Real estate commissions are fundamentally different after 2024
The NAR settlement that took effect August 2024 changed how real estate commissions work in the United States. Before 2024, the seller typically paid both the listing agent and the buyer's agent — a combined 5–6% was the norm, split 50/50 at the closing table. After 2024, buyer agent compensation must be negotiated separately, often written into a buyer representation agreement before the buyer tours homes.
The practical effect: sellers are no longer automatically on the hook for buyer-side commission. Some sellers offer it (competitive markets), some don't (strong seller's markets). Buyers may end up paying their agent directly out of pocket, or rolling it into the offer price, or negotiating seller concessions to cover it.
The traditional 5–6% model — how it worked
Pre-2024, the listing agreement specified a total commission (say, 5.5%) split between listing agent and buyer's agent (say, 2.75% each). The seller signed this at listing; the MLS advertised the buyer-side offer to incentivize agents to show the home. When the home sold, the title company paid both sides out of the sale proceeds.
The model worked for sellers in that they didn't have to think about buyer-side compensation separately, and it worked for buyers in that they got "free" representation. But it baked commission into the price — buyers arguably paid for it via higher list prices — and it lacked the negotiation pressure that separate buyer agreements introduce.
The post-2024 model — what changed
- Buyer representation agreements are now required before a buyer tours homes with an MLS-participating agent. The agreement specifies what the agent is paid and who pays them.
- MLS listings cannot advertise buyer-side compensation. Sellers can still offer buyer-agent concessions, but those offers can't be listed on the MLS. They're typically communicated separately.
- Commission is more explicitly negotiable on both sides. Sellers can now decline to pay buyer-side commission. Buyers can negotiate their agent's fee directly.
Typical commission rates in the new environment
Six months into the new rules, national averages settled around:
- Listing agent: 2.5–3% (down from 2.75–3%)
- Buyer agent: 2–2.75% (was 2.75–3%)
- Total: 4.5–5.75% (down from 5–6%)
On a $500,000 sale, that's $22,500–$28,750 in total commission. Still significant money, still the largest transaction cost for most sellers, but trending downward.
Commission splits inside the brokerage
Commission numbers in real estate listings represent what the brokerage earns, not what the individual agent takes home. Agents typically get 50–90% of their side's commission depending on their arrangement with the broker:
- New agents (under 2 years):typically 50–70% splits. On a $6,000 commission, the agent nets $3,000–$4,200 before taxes and E&O insurance.
- Established agents: 80–90% splits or flat-fee brokerages (agent pays $300–$1,000/month for office services, keeps 100% of commission).
- Top producer teams:team lead might take 30–40%; buyer's agents and listing coordinators split the rest.
Flat-fee and discount brokers
Several business models challenge the percentage-based structure:
- Flat-fee MLS: $300–$1,500 one-time to list your home on the MLS, DIY everything else. Saves massive money but you handle showings, negotiation, paperwork.
- Discount full-service (Redfin, Houwzer, Ideal Agent): 1–2% listing commission with full service. Works well in large markets; spotty in smaller ones.
- iBuyers (Opendoor, Offerpad): instant cash offer with 5–8% service fee plus required repairs. Expensive, but fast and certain.
Discount models work best when the home is easy to sell (good condition, desirable area, fair price). They work poorly when the home needs strategic marketing or hands-on negotiation.
What the listing agent actually does for 2.5–3%
Services to expect:
- Pricing analysis and comparative market analysis
- Staging recommendations and (sometimes) staging furniture
- Professional photography and 3D tour
- MLS listing, syndication to Zillow/Realtor.com/Redfin
- Open houses and private showings
- Offer review, negotiation, and counteroffer strategy
- Inspection coordination and repair negotiation
- Escrow coordination, document management, closing attendance
A strong listing agent makes back their commission in the pricing and negotiation work alone. A weak one is overpaid at any percentage. Interview 3+ agents and ask to see their past 12 months of listings with list-to-sale ratio and days on market.
What the buyer's agent does
- Identifying homes that match your criteria and pricing
- Coordinating tours and disclosing property issues
- Drafting offers and advising on offer strategy
- Negotiating price, terms, and inspection-based repairs
- Coordinating inspections and vendor referrals
- Escrow shepherding and closing attendance
In the new environment, buyer's agents have to justify their fee more directly. Interview 2–3 before signing a buyer representation agreement. Ask about their typical offer-to-acceptance rate and how they structure compensation (flat fee, hourly, percentage).
For sale by owner (FSBO)
FSBO saves the listing-side commission (2.5–3%) but statistically produces a lower sale price. NAR data suggests FSBO homes sell for 8–12% less than agent-listed homes, net of commission saved. The gap closes when FSBO sellers are in hot markets, pricing aggressively, and willing to do the marketing and negotiation themselves.
FSBO + flat-fee MLS listing + hiring a real estate attorney for document review is often the best compromise: you save commission but get professional paperwork.
Related calculators
Pair this with our closing cost calculator for seller closing costs beyond commission, and the home equity calculator for estimating net proceeds at sale.