What Is the Standard Realtor Commission?
If you’re thinking about buying or selling your home, news of potential REALTOR® commission changes after the NAR lawsuit settlement may have left you uncertain of what you’ll have to pay. As a trusted real estate training provider, we have insight that can help. If you’re considering a career in real estate, you can also explore our real estate license course for a flexible path into the industry.
In this guide, we’ll explain the basics of commissions, how they’re calculated, how the NAR settlement has changed things, how average commission rates have shifted over time, and what agents really take home.
Real Estate Agent vs. REALTOR®
Before diving into commissions, it helps to understand the difference between a real estate agent and a REALTOR®:
- Real Estate Agent: A licensed professional who helps clients buy and sell property.
- REALTOR®: A real estate agent who is also a member of the National Association of REALTORS® (NAR) and agrees to follow its strict code of ethics.
While the core duties are similar, REALTORS® may be perceived as having additional professional credibility because of NAR’s ethics standards, research resources, and policy influence.
NAR is also important because its policies, and the recent lawsuit settlement, have historically shaped both real estate regulations and industry norms.
What Is a Real Estate Commission?
A real estate commission is a percentage of the property sale price paid to the real estate agent (or agents) involved in the deal.
Commissions make up the lion’s share, if not the entirety, of the typical real estate agent salary. While some real estate agents’ compensation may include a regular salary or hourly pay, most do not get paid until they close a deal. This compensation structure is one of the things new real estate agents struggle with the most.
This is especially true because most new agents are under the mistaken impression that they’ll get to take home the entire commission. Unfortunately, that’s not how it works.
How Does Commission Work for Real Estate Agents?
First, commissions aren’t paid until a real estate transaction is successfully completed. No matter how close a real estate agent might get to closing a deal, they’ll receive no pay until the sale is finalized.
Second, the exact commission for a deal will depend on the percentage negotiated by the seller and their agent on the listing agreement, as well as the negotiated sale price of the property.
There is no standard universal commission; trying to impose one would violate federal antitrust laws.
Finally, when the commission is paid, the total is split between two to four parties, depending on whether a buyer’s agent is involved.
The Question of Dual Agency
When a real estate agent represents both the buyer and the seller in a deal, it’s called a dual agency transaction. Dual agency is controversial because real estate agents are supposed to represent their clients’ interests and, by the nature of a real estate transaction, some of the buyers’ and sellers’ interests will clash.
Dual agency deals are legal in most states, though some require clients to sign a waiver acknowledging the conflict of interest. In eight states, dual agency is outright illegal, and a separate buyer’s agent must be involved.
State Rules on Dual Agency
| Status | Details |
|---|---|
| Legal (most states) | Often requires written disclosure from clients |
| Illegal (8 states) | Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, Vermont, and Wyoming require a separate buyer’s agent |
| Allowed with caution | Considered a conflict of interest by many professionals |
When a buyer’s agent is involved, the commission must be split, becoming another point of negotiation.
Real Estate Agent Commission Split Explained
Real estate agents, both buyer and seller, typically work under the guidance of a broker, who takes part of their commission to cover business overhead. The brokerage usually sets the agent–broker commission split in the employment contract.
Agent–Broker Compensation Arrangements
Commission splits vary widely by brokerage. Common structures include:
Percentage Splits
- 50/50
- 60/40
- 70/30
- 80/20
More experienced agents often earn more favorable splits.
Capped Commission Plans
Agents pay the brokerage a set amount each year (the “cap”). After reaching it, they may keep up to 100% of their commissions for the remainder of the year.
Flat-Fee Brokerages
Agents pay a flat fee per transaction (for example, $500) instead of a percentage. This model is growing in popularity due to the rise of virtual brokerages.
Hybrid Models
- Small flat fees
- Partial percentage splits
- Monthly membership fees
These newer models offer flexibility, especially for part-time or high-volume agents.
Example: A Real Estate Transaction and Commission Payout
Home Sale Price: $400,000
Total Negotiated Commission: 5.5%
Total Commission Amount: $22,000
Step 1: Split Between Listing & Buyer’s Brokerages
- Listing brokerage: $11,000
- Buyer’s brokerage: $11,000
Step 2: Agent–Broker Commission Splits
- 50/50
- 60/40
- 70/30
- 80/20
- Capped plans
- Flat-fee brokerage models
If the listing agent is on a 70/30 split, they receive $7,700, while the brokerage keeps $3,300.
If the buyer’s agent has a 60/40 split, the agent takes home $6,600 and the brokerage keeps $4,400.
Final Takeaway
Even though the total commission is $22,000, each agent may only take home between $6,000 and $8,000 after splits.
What Are the REALTOR® Commission Changes After NAR Lawsuits?
NAR settled antitrust lawsuits in May 2024, with new rules taking effect in August 2024. The settlement mainly affects buyer contracts and how commissions are offered.
- No more commission offers in the MLS
- Commission splits must be negotiated directly
- Sellers are no longer required to pay buyer’s agent commissions
While the rules technically apply only to REALTORS®, they are shaping practices across much of the industry.
What Is the Average REALTOR® Commission in 2025?
As of August 2025, the national average real estate commission is 5.57%.
How Can I Become a Real Estate Agent?
- Complete your state’s pre-license education.
- Pass your state’s real estate exam.
- Pass a background check.
- Apply for your real estate license.
When you choose us as your pre-license training provider, you get flexible online coursework, a trusted name in the industry, and a self-paced curriculum that fits your schedule.
Browse our catalog and enroll today to begin your real estate career!
