So, you’re diving into the world of real estate. Get ready to become your clients’ superhero, guiding them through what’s probably the biggest purchase of their lives. As a new agent, understanding how you get paid is key to, well, actually getting paid. Real estate commissions are how you’ll make your living, so it’s time to get savvy about them.
You may have heard that the way agents earn money is changing. Your clients may have seen the headlines too. But the reality is that even though some things have changed regarding real estate commissions, real estate professionals are still earning about 6% of property’s value upon closing, which has been the pattern for decades.
Whether you’re still cramming for your license exam or about to post your first “Just Listed” selfie, knowing the ins and outs of commission rates will help you explain your value and the recent changes to how commissions work without sounding awkward. This guide will break down the national averages, how the math works, and what all the recent industry drama means for your wallet. Let’s get you ready to succeed.
Key Takeaways
- Understand Commission Basics: Real estate commissions are typically a percentage of the property’s sale price and are commonly split between the buyer’s and seller’s agents.
- Stay Updated on National Averages: Being aware of the average commission rates in your market can help you stay competitive and provide accurate information to clients.
- Be Transparent with Clients: Clearly explain how commissions work and how they align with the value you provide as their agent.
- Adapt to Industry Changes: Recent shifts in the real estate landscape require agents to stay informed and adjust their practices as needed.
- Highlight Your Value: Use your expertise and market knowledge to illustrate the benefits clients gain from hiring you to guide their transactions.
What Is the Typical Real Estate Agent Commission Percentage?
A real estate commission is the fee paid to real estate agents for their services in facilitating the sale of a property. Unlike salaried employees, most agents work entirely on commission, meaning they only get paid when a transaction successfully closes.
As of late 2025, the national average real estate commission rate sits at approximately 5.57%. This figure typically represents the total commission, which is then divided among the professionals involved in the transaction.
It’s important to note that this percentage is not a fixed legal standard. Real estate commissions are (and always have been) negotiable. Commission rates may vary significantly by state, city, and even neighborhood. For example, recent data from FastExpert indicates that average total commissions can range from around 4.66% in New York to over 6% in states like Iowa and Indiana. Furthermore, data from Redfin suggests that the average buyer’s agent commission specifically settled around 2.42% in the third quarter of 2025.
REALTOR® Fees for Selling a House
When you see a commission rate of 5% or 6%, it rarely goes into a single agent’s pocket. In a traditional transaction, this fee compensates multiple parties for their role in the sale.
Breakdown of fees
The total commission is generally split between the listing agent (who represents the seller) and the buyer’s agent (who represents the buyer). Historically, this split has been relatively even—for example, a 6% total commission might result in 3% for the listing agent and 3% for the buyer’s agent.
However, the agents do not keep the full amount. They must split their portion with their respective brokerage firms. Depending on the agent’s experience and agreement with their broker, they might keep anywhere from 50% to 100% of their side of the commission.
Factors influencing fees
Several factors can influence the commission rate you might encounter:
- Location and Competition: High-demand markets often have different rate standards. Additionally, the number of active agents in your area can drive competitive pricing.
- Property Value: Agents may be willing to negotiate a lower percentage on high-value luxury properties, as the total dollar amount remains significant.
- Market Conditions: In a hot seller’s market, agents might accept lower fees because homes sell quickly with less marketing spend. Conversely, in a buyer’s market, agent fees might hold steady to cover the increased effort required to sell a home.
Who Pays Real Estate Agent Commission: Buyer or Seller?
Sellers typically pay the real estate agent commissions. Please note the word “typically” in the previous sentence because more buyers have been paying their agents directly within the last few years. Here’s why:
Common practices and recent changes
Historically, the home seller paid the total commission (both the listing and buyer’s agent fees) from the proceeds of the sale. This was often viewed as a marketing cost to attract buyers’ agents to show the home.
However, following a settlement by the National Association of REALTORS (NAR) that took effect in August 2024, the landscape has evolved. Offers of compensation to buyer’s agents are no longer allowed to be displayed on Multiple Listing Services (MLS). While sellers can still choose to pay the buyer’s agent commission to make their home more attractive, it is no longer an automatic default.
Today, buyers must sign a written agreement with their agent before touring homes, outlining the agent’s fee. If a seller refuses to cover this cost, the buyer may be responsible for paying their agent directly.
Regional variations
While the new rules apply nationally, local customs still prevail. In competitive markets, sellers may continue to cover all commissions to ensure their property stands out from others. In other areas, you may see more negotiations where buyers and sellers split the costs.
How Are Real Estate Commissions Calculated?
Calculating the estimated commission is a straightforward math problem, but it’s vital for accurate budgeting.
Calculation methods
Commissions are calculated as a percentage of the final sale price of the property.
Formula: Final Sale Price × Commission Percentage = Total Commission
Example:
If a home sells for $500,000 and the agreed-upon total commission is 5.5%:
$500,000 × 0.055 = $27,500
In this scenario, if the split is 50/50, the listing brokerage and the buyer’s brokerage would each receive $13,750. From there, the individual agent is given their negotiated split. For eample, if the agent has a 70/30 split, they would receive $9,625 from the sale.
Use of real estate commission calculators
To avoid manual math and potential errors, you can use digital tools to estimate your costs. The Colibri Real Estate Commission Calculator allows you to input the home price, commission rate, and agent splits to see exactly how the money is distributed.
Are Real Estate Commission Rates Negotiable?
Yes, real estate commission rates are fully negotiable. There is no federal law or standard that sets a fixed commission rate.
How to navigate commission negotiations
As a real estate professional, negotiating your commission is a critical skill. It’s important to understand your value and be prepared to discuss your rates with clients. Here’s how you can approach these conversations:
- Articulate Your Value Proposition: Clearly explain the comprehensive services you provide, from marketing and staging advice to your negotiation expertise. Show clients that your rate reflects the value and results you deliver.
- Offer Flexible Service Tiers: Consider offering different commission structures based on the level of service provided. This allows you to meet client needs while ensuring you’re fairly compensated for your work.
- Leverage Your Track Record: Use your sales history and testimonials to demonstrate your success. A proven record of selling homes quickly and for top dollar is your strongest negotiation tool, justifying your commission rate.
- Consider Bundled Services: If a client is both selling and buying a home with you, you might offer a reduced rate as an incentive for their loyalty and the dual business opportunity. This can be a powerful way to secure both transactions and build a long-term relationship.
Understanding your negotiating power
While you have the power to set your rates, clients may occasionally ask for a reduction. Understanding when to stand firm is key to maintaining your value and ensuring your business thrives. You may decide that a lower fee isn’t feasible when:
- Market Conditions Demand More: In a slower market, your investment in extensive marketing and outreach is vital to securing a successful sale for your client.
- High-Maintenance Listings: Properties that require significant staging, professional coordination, or extra legwork demand more of your time and resources.
- Your Proven Value: As a top-producing professional, your track record of securing higher sale prices than the competition is a premium service that justifies your standard commission.
By staying clear on the value you provide, you empower yourself to make the best decisions for your career growth and your clients’ success.
Understanding Your Commission: The Value You Provide
When a client pays a commission, they’re investing in more than just an online listing. As a full-service agent, you provide comprehensive expertise that is crucial to guiding the transaction smoothly to the closing table.
What your commission covers
Your commission reflects the extensive services you deliver to secure a successful sale. These typically include:
- Expert Marketing: From professional photography and virtual tours to strategic signage and social media campaigns, you ensure every listing gets maximum exposure.
- Exclusive MLS Access: You leverage the Multiple Listing Service to syndicate listings to major real estate portals, reaching a wide network of potential buyers.
- Skilled Negotiation: You serve as your client’s strongest advocate, expertly navigating price negotiations and inspection requests to protect their best interests.
- Seamless Transaction Management: You orchestrate the entire process, coordinating with title companies, lenders, and inspectors to ensure every deadline is met without a hitch.
- Legal Safeguarding: You meticulously manage all disclosures and contracts, ensuring full compliance with state laws to protect your clients from future liability.
Demonstrating your value
While a seller might be tempted by the idea of saving on commission, it’s your job to articulate how your expertise translates into real financial gains. A skilled agent often negotiates a final sale price that far exceeds any potential savings from a discounted fee. Your mastery of pricing strategy, staging, and negotiation can lead to a higher net profit for your clients, underscoring the immense value of your professional guidance.
Real Estate Commission Rates vs. Flat Fee Services
As an alternative to traditional commissions, some sellers opt for flat fee services.
Understanding other service models
Empowering your clients starts with helping them navigate their options. While you offer a full-service experience, some sellers may consider alternative models. It’s vital to articulate the difference in value:
- Full-Service Commission: As a dedicated professional, you manage the entire lifecycle of the transaction. From high-level marketing and staging to complex legal paperwork and expert negotiation, your role is to maximize the client’s net profit and provide peace of mind.
- Flat Fee MLS: These services offer limited entry into the MLS for an upfront fee. However, the burden of showings, vetting buyers, and navigating contracts falls entirely on the seller.
Navigating the value gap
While flat fee services appeal to cost-conscious sellers, they often lack the professional guidance necessary for a successful close. According to the National Association of REALTORS®, FSBO (For Sale by Owner) homes sold at a median of $310,000 last year, significantly lower than the median of $405,000 for agent-assisted homes. Without a skilled negotiator, sellers risk a lower final sale price and increased legal vulnerability.
Your expertise is the catalyst for their success; by highlighting the risks of a “DIY” approach, such as improper pricing or missed market opportunities, you position yourself as an essential partner.
Buyer’s Agent Commission vs. Seller’s Agent Commission Split
Understanding the split helps you realize where the money goes.
Standard splits
While 50/50 is common, splits are not mandatory. A seller might agree to pay a listing agent 3% but offer only 2.5% to the buyer’s agent.
Impact on transactions
The commission offered to the buyer’s agent is a marketing tool. If a seller offers a very low commission to buyer’s agents, those agents may be less motivated to show the property, or buyers may prioritize other homes where they won’t have to pay their agent out of pocket.
Additional Considerations: Commercial Real Estate Commission Rates
If you’re dealing with commercial properties, the rules change slightly.
Differences from residential rates
Commercial real estate commissions are often more variable than residential rates. While they can hover around 4% to 6%, they can sometimes reach as high as 10% for lower-priced properties or complex land deals. Conversely, for multi-million dollar commercial buildings, the percentage often drops lower.
Industry trends
Commercial commissions are frequently calculated differently, sometimes based on the square footage of a lease or a sliding scale that decreases as the deal size increases.
Understanding real estate commission rates is crucial for anyone engaging in the housing market. The national average hovers around 5.57%, covering the comprehensive services of both listing and buyer’s agents. However, with recent industry changes regarding who pays these fees and how they are disclosed, knowing your clients’ options is more important than ever.
Ready to Start Your Real Estate Career?
If the strategy and financial potential of real estate interest you, why not turn that interest into a career? The real estate industry offers flexible hours, unlimited earning potential, and the freedom to be your own boss.
At Colibri Real Estate, we make getting licensed simple and stress-free. With our Pass or Don’t Pay Guarantee, you can enter exam day with total confidence. Our flexible, self-paced online courses allow you to master the material on your own schedule, giving you the power to balance your education with your current life commitments while you grow toward your new career.
Get your real estate license with Colibri Real Estate.
Disclaimer: This guide is for general informational purposes only, based on a September 2025 survey of Colibri Real Estate School alumni and publicly available industry sources. While Colibri Real Estate School strives for accuracy, we make no guarantees regarding the completeness, reliability, or applicability of the information. Earnings and outcomes vary widely based on factors like location, experience, and market conditions and should not be considered guarantees. This guide does not constitute professional advice. Users should consult additional sources for personalized guidance.
