If you’re planning to buy or sell a home, you’ve probably wondered: how much commission does a realtor make? It’s one of the most common questions in real estate—and with good reason. Realtor commissions impact both buyers and sellers, from influencing listing prices to determining how much sellers walk away with at closing. Despite being a significant part of every real estate transaction, commissions often remain misunderstood, shrouded in assumptions or outdated information.
Understanding how commissions work—and who truly pays them—is crucial if you’re navigating the housing market. Whether you’re a first-time buyer or listing your third home, knowing these details helps you make more informed decisions that align with your financial goals. In this article, we’ll break down the structure of real estate commissions, how costs are typically divided, and the factors that affect how much realtors ultimately earn in a transaction.
What Is Realtor Commission and How Does It Work?
Realtor commission refers to the fee paid to real estate agents for their role in facilitating a property transaction. Most commonly, this fee is a percentage of the home’s final sale price. Nationally, the typical commission hovers around 5% to 6%, though it’s always negotiable and can vary by region, brokerage, or market conditions. The total commission is split between the listing agent and the buyer’s agent, often evenly unless otherwise agreed.
Contrary to what many believe, it’s usually the seller who pays both agents’ fees, which are deducted from the sale proceeds at closing. So while buyers don’t directly pay the commission, it is baked into the overall transaction cost. This setup helps simplify the process but also limits price flexibility, especially in tighter markets where buyers might already be stretching financially.
It’s worth noting that not all commission structures are identical. Flat fee services and alternative models are gaining traction, especially among tech-savvy homeowners. Sellers increasingly explore non-traditional listing services that lower fees without compromising visibility. Some brokerages now offer variable rates depending on the level of service provided, offering more control and customization for clients who don’t need full-service representation.
According to the National Association of Realtors, commission is not regulated by law and can be fully negotiated. This flexibility allows sellers to shop around and compare offers. However, the ability to negotiate often depends on market dynamics and whether your property is in high demand or facing stiff competition.
Factors That Influence How Much Commission a Realtor Makes
While the advertised commission percentage might sound stable, the amount a realtor actually takes home often tells a different story. The gross commission—say, 6% on a $400,000 home—gets divided among several parties. After splitting with the co-agent and then their brokerage, many agents only keep between 1.5% and 2.5% of the total sale price.
For example, a home that sells for $400,000 with a 6% commission generates $24,000. After dividing that between the buyer’s and seller’s agents, each side might earn $12,000. From there, the agent typically splits again—often 50/50—with their brokerage, leaving them with just $6,000. That amount doesn’t yet account for taxes, marketing expenses, or transportation costs, which can quickly reduce net earnings.
Location makes a noticeable difference. Homes in high-cost urban areas may generate larger commission amounts due to steeper prices, but competition among agents can drive rates down. In contrast, less expensive or rural markets may stick more closely to the standard 6%, even if the final dollar amounts are lower. The type of property sold—residential, commercial, luxury—also influences how commissions are structured and negotiated.
Newer agents typically earn less because they have fewer listings, smaller networks, and greater upfront expenses. In contrast, experienced agents with strong reputations often justify higher commission splits thanks to proven track records. Training, licensing, and ongoing fees to maintain credentials also factor in, meaning many agents reinvest a portion of each commission just to keep running.
Pros and Cons of Traditional Realtor Commission Models
Traditional realtor commission models offer both advantages and drawbacks depending on your perspective. For sellers, the incentive model means agents are motivated to sell quickly and at the highest possible price. This aligns agent and seller interests, typically resulting in faster transactions and desirable terms. Homeowners also benefit from the agent’s market knowledge, marketing resources, and negotiation skills.
On the buyer side, having a dedicated agent—in most cases available without an upfront cost—can be a major asset. Buyers get access to curated listings, private showings, community insights, and seasoned guidance throughout the process. With the seller footing the bill, buyers often feel like they’re getting valuable assistance without a direct financial burden.
However, traditional commission structures can create complications. Sellers may feel pressured to price higher to cover agent fees, which can slow down competitive sales. In slower markets, it might make more sense to explore lower-cost options or allocate those savings toward repairs or home staging instead. In some cases, higher commission expectations may not reflect the amount of effort or support provided by the agent.
In exploring alternatives, some homeowners opt for flat-fee MLS listings or limited-service brokerages. These models often emphasize cost savings and streamlined service. Still, they require more hands-on work from the seller and a strong understanding of the home-selling process. According to Consumer Financial Protection Bureau data, many consumers don’t realize they can shop for agent services just like any other product or service—they’re not locked into one rate or structure.
Buying or Selling Without a Traditional Realtor
For some homeowners and buyers, stepping outside the traditional realtor model makes sense financially and strategically. Sellers who choose to go the “For Sale by Owner” (FSBO) route can eliminate or reduce commissions significantly. However, this approach demands more time, legal knowledge, and marketing savvy, as you’ll need to handle everything from listing photos to contract negotiation.
Independent buyers might choose to work without a realtor in competitive markets or for unique off-market properties. Without an agent, buyers must set up showings, submit offers, and navigate contingencies solo—or with the help of an attorney. Success here depends heavily on market experience and comfort handling legal and procedural details, which is why this option appeals mainly to experienced investors or repeat buyers.
Reducing or avoiding commission expenses might sound appealing, but it comes with trade-offs. Handling all aspects of home sales and purchases adds complexity. Mistakes, poor pricing strategy, or legal missteps could cost more than what you’d save in commission fees. For those sitting on the fence, hybrid models offer a middle ground: some agent support with reduced fees in exchange for a more proactive client role.
The tax side also deserves consideration. In rare cases, commissions or listing expenses may play a role in home sale capital gains calculations. While tax rules can be complex and vary per situation, tools provided by institutions like the Internal Revenue Service offer basic guidance on deductibility and reporting, especially for investment properties or mixed-use dwellings.
Modern Commission Choices with a Better Alternative
So, how much commission does a realtor make? It depends—on the home price, the agents involved, market fluctuations, and how services are structured. While traditional realtor commissions remain widespread, they’re no longer your only option. Today’s buyers and sellers look for smart, flexible ways to control their bottom line. And that’s exactly the opportunity that Beycome delivers.
By using Beycome’s platform, you can skip the bloated commission model entirely while still getting access to top-tier marketing tools, listing exposure, and legal resources. Sellers have saved over $213 million in commission costs. On average, clients keep an extra $13,185 in their pockets. With more than 18,000 homes closed and one selling every 30 minutes, the platform proves that expertise and empowerment can go hand in hand.
If you’re selling, try a smarter approach with our flat fee MLS listing service or explore For Sale by Owner home sales with full digital support. Buyers can take advantage of our intuitive tools like the property value calculator to assess homes on the go. At Beycome, we’re changing the home buying and selling experience—one transaction, and commission saved, at a time.