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The short answer: Realtors get paid through commissions, typically a percentage of the home’s sale price, which is paid at closing from the seller’s proceeds and then split between the listing brokerage, the buyer’s brokerage, and the individual agents. Since the NAR settlement changes in 2024, buyers must sign a written agreement with their agent before touring homes, and seller-paid buyer commissions can no longer be advertised on the MLS.
How Realtor Commissions Work
Most people assume realtors charge a flat fee or an hourly rate, but that is not how the system works in the United States. Real estate agents earn a commission, a percentage of the final sale price, and they only get paid when the deal closes. No closing, no paycheck.
The typical commission rate
The total commission on a home sale has historically been around 5 to 6 percent of the sale price, though this has always been negotiable and has trended slightly downward in recent years. On a $400,000 home, a 5.5 percent commission comes to $22,000. Traditionally, that total was split roughly in half, with half going to the seller’s side and half to the buyer’s side.
How the split works
The commission is first paid to the brokerages, not directly to the agents. Here is the usual chain: the seller’s proceeds at closing fund the total commission, the listing brokerage takes its agreed share, the buyer’s brokerage takes its share, and then each brokerage splits its portion with its individual agent. Newer agents often split 50/50 or 60/40 with their broker, while experienced agents may keep 80 to 100 percent of their side under a fee-per-transaction model. After splits, taxes, and business expenses, an agent’s take-home is much smaller than the headline commission suggests.
What Changed After the 2024 NAR Settlement
The National Association of Realtors settlement that took effect in August 2024 reshaped how realtors get paid, and every buyer and seller should understand the new rules.
Buyer agreements are now mandatory
Buyers must now sign a written buyer representation agreement with their agent before touring homes. This agreement spells out exactly how much the buyer’s agent will be paid, who pays it, and what services the agent will provide. No more informal arrangements where compensation is sorted out after the fact.
Seller concessions can no longer be advertised on the MLS
Listing agents can no longer advertise an offer of compensation to the buyer’s agent on the MLS. Sellers can still offer to pay some or all of the buyer’s agent commission, and they often do, but that offer is negotiated directly between the parties instead of being published in the listing. This change was designed to make commissions more transparent and negotiable.
Commissions are more negotiable than ever
Commissions were always technically negotiable, but the settlement made that reality explicit. Buyers can negotiate their agent’s fee, sellers can negotiate what they pay the listing agent, and sellers can decide whether to contribute anything toward the buyer’s agent at all. Shopping around and asking agents what they charge is now standard practice.
Who Pays the Realtor?
This is the question most buyers and sellers actually care about.
- The seller pays at closing: In the traditional model, the seller pays the full commission out of the sale proceeds at closing. The listing agent then shares the agreed portion with the buyer’s brokerage. This is still the most common arrangement in the US.
- The buyer may pay their agent directly: Under the new rules, a buyer can agree to pay their own agent’s commission, either at closing or from their own funds. Some buyers prefer this for transparency, while others negotiate a seller credit to cover it.
- Negotiated combinations: Many deals now use a mix, where the seller offers a set amount toward the buyer’s agent costs as a concession, and the buyer covers the rest if their agreement calls for more. Everything is on the table during negotiation.
- When no deal closes: If the sale falls through, the agent generally earns nothing for that transaction. Some agents charge a small retainer or cancellation fee in their buyer agreements, so read the agreement carefully before signing.
Other Ways Realtors Get Paid
Commissions are not the only model, and alternatives are growing.
Flat-fee brokerages
Flat-fee brokerages charge sellers a fixed amount, often $3,000 to $5,000, instead of a percentage. The seller still handles showing the home and negotiating, or pays extra for those services. This can save thousands on expensive homes, but the service level is typically lower than a full-service agent.
Discount brokerages
Discount brokerages list homes for a reduced percentage, often 1 to 2 percent on the listing side. They still use the MLS and offer professional marketing, but with leaner staffing. Results vary widely by company, so reviews and local track records matter.
Referral fees
Agents also earn referral fees, typically 25 to 35 percent of a commission, when they refer a client to an agent in another market. Relocation and corporate move programs run heavily on referrals, which is another way agents get paid without directly handling the transaction.
Rentals and property management
Some agents earn fees on rental placements, usually one month’s rent, or monthly management fees on properties they oversee. This provides steadier income than the feast-or-famine cycle of sales commissions.
Further Reading
- How to Buy a House: Step-by-Step Guide (2026)
- How to Write a Check: Step-by-Step Guide (2026)
- How to Pay Off Credit Card Debt: Step-by-Step Guide (2026)
- IRS Where’s My Refund tool
- CFPB’s Ask CFPB resource
Frequently Asked Questions
Do realtors get paid if the house does not sell?
Generally, no. A listing agent who spends months marketing a home that never sells earns no commission from that listing. Sellers do not owe a commission unless the contract terms trigger one, such as a sale closing or a ready buyer being procured during the listing period.
Can you negotiate a realtor’s commission?
Yes. Commissions are fully negotiable, and the post-2024 rules made this more explicit. You can negotiate the listing agent’s rate, what the seller contributes toward the buyer’s agent, and the buyer’s agent fee itself. Agents may justify their rates with marketing plans and track records, but you are free to shop around.
How much do realtors make per house on average?
On a $400,000 sale at a 5.5 percent total commission, each side handles about $11,000 before broker splits. After splitting with the brokerage and subtracting marketing costs, taxes, and insurance, an individual agent might net $5,000 to $8,000 on that transaction. Agents who close 10 to 15 deals a year earn a solid middle-class income, while top producers earn far more.
Do buyers have to pay their realtor now?
Buyers must sign an agreement stating how their agent is compensated before touring homes, but that does not mean the buyer always pays out of pocket. Many sellers still offer compensation to the buyer’s agent as a negotiated concession, and the buyer agreement simply defines the maximum the agent will receive and who covers any shortfall.
Are realtor fees tax deductible?
For sellers, the commission reduces the taxable gain on the sale because it is added to the cost basis, which is effectively a tax benefit. For buyers, agent fees are generally not deductible as a personal expense. Consult a tax professional for your specific situation.
Conclusion
Realtors get paid through commissions tied to completed sales, with the money flowing from the seller’s proceeds through the brokerages to the individual agents. The 2024 NAR settlement made the process more transparent by requiring written buyer agreements and removing advertised commission splits from the MLS. Whether you are buying or selling, the key takeaway is that every fee is negotiable, every agreement should be read before signing, and understanding how your agent gets paid helps you get the service you are actually paying for.