FAQs on Real Estate Commission Fees

Real estate agents put in a ton of work for their clients, whether they’re working with buyers or sellers — or both! — and when you hire an agent to buy or sell your home, they’re paid for all that work through a real estate commission.

But how (and how much) agents are paid can feel confusing, especially for people that are new to the home buying or selling process, and that can bring up a lot of questions.

So what, exactly, are those questions, and, more importantly, what are the answers?

A recent article from realtor.com outlined frequently asked questions about real estate commission fees, including:

• Who pays the real estate commission? Up until recently, the seller typically covered the full commission for both their agent (the listing agent) and the buyer’s agent, through the proceeds of the sale. They would pay their listing agent an agreed upon amount, and their agent would then share a portion of that amount with a buyers’ agent by paying their broker, who would in turn pay the agent. But changes to the process recently went into effect, and now, buyers may be responsible for paying their agents if a seller doesn’t offer to do so. However, many sellers will likely offer to pay a buyers’ agent commission, and/or be willing to agree to it during negotiations.
• What does a real estate commission cover? An agent’s commission covers all of the services agents provide throughout the home buying and/or selling process. In the case of buyers, this might include finding homes that meet your criteria, writing and submitting offers, and negotiating with listing agents. For sellers, this might include things like helping you price your home and marketing the property. While most agents probably provide similar services, each one chooses what they do and don’t do in the course of helping a client. Make sure to have a conversation about what your agent will be doing, in order to have clear expectations throughout the process.
• Are real estate commissions negotiable? Real estate commission rates (both on the buyer and seller side) are negotiable. That being said, you want to compensate your agent fairly, and while you have the right to offer a lower commission rate, they also have the right to turn it down.