How do real estate agents get paid?

Key takeaways

• Buyers and sellers generally pay their own agents unless the seller agrees to cover the buyer’s agent fee.
• Commissions typically go first to brokers and are then divided between the buyer’s and listing sides, with agents receiving a share after brokerage splits.
• Earnings depend on factors such as home prices, market conditions, experience and location.

Real estate agents are licensed professionals who help buyers and sellers navigate property transactions. They are typically paid through commissions, which are calculated as a percentage of a home’s sale price.

A real estate commission is negotiated between an agent and either the buyer or the seller. Historically, sellers often paid the entire commission, usually 5% to 6% of the home’s sale price.

That structure changed following a recent National Association of Realtors, or NAR, settlement. Under the new rules, buyers and sellers are responsible for paying their own agents unless a seller agrees to cover the buyer’s agent fee as well.

“The NAR settlement has made commission fees clearer, so buyers can now be pickier about what they’re willing to pay,” said Yancy Forsythe, owner of Missouri Valley Homes.

After a transaction closes, commission payments typically go to the brokers first. Those fees are usually split four ways:

• The buyer’s agent
• The buyer’s broker
• The listing agent
• The listing broker

Some brokerages offer agents a salary or a base salary plus commission, but that model remains uncommon.

Commission rates vary by transaction, but here’s an example assuming a traditional 50-50 split.

A 6% commission on a $450,000 home sale totals $27,000. That amount is split evenly, with 3% going to the listing broker and 3% to the buyer’s broker — or $13,500 each.

Each broker then typically splits its share with the agent. In this scenario:

• The broker receives 1.5%
• The agent receives the remaining 1.5%

That means each agent earns $6,750 from the transaction.

Several factors affect how much real estate agents earn, including:

• Property value: Because commissions are based on a percentage of the sale price, higher-priced homes generally generate higher earnings.
• Repeat business: Some agents may adjust commission rates for repeat clients, though this isn’t guaranteed.
• Market conditions: In a seller’s market with strong demand and limited homes for sale, listing commissions may decline if homes sell quickly with minimal effort.
• Services provided: Agents who offer additional services, such as home staging, may charge higher commissions.
• Unique properties: Homes that require more time, marketing or specialized knowledge may come with higher fees.
• Experience and reputation: Agents with long track records and strong reputations may command higher commissions.
• Brokerage fees: Agents typically pay fees to their brokerages, which can influence how they structure commissions.

According to NAR, agent income varies based on factors such as brokerage splits, housing market conditions and competition. In 2024, the median gross income for real estate agents was $58,100, up from $55,800 in 2023.

“Real estate agents can make anywhere from $40,000 to over $100,000 a year, depending on how many houses they sell and how much experience they have,” Forsythe said.

Location also plays a role. NAR notes that agents in New York earn the highest average income.

Many agents supplement their income through related side businesses, including:

• Property staging
• Real estate photography

Others earn money through real estate investments or by transitioning into property management.
Referrals are another income stream. When an agent refers a buyer or seller to another agent, the referring agent may earn a referral fee if the deal closes.

Some agents also pursue additional licenses, allowing them to work as home appraisers or mortgage loan originators, professionals who help negotiate loan terms for buyers.

This story was updated April 23.