Commission
A real estate commission is the fee a brokerage is paid for its work on a sale, usually a percentage of the price. Since August 2024, what each side's agent is paid is negotiated in writing rather than assumed.
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Where this comes up in a sale, and what follows
Part 1 of 5
Why a seller cares
The commission is the largest cost of most sales, and since 2024 it is negotiated on both sides rather than assumed. What you pay your own agent is in the listing agreement; what you pay the buyer's is in the offer.
Part 2 of 5
A simple example
A $300,000 sale. Your listing agreement sets 2.5% for your agent, and the buyer's offer asks for 2.5% toward theirs.
| The piece | Where it is set, and roughly what |
|---|---|
| Your agent's fee | The listing agreement; $7,500 at 2.5% |
| The buyer's agent's fee | The offer; $7,500 if you agree to 2.5% |
| Neither, in a FSBO sale to an unrepresented buyer | Nothing |
Two fees, two documents, both negotiable before they are signed.
Part 3 of 5
What people get wrong
That six percent is the rate. There is no rate; there is what you agree to, on each side, in writing.
Part 4 of 5
Common questions
What is a real estate commission?
It is the fee a brokerage is paid for its work on a sale, usually a percentage of the price. It is commonly paid at closing, out of the sale proceeds.
Is 6% the standard real estate commission?
There is no standard rate. Each fee is what the seller and each agent agree to in writing, and every one of them is negotiable before it is signed.
Who pays the buyer's agent?
Since August 2024 it is settled sale by sale. The buyer agrees their agent's pay in writing, and an offer may ask the seller to cover some or all of it.
Is this the same as the state real estate commission?
No. The state real estate commission is the government body that licenses agents and publishes forms. The commission here is a fee.
Part 5 of 5 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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