Realtor commissions are among the most misunderstood aspects of buying or selling a home. If you’ve started exploring the real estate process, you’ve probably asked yourself, “Who pays realtor commission?” You’re not alone. It’s a common question that often leads to more questions, especially when buyers or sellers realize just how much money is involved. Understanding how commissions work can make a big difference in how you negotiate, budget, and ultimately close your deal.
In most standard residential transactions, real estate agents work on commission, which means they only get paid when a property closes. While this sales-based payment structure sounds simple, the underlying mechanisms, responsibilities, and strategies around commission costs reveal a much larger story. Whether you’re a seller trying to retain equity or a buyer factoring every cost, taking time to learn about realtor commissions is one of the smartest moves you can make before signing any contracts.
Understanding Who Pays Realtor Commission
The answer to who pays realtor commission is often more nuanced than it seems. Typically, the seller pays the commission for both their listing agent and the buyer’s agent. That commission is deducted directly from the proceeds of the home sale at closing. Standard commission rates hover around 5% to 6% of the home’s final sale price, and this amount is usually split evenly between the two agents involved.
Even though the seller is the one writing the check at closing, buyers should understand they’re indirectly contributing to that commission. That’s because the final sale price of the home likely includes the seller’s anticipated cost of those agent fees. In that sense, buyers are footing part of the bill through the price they agree to pay for the home. This is important context when weighing home values and placing offers.
For luxury properties or highly competitive markets, commission structures might be slightly different. Agents may negotiate higher rates or build in bonus incentives to speed up sales. In contrast, some sellers may negotiate lower commission rates, especially if they think their home will sell quickly. Regardless of the arrangement, it’s key to understand what you’re paying for and how the costs influence the sale price.
How Commission Splits and Structures Work
Realtor commissions aren’t just about a flat percentage being charged and happily pocketed. The internal breakdown of who gets what is surprisingly intricate. When a seller agrees to a 6% commission, for example, that fee is normally split between the listing agent (who represents the seller) and the buyer’s agent. Each might receive 3%, but they won’t keep it all.
Agents must share commissions with their brokerages. Most work under brokers who provide office support, legal backing, licensing oversight, and other resources. Depending on the brokerage agreement, an agent may walk away with only 60% to 75% of their share of the commission. Newer agents typically receive smaller cuts, while experienced agents often negotiate better splits.
These internal divisions impact what kind of service agents can justify offering. Some may prioritize higher-value listings where the return is worth their time. Others might choose volume. Buyers and sellers can benefit by asking exactly how and where commission dollars are being allocated. Transparency breeds smarter negotiations and often better results throughout the process.
Advantages and Drawbacks of Commission-Based Models
Paying agents via commission keeps them motivated. That’s a major upside for both buyers and sellers. A listing agent is incentivized to market aggressively and close fast, while a buyer’s agent is encouraged to find the right home that aligns with your budget and goals. Since they only earn if you close, agents tend to be responsive, poised, and persistent.
However, commission-based systems come with drawbacks. Because the commission is based on the sale amount, some agents may prioritize higher-priced properties where their earnings are greater. This creates a potential conflict of interest when advising clients about property value or whether to accept a particular offer. It can also encourage overpricing or discourage buyers from offering discounts, even when justified.
Another disadvantage is the lack of price flexibility. Sellers feel locked into paying thousands in realtor fees, which often range into the five-figure territory. As noted by the Consumer Financial Protection Bureau, high transaction costs can make it harder for homeowners to recoup equity or transition into their next purchase smoothly. Buyers meanwhile have virtually no say in how that commission is structured — yet it still affects the price they pay.
Navigating Alternatives to Traditional Commissions
Not every real estate transaction must follow the traditional commission route. Many homeowners explore alternative options like flat-fee MLS services, discount brokerages, or even selling entirely on their own. These approaches reduce or eliminate agent commissions, which can lead to significant savings. They also allow for more control and often faster timelines.
Flat-fee services allow sellers to list their homes on the Multiple Listing Service (MLS) — the primary marketplace used by agents — for a one-time rate. You handle the rest of the transaction, but you still reach the broadest pool of buyers. These models attract confident sellers who want to avoid paying both sides of the commission. However, you may still need to offer a buyer’s agent a commission to get traction.
The Nolo legal guide recommends caution when selling without representation. If you’re not comfortable managing disclosures, inspections, or negotiations, cutting out professional support might cost more than it saves. That said, a hybrid approach — limited agent support paired with DIY elements — can work well for savvy homeowners looking to balance service and savings.
What Buyers Should Know About Commission Structures
Buyers often think commissions have nothing to do with them. But incorrect assumptions about who pays realtor commission can lead to missed opportunities. For instance, some buyers believe their agents work “for free” — which isn’t true. That agent gets paid from the seller’s closing proceeds, and the home price likely reflects that cost.
Knowing this, buyers can be strategic. You can negotiate for seller concessions, such as asking them to cover part of your closing costs since they won’t be reducing commission amounts. You can also align your expectations with your agent’s motivations. If they’re being paid more to close quickly, you might notice pressure that doesn’t match your pace or goals. Transparency builds better partnerships.
You should also know what your agent earns in your purchase. Federal disclosure laws don’t always require this information, though the Department of Housing and Urban Development does outline broader policies tied to real estate fees and intermediary roles. Nothing prevents you from asking. A quick money conversation early on can spark more trust down the road.
Making Commission Work for You with Beycome
At the heart of any real estate deal is the balance between cost, convenience, and confidence. That’s where Beycome shines. We believe that today’s buyers and sellers deserve more control without sacrificing results. With over 18,000 homes closed and more than $213 million in commissions saved, Beycome shows that you don’t have to pay traditional fees to get high-performance results. In fact, a new Beycome home sells every 30 minutes across our supported markets.
Sellers often embrace flat-fee MLS listings to reduce their costs while keeping all the exposure. Buyers searching for homes through our home search tools benefit from direct access and simplified support. And if you’re curious about what your property could sell for, our property value calculator gives you quick insights into local pricing and recent comps.
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