When you’re navigating the home buying or selling process, one question tends to pop up early: who pays real estate commission? Whether you’re prepping your house for listing or scouting neighborhoods for your dream home, understanding commission structures can help you budget smarter, negotiate better, and avoid last-minute surprises. In the U.S., real estate commissions are a substantial part of the transaction cost, often totaling thousands of dollars. But the way this fee works isn’t always straightforward.
In most residential transactions, real estate agents are compensated through commissions paid at closing. Traditionally, a seller hires a listing agent and agrees to a total commission amount. That fee is then split between the listing agent and the buyer’s agent. However, buyers don’t write a check for their agent — instead, the funds are taken out of the proceeds of the sale. So technically, sellers pay the full commission. But let’s not oversimplify. Ultimately, the home price typically reflects all anticipated costs, including commissions, which means buyers indirectly share the burden.
Knowing how these fees are structured and negotiated puts you in a stronger position. Whether you’re trying to price your home competitively without losing money to commissions or you’re a buyer wondering where your money actually goes, it helps to have clarity. Let’s explore how real estate commissions work, who pays, what you can negotiate, and whether you’re truly getting what you pay for.
Breaking Down Real Estate Commission Payments
Real estate commissions in the U.S. generally range from 5% to 6% of the home’s final sale price. This figure is not set by law, and in many cases, agents are open to negotiation, especially in competitive or high-value markets. The full agreed-upon percentage typically covers both the listing agent and the buyer’s agent, with a common split being 50/50.
A common misconception is that buyers pay commissions. However, in standard practice, the seller pays the total commission out of the proceeds from the home sale. The commission is outlined in the listing agreement the seller signs with their agent. Once under contract, the total commission is divided between brokerages involved. Even though the seller foots the bill, buyers’ offers almost always account for this cost indirectly, since sellers anticipate that expense when pricing the home.
Understanding this fee distribution is critical. For example, if a home sells for $400,000 and the commission is 6%, the $24,000 is paid from the sale at closing. If split evenly, each agent’s brokerage gets $12,000, and that amount is further split between the brokerage and the individual agent. This means each agent may walk away with only a portion—sometimes as low as 1.5% of the home price—after those splits.
The important takeaway is that whether you’re buying or selling, the commission structure influences pricing, negotiations, and expectations. It plays a pivotal role in shaping the financial puzzle of any home transaction.
What Sellers Should Know About Commission Responsibilities
For homeowners looking to sell, the question of who pays real estate commission is both practical and strategic. Yes, sellers usually pay this cost at closing, which means it directly reduces their net proceeds from the sale. That’s why it’s essential to understand what you’re paying for when choosing to work with an agent.
Seller agents perform valuable functions: pricing homes, staging advice, managing showings, negotiating with buyers, and navigating the regulatory process. But commissions take a sizable chunk from your sale. If your home sells for $500,000 and the total commission is 6%, you’re paying $30,000. Sellers with equity concerns or tight margins need to weigh whether full-service representation justifies the fee.
Fortunately, sellers have alternatives. One option is to negotiate the commission with your agent. Another path is exploring flat-fee or discount brokerages, which can reduce transaction costs significantly. According to the Consumer Financial Protection Bureau, home sellers are not bound to any one commission rate or service model—so it pays to shop around and compare services before committing to one agent or firm.
It’s also smart to factor in incentives. Some agents reduce commission if they represent both sides. Others provide tiered services with different pricing. Sellers who understand these dynamics can better control costs and maximize returns.
What Buyers Need to Understand About Commissions
Even though buyers don’t typically pay their agent directly, they’re still affected by the real estate commission. Because sellers account for commission when setting a price, buyers may effectively pay more than the raw property value to cover these built-in costs.
Buyer’s agents offer valuable services—arranging showings, advising on neighborhoods, running comparable market analyses, and preparing offers—without upfront cost to the buyer. But that doesn’t mean those services are “free.” The seller pays commission at closing, yet the buyer’s purchasing power eventually absorbs that cost through a higher contract price.
For cash-strapped buyers or first-time homeowners, it’s helpful to ask your agent about any rebates they offer. Some buyer’s agents share a portion of their commission as credit at closing. According to the Nolo Legal Encyclopedia, this is perfectly legal in most states and can reduce your closing costs—sometimes by thousands of dollars.
It’s also becoming more common for buyers to hire agents on a fee-for-service basis, paying a flat amount instead of relying on commission structures. This model allows buyers more transparency and potential savings, though it isn’t available everywhere yet.
The Opportunity to Negotiate Commissions
Real estate commissions are negotiable, and that’s something both buyers and sellers often overlook. Agents don’t typically volunteer lower rates unless asked, but many are open to adjusting their fee depending on services provided, local market conditions, or transaction complexity.
In strong seller’s markets where homes sell quickly, listing agents may be more willing to accept a lower commission. Likewise, if you’re working with an agent on multiple transactions over time, they may offer preferred rates. Don’t hesitate to initiate a conversation about commission. Clear communication about expectations and deliverables can foster a more budget-conscious relationship.
From the buyer’s perspective, you can also negotiate your agent’s agreement. For example, if you are confident in your ability to find homes and schedule viewings yourself, you might ask for a reduced commission rebate. Transparency benefits all sides, and agents who communicate openly about cost tend to offer better experiences overall.
The National Association of Realtors recommends that both sellers and agents clearly outline commission expectations in writing. This eliminates misunderstandings and ensures everyone knows what to expect financially.
Why More People Are Choosing Beycome
The question of who pays real estate commission becomes even more significant when you consider what’s at stake. Saving on commission fees can preserve equity, increase market competitiveness, or make homeownership more affordable. That’s where Beycome steps in as a smart alternative to traditional real estate practices.
With Beycome, you can sell your home directly or leverage a flat-fee MLS listing while avoiding inflated commissions. Sellers save an average of $13,185, and more than 18,000 homes have closed using this empowered, simplified approach. In fact, a Beycome home closes every 30 minutes. These aren’t just marketing stats—they reflect a growing shift as savvy consumers look for transparent, tech-forward alternatives to outdated commission models.
If you’re a seller looking to maximize your return, consider Beycome’s flat-fee MLS tools. For buyers, it’s easier than ever to search for homes, connect directly with sellers, and stay in full control of your buying journey. Want to know what your home’s really worth before listing? Try our property value calculator to find out within minutes. Beycome isn’t just a workaround; it’s a smarter way to manage one of life’s biggest decisions—on your own terms.