How Does a Realtor Get Paid When You Buy a House?

The short answer is that a 2024 legal settlement changed how agents get paid, and buyers are now more likely to pay their own agent directly. Planning to buy or sell a home in the near future? You’ll want to read up so you don’t overpay.

How Do Real Estate Agents Get Paid?

For agents — on the seller’s or buyer’s side — it’s long been business as usual to receive compensation via commission, as opposed to a set fee. Sellers typically paid commissions of 5% to 6% of a house’s price after what is known as the “closing” of a home they sold, and that money was split between the seller’s and buyer’s agents, plus other pros involved in the transaction. The higher the sales price, the more agents got paid.

But in 2024, the National Association of Realtors® (NAR), a trade association, and a number of real estate brokerages, settled a group of lawsuits. The settlements totaled nearly $2 billion. NAR paid $418 million in damages. The payout resulted from a legal filing contending that the real estate commission structure violated antitrust laws. NAR agents, it claimed, were receiving inflated commissions.

The lawsuits brought changes to the way homebuyers and sellers work with real estate agents on home purchases — and the way those agents are compensated.

Agents and Buyers or Sellers

In the lawsuit, homesellers from Missouri alleged that commission rates had been shared secretly and inappropriately among those who stood to profit. The sellers stated that the exchange of information had resulted in a lack of transparency about who homesellers were responsible for paying, and how much. They also said that this led to agents’ fees being inflated.

The lawsuits sparked NAR to revise protocols for the way homebuyers and sellers work with real estate agents when a home goes up for sale. That reboot may significantly affect those transactions and agent commissions going forward. The changes were expected to save buyers and sellers money, though whether they have is still debated.

How will a Realtor you hire get paid in this new world? If you plan to buy or sell a home, it’s important to ask them, and to understand the details of compensation before entering into an agreement. Sellers are likely to continue paying their agents a commission for selling their house. Buyers who want to work with a buyer’s agent may have to pay for that agent’s assistance themselves, but only if the agent won’t receive any other commission.

Let’s take a closer look at how the changes affect costs for both homebuyers and sellers, beginning with examples of Realtors getting paid.

Real Estate Commission: Before the Settlement

We’ll start with how it used to work. Say a home sold for $500,000, with the commission being the formerly typical 6%:

Total commission fee: $500,000 × 6% = $30,000

The commission was generally split evenly between the two sides:

•   Listing agent side = $15,000

•   Buyer’s agent side = $15,000

Real estate agents also shared commissions with brokers who represented them. (A broker is an agent who has an additional license to supervise other agents.) The broker’s fee might have been 1% of the sales price, or $5,000, subtracted from the total to leave the seller’s agent with a commission of $10,000.

•   Listing agent = $10,000 (2% of sales price)

•   Listing agent broker = $5,000 (1% of sales price)

•   Buyer agent = $10,000 (2% of sales price)

•   Buyer agent broker = $5,000 (1% of sales price)

Real Estate Commission: A Changing Approach

For a long time, agent commissions were more or less built into a home’s asking price. The seller’s agent would offer a percentage of the total commission amount to the buyer’s agent, normally mentioning it in the home listing’s fine print on the multiple listing service (MLS). After closing, the seller’s agent would disburse the fee. That changed a little in 2024, when the court prohibited sellers’ agents from stating the buyers’ agent’s percentage share on the MLS.

The MLS comprises databases of homes for sale that only Realtors, agents, brokers, and other real estate industry people can access — and that is what caused concerns about transparency.

Now, conversations about commissions must take place outside the MLS. Sellers may offer to pay commissions to buyer’s agents, but an agent for the homebuyer may also request a percentage of the home price or a flat fee from their own client. A buyer using an agent is required to have a representation agreement with the agent, defining compensation, before touring homes.

Listing agreements now must specify the amount the seller will pay to the listing agent, as well as what the seller will pay to a buyer’s agent. With these revisions, sellers have some newfound control. They can offer equal commissions to both sides, or different amounts. A seller may decide not to offer a buyer’s agent a commission, leaving the buyer responsible for paying for their services.

An Agent’s Responsibilities

To earn a commission, real estate agents often take on a lot of tasks and responsibilities. Their duties include:

•   Providing market data and helping to set a listing price

•   Placing ads and putting up yard signs

•   Photographing the property

•   Listing the property in the MLS listings database

•   Scheduling showings

•   Placing lock boxes

•   Guiding first-time homebuyers

•   Smoothing over difficult relationships

•   Navigating offers and counteroffers

•   Negotiating home contracts

Recommended: How to Find a Real Estate Agent

The State of Agent Commissions

Earnings vary widely. How much agents make in a year depends on their market, their sales volume, and the rates they negotiate.

Early surveys suggested commission rates were falling, but later research has been less conclusive. A 2026 Consumer Federation of America report found that only 7% of nonprofit counselors who advise first-time homebuyers surveyed said commissions had decreased compared with a year earlier, while 36% disagreed that rates had fallen. That’s consistent with a Federal Reserve analysis of about 45 million home sales, which found that similar rules adopted earlier in some states had no material effect on advertised commission rates.

Sellers’ agents may continue to receive their commissions, negotiated with the seller, who pays the real estate agent commission fee out of the payment they receive when the home sale closes. Since buyers’ agents are no longer entitled to payment from this money, homebuyers may need to negotiate with and pay their agents. This could in some cases make buying a home even more costly.

How Does It All Affect the Bottom Line?

If the sales price of a home is $500,000 and the sellers owe $250,000 on their mortgage, then the commission and other fees would be subtracted from the $250,000 that remains after the sellers pay off their mortgage.

To keep it simple, let’s say the total commission negotiated is 5%:

Total seller-paid commission fee: $500,000 × 5% = $25,000

•   Listing agent side = $25,000

•   Buyer’s agent side = negotiated separately

Whether the buyer’s agent is paid out of that $25,000, by the seller on top of it, or by the buyer directly now varies by transaction.

Can a buyer come out ahead in this changed compensation structure? Maybe. A buyer’s extra costs could be compensated by lower listing prices on homes for sale. But that remains to be seen.

Can You Negotiate Who Pays the Real Estate Agent?

Yes. Realtor fees on both sides are negotiable. These ideas may help you reduce your fee if you are selling your home:

•   Barter. Do you have a photographer friend who can take photos of your home? Offer up skills in exchange for a lower commission.

•   Hire a newer agent. A newer agent may accept a lower commission to gain experience.

•   Pay attention to market conditions. If homes aren’t moving in your market, you may be able to negotiate a lower commission.

Take time to interview potential Realtors using these suggested questions. Be sure the commission stated in the listing agreement matches what you’ve agreed on before you sign.

How Should a Buyer Agent’s Commission Be Set?

If you are in the market for a new home, you may still decide to seek a buyer’s agent to guide you through the process and represent you in closing. Their efforts may be well worth their fee.

Look for an agent with a strong network — they may hear about quiet “whisper listings” before anyone else. Once you’ve chosen someone, be sure to discuss a fee structure and payment process with them before you sign on.

Buyer’s agents may charge hourly, a flat fee, or a percentage, and in many markets sellers still offer to cover it.

In lieu of a commission, buyers’ real estate agents might charge fees for showing homes, shepherding clients through making offers, signing contracts, negotiating inspections, and more. For buyers, this would add to a home’s cost.

Of course, if agent commission fees have all along been a component of a property’s price, then buyers were already paying them. But in that scenario, buyers could cover those baked-in costs with their home mortgage loan. New fees paid by a buyer to the agent would come from the buyer’s pocket.

This switcheroo may lead some homebuyers to think about shopping for a home without an agent’s help, or buying a house for sale by owner. If you go this route, be aware that you’ll need to spend significant time researching potential properties, scheduling viewings, and self-advocating, especially if you are attempting to buy in a seller’s market.

When Do Sellers’ Agents Receive Their Commission?

Sellers’ agents usually receive their commission after the home mortgage loan has been funded and the sale closes. Their brokerage receives a wire with the funds, and the agent’s portion of the commission is released to them shortly thereafter.

What Is Dual Agency?

Dual agency is when a real estate agent represents both the seller and the buyer in a transaction. It must be disclosed to both parties because real estate agents are bound by a fiduciary duty to serve their clients. An agent who represents both seller and buyer may earn more commission.

Buyers faced with having to pay a buyer’s agent out of pocket might choose to look at properties on their own. When they find a home they would like to buy, they may decide to make an offer directly with the listing agent. In this scenario, the listing agent becomes a dual agent. They may accept a lower fee, since they are also getting a commission paid by the seller. It might appear to everyone to streamline the process. It also creates a possible conflict of interest.

Many in the industry discourage buyers and sellers from entering a dual-agency sale with an agent. It’s also worth noting that the practice is illegal in several states.

Is Paying a Real Estate Commission Worth It for the Seller?

Hiring an agent is not required. And for many sellers, it’s painful to look at the closing documents and see how much of the sales price goes to different agents, title insurance companies, concessions, and so forth. But a lot of sellers find it worthwhile having someone to guide them through the complexities of real estate law, and sensitive issues that the sale of a home creates.

Recommended: How to Buy a House Without a Realtor

Alternatives to a Percentage-Based Commission

There are real estate brokerages that advertise services for a flat fee. Flat fees are typically much lower than a percentage-based commission. They usually don’t offer to schedule showings or manage the listing in any other way.

The Takeaway

Working with a real estate agent when you’re a buyer requires asking a lot of questions and understanding the terms of compensation before you sign on for representation. You might be tempted to go it alone, and it can be done. But having an agent on your side to help you negotiate may, in many cases, help you land a better deal.

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FAQ

Do sellers pay Realtor fees?

Yes, sellers typically pay their listing agent a commission that’s negotiated in the listing agreement and deducted from the sale proceeds at closing. Since the 2024 rule changes, they’re no longer expected to also offer a commission to the buyer’s agent, though many still do. When they don’t, the buyer may be responsible for paying their own agent.

How long have the new rules been in place?

The settlement received final approval in November 2024. The two core changes — no commission offers listed on the MLS, and a signed agreement before a buyer’s agent shows homes — took effect August 17, 2024.

How much does a Realtor make in Illinois?

According to ZipRecruiter.com, the average pay for a real estate agent in Illinois is $83,135. Salaries can range from as low as $58,100 up to $96,900 per year.

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Photo credit: iStock/RyanJLane

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