Who Pays the Real Estate Commission?
Historically, sellers paid the total commission — typically 5% to 6% — split between listing agent and buyer's agent. After the 2024 NAR settlement, buyers negotiate compensation with their agent directly. Sellers can still offer to cover the buyer's agent cost as a concession, which many continue to do to attract buyers. Ultimately, commission is a cost embedded in the transaction for both sides.
Are Real Estate Commissions Negotiable?
Yes. Commission rates are not fixed by law and have always been negotiable. The NAR settlement increased transparency and competitive pressure, making negotiation more common. Discount brokers and flat-fee listing services offer lower rates in exchange for fewer services. Full-service agents may justify higher commissions through superior marketing, negotiation skill, and transaction management.
How Much Does a Real Estate Commission Cost in Dollars?
On a $400,000 home with a 5% total commission, agents earn $20,000 — typically $10,000 each side. Each agent then shares a portion with their brokerage per their individual split agreement. On expensive properties, agents may negotiate lower percentage rates. On lower-priced homes, a minimum flat fee may apply even if the percentage would be smaller.
Frequently asked questions
Can I buy a home without paying a buyer's agent commission?
You can purchase without a buyer's agent or negotiate to limit their fee. However, foregoing representation entirely means handling negotiations, contracts, and due diligence yourself — which carries real risk, especially for first-time buyers.
Is real estate commission tax-deductible for sellers?
Not directly as a deduction, but commission reduces your net proceeds and is included in your cost basis calculation, which lowers capital gains when you sell. Consult a tax professional for guidance on your specific situation.