How Real Estate Commissions Actually Work

If you're buying or selling a home, one of the most common questions is:"How do real estate commissions actually work?"

It's a fair question — and one that can be surprisingly confusing. Between buyers’ agents, listing agents, percentages, and who actually pays what, there’s a lot of misinformation out there.

Let’s break it down simply so you know exactly where your money is going and what you’re getting in return.

What Is a Real Estate Commission?

A real estate commission is the fee paid to real estate agents for the services they provide in helping buy or sell a home. It’s typically calculated as a percentage of the home’s sale price.

• Average commission: 5% to 6% of the sale price

• This fee is usually split between the listing agent and the buyer’s agent

📌 Example:If a home sells for $400,000 with a 6% commission:→ Total commission = $24,000→ Listing agent gets $12,000, buyer’s agent gets $12,000(before their brokerage splits)

Who Pays the Commission?

In most cases, the seller pays the entire commission out of the proceeds of the sale.

• Buyers don’t typically write a check for agent services — the commission is baked into the transaction.

• Sellers agree to the commission amount when signing a listing agreement with their agent.

What Do You Get for That Commission?

If you’re a seller, your listing agent:

• Prices your home competitively using market data

• Markets your property through online platforms, professional photos, open houses, and more

• Negotiates offers on your behalf

• Coordinates inspections, appraisals, paperwork, and closing

• Helps avoid costly mistakes that can delay or derail a sale

If you’re a buyer, your agent:

• Helps you find and tour homes that match your needs

• Provides market insights and price guidance

• Writes and negotiates offers

• Assists with inspections, timelines, and due diligence

• Acts as your advocate from offer to closing

Bottom line: You’re not just paying for someone to “unlock doors” — you're paying for experience, guidance, negotiation skills, and peace of mind.

Can You Negotiate Commission?

Sometimes, yes — but it depends on the market, the property, and the agent.Agents invest time, money, and resources into every listing, so commission negotiations should be handled with respect and transparency.

Keep in mind: Lower commission doesn’t always mean higher profit — it may result in less marketing or fewer offers.

Final Thoughts

Real estate commissions are often misunderstood, but they’re a crucial part of the home buying and selling process. A good agent doesn’t just earn their commission — they protect your investment, maximize your sale or purchase, and make the process smoother from start to finish.

Have more questions about commissions, pricing, or how the process works? I’d be happy to walk you through it — no pressure, just real answers.