What Commission Do Realtors Get

What Commission Do Realtors Get? The Ultimate Guide for Buyers and Sellers

If you're jumping into the real estate market, whether you're selling your beloved home or hunting for the perfect new one, there's one topic that always sparks confusion and curiosity: Realtor commissions. People often ask: What commission do Realtors get exactly? It seems like a simple question, but the answer is complex, dynamic, and rarely a fixed number.

Understanding how real estate commission works is crucial for budgeting, negotiating, and feeling confident in your transactions. It helps you ensure you're getting fair value for the professional services you receive. Let's break down the typical commission structure in a clear, straightforward way so you know exactly where your money goes.

Breaking Down the Real Estate Commission Puzzle

First things first: there is no universal, fixed percentage rate set by law or dictated by any national Realtor association. Commission is always negotiable and is set between the seller and their listing agent (Realtor) when signing a Listing Agreement.

The total commission typically ranges between 5% and 6% of the home's sale price in most US markets. However, that entire percentage does not go directly into the pocket of the single agent you interact with. That total fee is split multiple ways before an agent ever sees a dollar.

Think of the commission as a pie that gets sliced four times. This is why knowing what commission do Realtors get requires understanding the split mechanics, not just the initial percentage.

How Is the Commission Split Calculated?

The most important realization about real estate commission is that the total percentage agreed upon is usually split right down the middle between the two main parties involved: the listing brokerage (who represents the seller) and the cooperating brokerage (who represents the buyer).

This division covers the efforts of both the agent who marketed the property and the agent who brought the successful buyer to the table.

The Standard 50/50 Split

When you hear about a 6% commission rate, it usually means 3% goes to the listing brokerage and 3% goes to the buyer's brokerage. This 50/50 split is traditional and encourages buyer's agents to show the property, as they know exactly what compensation is being offered.

If a home sells for $400,000 at a 6% commission rate, the total commission is $24,000. That $24,000 is immediately divided:

• $12,000 goes to the listing brokerage.
• $12,000 goes to the cooperating (buyer's) brokerage.

Keep in mind that while the 50/50 split is common, the seller determines the exact amount offered to the buyer's agent when setting up the listing agreement. Sometimes, especially in high-demand markets, the split might shift slightly, though usually only by small margins.

Brokerage Splits and Agent Payouts

Here is the critical piece of information when asking what commission do Realtors get: agents are independent contractors who must share their portion of the commission with their supervising brokerage firm.

The brokerage provides the agent with legal liability, office space, training, administrative support, and often marketing tools. For these services, the brokerage takes a cut of the commission received.

Brokerage split models vary widely depending on the agent's experience level, volume of sales, and the type of brokerage they work for. Here are the most common models:

1. The Traditional Split (e.g., 50/50 or 60/40): Newer agents often start here. If the brokerage received $12,000, the agent might receive $6,000.
2. The Sliding Scale Split: As the agent sells more homes, their percentage share increases, perhaps moving from 60% up to 80% over the course of the year.
3. The Cap Model: Agents pay a high percentage split until they hit a certain "cap" amount (e.g., $20,000) paid to the brokerage. After reaching the cap, they keep 100% of their commission for the rest of the year, only paying small transaction fees.
4. The 100% Model: Agents keep 100% of their commission but pay higher monthly or desk fees to the brokerage. This is common for top-producing agents.

So, going back to our $400,000 sale example, if the agent operates on a 60/40 split in favor of the agent, the agent would keep $7,200 out of their brokerage's $12,000 share.

Understanding the Commission Rate: Is It Negotiable?

Absolutely! The real estate commission rate is 100% negotiable. While certain percentages (like 5% or 6%) are common in many markets, they are simply established norms, not requirements.

As a seller, you have the right to negotiate a lower total commission. However, be cautious about slashing the rate too drastically, as this could reduce the incentive for buyer's agents to show your property, potentially extending the time it sits on the market.

Factors Influencing Commission Rates

If you are trying to negotiate a better deal, knowing what commission do Realtors get is only half the battle. You also need to understand the variables that impact the rate the listing agent is willing to accept.

• Property Value: Higher-priced homes often justify a slightly lower commission percentage, simply because the dollar amount resulting from the sale is already substantial.
• Market Conditions: In a super hot seller's market where houses sell in hours, an agent might be more flexible on their rate because their work is less intensive than in a slow market.
• Service Level: Are you expecting extensive marketing, professional photography, virtual tours, and frequent open houses? Full-service agents command standard rates, whereas agents offering limited services might charge less.
• Repeat Business/Referrals: If you are a past client or referring multiple pieces of business, agents may offer a loyalty discount.

The Rise of Discount Brokers and Alternative Models

The industry is changing. If paying a full 6% seems too high, you have options. Discount brokerages are emerging, offering lower fixed fees or significantly reduced percentage rates (e.g., total commissions of 4% or less).

These models work by reducing the services offered (perhaps you handle the showings or negotiations yourself) or by operating on a massive scale with lower overhead. However, always confirm exactly what services are included to ensure you aren't sacrificing critical support just to save a percentage point.

Who Actually Pays the Commission?

This is a common point of confusion, especially for buyers. In almost all residential real estate transactions, the seller pays the entire commission fee. This payment is deducted from the sale proceeds at closing.

The seller is responsible for paying both the listing agent's side and the buyer's agent's side. For the buyer, the agent's services are essentially "free" because the compensation comes from the seller's funds.

While the seller writes the check, remember that commission is simply a cost of selling. This cost is usually factored into the home's listing price. In this sense, the buyer indirectly pays the commission, as it's baked into the final price of the house.

Important Things to Remember Before Signing

Always Review the Listing Agreement (Sellers)

Ensure the total commission percentage and the promised co-brokerage split (the amount going to the buyer's agent) are clearly stated and understood before you sign. This is where you finalize what commission do Realtors get from your sale.

Understand the Value of a Good Realtor (Buyers and Sellers)

A highly skilled Realtor who charges a standard commission often delivers far more value (in terms of negotiating a better price, faster sale, and fewer legal headaches) than a low-commission agent who may be less experienced or available.

Ask About Additional Fees

Some agents charge a separate "brokerage fee" or "transaction fee" on top of the percentage commission. Make sure you know about all potential fees upfront.

Conclusion

So, what commission do Realtors get? The standard rate is usually 5% to 6% of the sale price, but that amount is split twice: first between the listing and buyer brokerages, and then again between the individual agent and their brokerage firm. Ultimately, the agent pockets only a fraction of the original percentage you see on the Listing Agreement, which compensates them for months of marketing, showing, negotiating, and administrative work.

By understanding this four-way split, you can approach the conversation about commission with confidence. Always feel empowered to negotiate the rate, but also recognize that the commission is an investment in professional service that drives the successful sale of your most valuable asset.

Frequently Asked Questions (FAQ) About Realtor Commissions

What is the average real estate commission rate?

The average total commission rate typically falls between 5% and 6% of the home's final sale price, though this varies by market and is always negotiable.

Does the buyer pay the Realtor commission?

No, traditionally, the seller pays the entire commission fee (both for the listing agent and the buyer's agent) out of the proceeds of the sale at closing.

Can I negotiate the commission rate with my listing agent?

Yes, absolutely. All real estate commissions are negotiable, and you should feel free to discuss the rate based on your property's value, the market, and the expected level of service.

Why does the commission get split 50/50?

The standard 50/50 split encourages agents representing buyers to show the property. If the compensation offered to the buyer's agent is too low, they might prioritize showing homes with better commission structures.

Do Realtors still get paid if the house doesn't sell?

Generally, no. Realtors typically work on a contingency basis, meaning they only receive commission if the sale successfully closes. If the listing agreement expires or the seller pulls the home off the market, the agent does not get paid for the time and resources spent.

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