Who gets the cut, and how much?© bmak/stock.adobe.com, © wichientep/stock.adobe.com; Photo illustration Encyclopædia Britannica, IncWhen a home changes hands, money moves in more ways than one. Beyond the price tag, there’s the cost of paying the people who make the deal happen—the agents and brokers who market listings, guide offers, and close transactions.

　　For decades, their pay has followed a familiar pattern: a percentage of the sale price, often split between the buyer’s and seller’s representatives. That model, long treated as standard, is shifting under new rules adopted in 2024.

　　Real estate commissions and agency basicsReal estate professionals—those who assist when you buy or sell a home—fall into two main categories: agents and brokers. Agents are licensed to guide clients through buying or selling a home, but they must work under the supervision of a broker, who can operate an agency and oversee transactions. The word agency refers to the legal relationship between you and the professional representing your interests in a sale or purchase.

　　They expect to be paid for their work, and that usually comes in the form of a commission, a percentage of the sale price paid to the agents and brokers involved in the deal.

　　For example, if you’re selling a house for $425,000 and the commission rate is 5%, the sale would generate $21,250 in commissions. Traditionally, the seller covered that amount, and if the buyer was represented by their own agent, the buyer’s agent would receive a portion of that commission. 

　　Although commissions have always been negotiable, the “seller-pays” model shaped how most home sales were structured for decades.

　　Real estate commission rulesMost real estate agents must practice changes implemented by the National Association of Realtors (NAR) in August 2024 under a nationwide class-action settlement with home sellers. Before the rules changed, it was a fairly standard practice to assume the seller would pay a 5% to 6% commission out of the proceeds of the home. The agents representing the seller and the buyer would split that commission.

　　Additionally, selling agents would often list the commission they were charging on a multiple listing service (MLS), which theoretically encouraged buyers’ agents to steer their clients toward homes where they might get a bigger cut of the deal.

　　Written buyer agreements before tours. Agents working with a buyer must have a written agreement that spells out compensation; a buyer’s agent can’t accept more than that agreement allows.No buyer’s broker compensation offers on MLS. A seller’s agent can no longer list commission compensation to a buyer’s agent on the MLS, although a seller can choose to say that they are willing to offer concessions.Seller approval in writing. If a listing broker offers payment to a buyer’s broker, it must be approved by the seller—in writing—before the agreement can be made.It’s especially important for buyers to understand these updates and be prepared to negotiate a commission with the agent, rather than assuming the seller will handle all the compensation. A seller might be willing to offer concessions on closing costs and real estate fees, including your agent’s commissions, but it’s no longer considered a given that both the seller’s and buyer’s agents will split commissions from the proceeds of the sale.

　　How real estate agents split commissionsMost real estate agents share their earnings with others involved in the transaction, usually their broker. Agents are licensed to represent clients, but brokers hold the higher license that allows them to run a brokerage and supervise agents.

　　When a commission is paid from a sale, it’s first divided between the seller’s brokerage and the buyer’s brokerage. Each brokerage then takes its own share—often 30% to 50%—before paying the remainder to the agent who worked the deal.

　　So, from the example above, let’s assume that the 5% commission ($21,250) was split such that 3% ($12,750) went to the seller’s broker and 2% ($8,500) went to the buyer’s broker. If the seller’s broker takes 40% of the $12,750, the agent actually ends up with 60%, or $7,650. If there were other selling agents helping with the deal, they would get a cut of the commission as well.

　　The same is true on the buyer’s agent side. Buyer’s agents also work under brokers and are generally required to share their commissions. So if the buyer’s broker takes 40% of the $8,500 ($3,400), the buyer’s agent would end up with $5,100 from the commission.

　　Basically, when a professional works with others in a real estate agency to complete a transaction, commissions are likely to be split. Split structures vary by firm and by experience level. Newer agents often give up a larger percentage of their commissions in exchange for training and leads, while some top producers keep nearly all of their commissions.

　　How to pay less in real estate agency commissionsOnline services such as Redfin (RDFN) and Zillow (Z) haven’t eliminated commissions, but they’ve made fees more transparent. By comparing agent listings online before meeting with potential agents, you can gauge what’s typical in your area before agreeing to terms.

　　You can also negotiate commissions, although few buyers and sellers actually do. Federal Reserve research shows that nearly half of homebuyers and sellers don’t know how much their agents received in commissions. Nearly a third of buyers and sellers don’t even realize they’re allowed to negotiate commission rates. Asking your agent to explain their rate—or whether they offer a reduced structure—can clarify what services are included.

　　It’s also possible to buy or sell a home without a real estate professional, although it means taking on the full workload yourself: marketing the property, setting the price, negotiating terms, and managing the contract. A skilled agent handles those details every day, often smoothing over problems you don’t see. If you decide to go it alone, you’ll need to ensure the legal paperwork is handled correctly. In some states, that means hiring a real estate attorney to oversee or conduct the closing; in others, title or escrow companies manage the process, and an attorney’s help is optional.

　　The bottom lineThe 2024 rule changes were meant to make real estate commissions more transparent, but old habits die hard. Most buyers and sellers still follow the familiar pattern in which the seller pays both agents from the sale proceeds. Over time, greater visibility into fees—and a clearer understanding of what agents do—could encourage more consumers to negotiate. Yet the traditional commission structure remains deeply rooted in how homes are bought and sold.

　　References[PDF] Backgrounder Q&A: National Association of REALTORS | justice.govCommissions and Omissions: Trends in Real Estate Broker Compensation | federalreserve.gov The Real Estate Commission: How Much Are Agent Fees? | realtor.com