negotiated lower commission rates on your behalf.
For example, Clever Real Estate can connect you with top-rated agents who charge a pre-negotiated 1.5% listing fee — helping you save thousands without sacrificing quality service. Just answer 5 short questions to get matched with the best low-commission agents near you.
How realtors get paid at closing
Realtors get their commission upon completing a home sale, a process known as "closing" or "settlement."
At this stage, the seller's title or escrow company oversees the transaction, prepares closing statements, and disburses funds. The commission payment gets transferred from the seller's title or escrow company to their brokerage.
Real estate agents typically split their commission with their brokerage. Brokers have varying commission split policies. For example, agents may start out at a 50/50 split and work their way up to an 80/20 split, where they get to keep 80% of their commission.
This means an agent who earns $30,000 on a $1,000,000 home sale at a 3% commission rate would take home only $15,000 after splitting the earnings 50/50 with their brokerage.
Once the seller's brokerage receives the commission, they distribute the buyer's brokerage's share (if it's been negotiated in the contract), deduct any fees, and disburse the remainder to the agents. Payment often gets made via check or ACH deposit to the agent's bank account.
Is a commission model good for home sellers?
Supporters of the percentage-based commission structure argue that it incentivizes agents to speed up the sale process and secure the best possible price for the property.
The rationale is straightforward: Agents get paid only upon completing the sale. They don't get paid and forfeit the time and resources invested in marketing the property if they fail to secure a favorable offer.
Agents also earn a higher commission when the property sells for a greater price, giving them a vested interest in achieving higher offers.
Do sellers pay all realtor fees?
Sellers typically cover both the listing fee and the buyer's agent fee. These costs are deducted from the sale proceeds, so buyers usually don’t pay out of pocket for their agent’s services.
For years, this practice was reinforced by the National Association of Realtors (NAR), which required brokers affiliated with Realtor-operated MLS platforms to offer compensation to buyer’s agents.[1]
That changed after NAR lost a lawsuit in 2024 over its commission practices.
Commission splits between agents are no longer allowed. Previously, a listing agent might collect a 6% fee from the seller and split it with the buyer’s agent. Now, buyer’s agents must sign a contract with their clients specifying the services they will provide and the fees they will charge.
Sellers can refuse to pay the buyer's agent, but many still do to attract buyers and simplify the sale. The fee can be negotiated as part of the offer, and if the seller agrees to cover it, it's paid as a concession at closing. Any portion the seller doesn’t cover is the buyer’s responsibility.
Who sets realtor commission rates?
Typically, both buyers and sellers negotiate the commission with their agents — sellers do so before listing their home for sale, while buyers negotiate when signing a buyer's agency agreement. This negotiation may result in an agreed-upon rate of 2.5–3% for each agent.
Factors such as local norms, property type, projected sales price, and home condition or desirability can inform this decision.
The commission rate is documented in the listing agreement or buyer's agency agreement. The listing agreement specifies fees and outlines terms authorizing the agent to market the home, including the initial listing price and what items will be conveyed with the property.
Does an exclusivity agreement affect commissions?
An exclusivity agreement grants the agent exclusive rights to market your home and collect payment upon sale. In rare cases, you might owe a commission even if the house doesn't sell, typically if the agent procures a willing buyer but the seller backs out.
Can negotiating commissions affect services?
Negotiating commissions can impact services, as agents may adjust the level of service offered, request assistance with marketing expenses, or extend the listing agreement duration. Negotiation success may be more likely if nearby homes are selling very quickly.
Is a real estate commission worth it for the seller?
Most sellers find real estate commissions worthwhile as they often lead to higher home prices. A recent study by Clever found that 7 in 10 sellers think a good realtor is worth every penny of their commission.[2]
Full-service agents bring years of expertise, area knowledge, transaction experience, and negotiation skills, resulting in homes frequently selling at or above the asking price. Industry data indicates that homes sold with an agent typically fetch around $55,000 more than those sold FSBO.[3]
The work of a full-service agent includes:
- Prospecting for clients
- Crafting client proposals with pricing strategies
- Listing and marketing properties to attract buyers
- Negotiating offers and advising the seller on how to proceed
- Guiding sellers through the closing process.
A skilled realtor can also provide invaluable assistance in avoiding costly legal errors. According to recent research by Clever, over one-third (36%) of FSBO sellers encountered legal issues due to the absence of an agent.[4]
Alternatives to the traditional commission model
Various alternatives to the traditional commission model for realtors have emerged to accommodate the evolving needs of sellers seeking cost-effective options. These alternatives include:
- Low-commission realtors. Some sellers opt for real estate agents who charge 1.5–2% of the final sale price, which is lower than the typical 2.5–3% commission. Many agents provide full service at reduced commission rates, which means you could save thousands while still getting traditional support.
- Flat fee MLS listing services. Sellers can pay a few hundred dollars upfront to list their property on the multiple listing service (MLS) without a realtor's help. The MLS is used by 88% of sellers,[3] and posting on the MLS will also blast your listing on the most popular real estate sites for buyers. This option provides significant exposure for the property and can lead to a 17.5% higher sale price on average[5]
- Salaried agents. While uncommon, some agents are paid a salary by their brokerage in addition to commissions earned from selling homes. This model, used by companies like Redfin, allows agents to charge sellers a lower commission. It may afford agents more time to focus on individual properties but could diminish their incentive to sell a house quickly and for top dollar.
The bottom line: How do realtors get paid?
Realtors are compensated at closing, typically from the seller's proceeds. Listing agents earn 2.82% on average, and buyer's agents earn 2.75%.
Negotiating realtor fees is an option, but only 22% of sellers successfully negotiate a lower rate.[3]
An easier alternative is a company like Clever Real Estate, which pre-negotiates the listing agent's commission to just 1.5%. On a $500,000 home sale, that reduced rate would save you $7,500 compared to the traditional 3%.
And a major plus: service quality isn’t compromised. Clever connects you with top-rated agents from trusted brokerages like Century 21 and RE/MAX, providing full-service support at a lower rate.
- Answer 5 simple questions about your sale
- Get matched with 2–3 top local agents in minutes
- Compare options, choose the best fit, save up to 50% on fees
