Real estate agent commissions typically total 5-6% of the sale price, split between the listing agent and buyer's agent. On a $300,000 home, that works out to $15,000-$18,000 in total commission. The good news is that commissions are fully negotiable, and the structure has changed following the NAR settlement.
Standard Commission Structure
In a traditional transaction, the seller pays the total commission at closing, typically 5-6% of the sale price. This amount is divided between the listing agent (who represents you) and the buyer's agent (who brings the buyer). Each agent then splits their portion with their brokerage. The seller's proceeds are reduced by the total commission at closing.
For example, on a $350,000 sale at 6% commission, the total commission is $21,000. The listing agent and buyer's agent each receive roughly $10,500 before their brokerage split. The seller nets $329,000 before other closing costs, taxes, and mortgage payoff.
What Is Negotiable?
Everything is negotiable. Commission rates are not set by law or by any real estate board. You can negotiate the total commission percentage, what you offer to the buyer's agent, and what services are included. Some agents charge a flat fee instead of a percentage. Discount brokers may offer lower rates with fewer services. Interview multiple agents and compare their commission structures and service packages before signing a listing agreement.
Following the NAR settlement, buyer agent compensation is no longer advertised on the MLS, which has changed how commissions are negotiated. Sellers can still choose to offer buyer agent compensation, but it must be negotiated directly rather than set through MLS rules.
FSBO: No Commission but More Work
Selling For Sale By Owner (FSBO) means you pay no listing agent commission, potentially saving 2.5-3% of the sale price. However, you still typically need to offer compensation to the buyer's agent (2-3%) to attract buyers represented by agents. You also handle all marketing, showings, negotiations, paperwork, and legal compliance yourself. Many FSBO sellers eventually list with an agent after realizing the complexity involved.
As a dual-licensed loan officer and realtor, I have seen both sides of many transactions. The value of professional representation goes beyond just the commission rate. A good agent can help you net more through better pricing, negotiation, and marketing than the commission costs.
