Realtor fees are the commissions paid to licensed agents for helping you buy or sell a home, and they currently average around 5% to 6% of the sale price nationally. For decades the seller paid the full amount out of closing proceeds, covering both their own agent and the buyer’s. That changed on August 17, 2024. Under rules from a National Association of Realtors settlement, buyers now sign a written agreement setting their own agent’s compensation before touring any home, and sellers can no longer advertise what they will pay a buyer’s agent through the Multiple Listing Service. Who writes the check at closing is now part of the negotiation on every deal.
How Much Realtor Fees Run
Total commissions have long clustered in the 5% to 6% range, calculated as a percentage of the final sale price. Recent industry data puts the 2026 national average at approximately 5.7%, with listing agents averaging about 2.9% and buyer’s agents about 2.8%. On a $400,000 home, that works out to roughly $20,000 to $24,000 in total fees.
No federal or state law sets a minimum or maximum commission rate. Every commission is negotiable, and both the listing agreement you sign as a seller and the buyer representation agreement you sign as a buyer must disclose that fact in conspicuous language.
Who Pays Realtor Fees Now
Before August 2024, the seller almost always paid the full commission for both agents. The rate was locked in through the listing agreement, and the money came out of sale proceeds at closing. Sellers routinely built the cost into their asking price, so buyers effectively paid through a higher purchase price even though no commission check passed through their hands.
That default is gone. Sellers can still offer to pay the buyer’s agent, and many continue to do so because it keeps the buyer pool wide. But the offer is no longer visible on the MLS, and buyers now arrive with their own signed agreement spelling out what their agent must be paid. If the seller’s offer falls short, the buyer makes up the difference or negotiates another arrangement into the purchase contract.
What the NAR Settlement Changed in August 2024
Two rules from the settlement matter most for anyone buying or selling right now.1National Association of REALTORS®. National Association of REALTORS Reminds Members and Consumers of Real Estate Practice Change
First, listing agents can no longer advertise buyer-agent compensation through the MLS. Sellers may still offer it, but the offer has to be communicated and negotiated outside the MLS system.
Second, any agent working with a buyer must sign a written representation agreement before the first home tour, including live virtual tours. The agreement has to state the exact compensation the agent will receive, as a flat dollar amount or a specific percentage; vague or open-ended figures tied to whatever the seller happens to offer are not allowed.2National Association of REALTORS®. Written Buyer Agreements 101 The agreement must also cap the agent’s pay: your agent cannot accept compensation from any source that exceeds the amount in your contract. If a seller offers 3% and your agreement says 2.5%, your agent takes 2.5%.
What Buyers Should Expect at Closing
Under the new framework, buyers need to plan for the possibility of covering their own agent’s fee. In practice, three paths are common:
- Pay the agent directly at closing, in the amount agreed to in the buyer representation agreement.
- Ask the seller to cover the fee as a concession in the purchase offer. Sellers are free to agree, and buyers can request seller concessions for closing costs through the MLS even though compensation offers themselves cannot be posted there.3National Association of REALTORS®. Compensation, Commission and Concessions
- Finance the cost into the mortgage, if the home appraises high enough. This lowers out-of-pocket cash but raises the loan balance and the total interest paid.
Before signing a buyer agreement, read the cancellation terms. The contract binds you to the brokerage, not the individual agent, and the brokerage has no legal obligation to release you if you want out later. Look for an expiration date or a termination clause that allows written notice.
How the Commission Gets Split
When a seller pays the full commission, the money first divides between the listing brokerage and the buyer’s brokerage, often evenly, though the exact allocation depends on the listing agreement and, now, on what the buyer’s agent separately negotiated.
A second split happens inside each brokerage, between the agent and the firm. New agents often start at 50/50 or 60/40, with the brokerage taking the larger share. Experienced agents may keep 80% to 90% of their side. The brokerage’s cut covers overhead, insurance, training, and technology. On a $400,000 sale at 5.7% total, the listing brokerage receives roughly $11,400 before that internal split further divides the money.
Negotiating Your Rate
Most people accept the first rate an agent proposes. You don’t have to.
Interview at least three agents before signing anything. Ask what each one includes for the fee: professional photography, video tours, staging consultation, paid advertising. If one agent charges 2.5% and another 2% without photography, use the comparison in your conversation. Agents who want the listing often match a competitor’s rate or add marketing services.
The question itself is simple. “Would you consider working for a lower commission?” opens the door, and many agents have flexibility built into their standard rate. You can also offer to take on some of the work yourself, such as hosting your own open houses or supplying photography, in exchange for a reduced rate.
Don’t overlook administrative or transaction coordination fees. Many brokerages add these flat charges, which can range from a couple hundred dollars to nearly $2,000, on top of the commission. They are not required by law and are negotiable, but they’re easier to waive at the start than at the closing table.
Alternative Fee Structures
The traditional percentage-based commission is not the only option, and alternatives have become more visible since the settlement.
- Flat-fee MLS listings place your home on the MLS for a one-time charge, often a few hundred dollars. You handle showings, negotiations, and paperwork yourself, or buy add-on services like contract review.
- Low-commission brokerages offer full-service representation at reduced rates, often 1% to 1.5% on the listing side instead of the usual 2.5% to 3%. Service levels and marketing budgets may be lower.
- Flat-fee full service charges a set dollar amount regardless of sale price. On a high-value property, a few thousand dollars flat can save tens of thousands against a percentage.
Each model shifts work onto you in different amounts. The right fit depends on your experience with the process and the value of your time.
How Realtor Fees Affect Your Taxes
For sellers, commissions reduce the “amount realized” from the sale, which is the figure the IRS uses to calculate taxable gain. Sell for $400,000, pay $22,800 in commissions, and your amount realized is $377,200.4Internal Revenue Service. Publication 523, Selling Your Home
Most homeowners owe no capital gains tax at all. Federal law lets you exclude up to $250,000 of gain on the sale of a primary residence, or $500,000 for married couples filing jointly, if you owned and lived in the home for at least two of the five years before the sale.5Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence The commission deduction matters most when gains exceed those thresholds, as in high-appreciation markets or long-held properties.
For buyers, commissions you pay add to your cost basis in the home. A $10,000 fee paid to your agent raises your basis by $10,000, which reduces taxable gain whenever you eventually sell.4Internal Revenue Service. Publication 523, Selling Your Home
Dual Agency and Where to Push Back
Dual agency is when a single agent represents both buyer and seller in the same transaction. The brokerage keeps the full commission instead of splitting it. A handful of states ban or heavily restrict the practice; in most it’s legal with written consent from both parties.
If you find yourself in a dual-agency situation, ask for a commission reduction. The brokerage is earning double on one deal, and there is room in the number. The same reasoning applies when two agents from the same brokerage represent opposite sides, sometimes called designated agency: one company still collects the full fee.