Real Estate Agent Commission: How Your Agent Gets Paid - NerdWallet (2024)

Real estate agents make money from commissions on home sales. Understanding how your agent is paid is an important part of the home buying and selling process.

Average real estate agent commission

Typical real estate agent commissions have historically been 5% to 6% of the home sale price. That's $17,500 to $21,000 on a $350,000 home.

How do real estate agents get paid?

The percentages may vary, but here's how a 6% commission could be divided:

Real estate brokers are agents who have taken additional coursework, passed an exam and gotten licensed as brokers. They can head up their own brokerages, operate independently, oversee agents or work under managing brokers.

Who pays the real estate commission?

Sellers have typically paid the agent commission for both sides as part of their closing costs when the sale is final.

Although the buyer doesn't directly pay for their agent's services, commissions impact how much homes cost. Sellers may build in the cost of agent commissions when pricing their homes.

In recent years, class-action lawsuits on behalf of sellers have challenged this practice, claiming it inflates the commissions sellers end up paying, compared with a system that would give them more ability to negotiate. Only one case has gone to a verdict so far, but in October 2023, a jury decided in favor of the plaintiffs.

In March 2024, the National Association of Realtors announced an agreement to settle the litigation. If approved by a judge, the proposal could change the way agents get paid, although it’s still unclear precisely what the changes will look like.

Alternatives to paying traditional real estate commissions

If you don’t want to pay traditional real estate agent commissions, consider these options.

Use a discount real estate broker

Discount real estate brokers help home sellers save money with lower commission rates or flat fees. Some discount brokers, such as Clever Real Estate and Ideal Agent, help you find agents and negotiate lower rates for you. Other companies, such as Houwzer and Redfin, have their own in-house agents. The pricing structures and service levels vary by company, so you'll want to shop around to find the best fit.

Sell your home yourself

Selling without a listing agent can cut the agent commission in half, but the "for sale by owner" option isn't for everyone. Handling the marketing, negotiating and navigating the legalities of selling a home requires skill and a lot of time. Make sure you have the time and energy to devote to the task before doing it on your own.