Whether you are buying or selling, it’s important to understand how real estate

commissions work. It can be confusing, but it is also critical to the success of your

transaction. In this article, we’ll talk about who pays the real estate agent, and how

to negotiate commissions.

The short answer is that the seller pays the commission. Real estate commissions

are typically a percentage of the home’s sale price, and are paid to both the listing

agent and the buyer’s agent. Typically, the amount is negotiated between the

parties involved, and can be adjusted as needed. For example, if you are buying a

high-end home, it may make sense to pay a higher percentage to the buyer’s agent.

Likewise, if you are selling a low-priced home, you can negotiate a lower commission

to attract more buyers. Also read https://www.carolinashousebuyers.com/we-buy-houses-south-carolina/

Real estate agents are generally paid by the brokerage they work with, which is

usually owned by a real estate company or independent broker. The brokerage

usually pays their agents a base salary, and then the individual real estate agents

decide how much to charge for their services. As a result, the rates vary widely

between brokerages, and even within the same brokerage. For example, national

discount brokerage Redfin pays its real estate agents a salary instead of

commissions, while Realty ONE Group, which has over 400 franchise offices across

the country, offers standard commission rates of only 1%.


Unlike other types of employment, real estate is a highly-competitive industry that

requires hard work and specialized knowledge to thrive. Some real estate

professionals are very successful and earn large paychecks, while others struggle to

find their niche and eke out a living. Some may choose to specialize in a certain type

of property or market, while others might focus on marketing their skills and

experience to get more leads.


In order to succeed, real estate agents must be able to sell homes quickly and

efficiently. If they can’t meet those goals, their career will likely be short-lived. To

ensure they’re compensated for their time and effort, many agents rely on

commissions to get them through the year.


It’s worth mentioning that commissions are not included in closing costs, which are

an assortment of fees related to the mortgage, title insurance, appraisal, lender fees

and more. Closing costs can add up to 2%-5% of the home’s sale price.

As a seller, you can always ask your agent to credit some of the commission to your

closing costs. While this is not a common practice, it can be useful as a way to offset

some of the expenses associated with purchasing your new home.