What are REALTOR® fees and who pays them?

When buying or selling a home, it’s commonplace to work with a REALTOR^® or other licensed real estate agent. REALTORS^® are members of the National Association of REALTORS^® (NAR), the largest industry trade group. Whether formal members or not, it’s the job of all real estate agents to represent their client in a home sale.

But how do REALTOR^® fees work, and who’s responsible for them? This question is very timely because recent legal settlements are changing some long-standing assumptions.

What are REALTOR^® fees?

REALTOR^® fees are fees the real estate agent is paid in exchange for their representation of yourself for the rendering of certain services in your transaction. How the agent is paid depends on what you contract with them for and their fee structure.

Most commonly, people will hire a REALTOR^® to represent them throughout the entire transaction. In this case, they typically earn a  real estate commission when the sale closes. This is typically a percentage of the purchase price, but it could be a flat fee.

Alternatively, you could work out an à la carte agreement with your agent to pay them for performing specific services like a competitive market analysis, preparing a purchase agreement, or taking professional photos.

For the purposes of this article, we’ll use the terms “REALTOR^®” and “agent” interchangeably, as the designation does not alter the fee structure.

Who pays REALTOR^® fees?

Historically, REALTOR^® fees have been paid by the seller. Both the amount of the fees and who pays them have always been negotiable, but the seller paying was a common practice. As a result of multiple legal settlements related to real estate commissions, some practice changes have been instituted that we’ll get into below.

In some instances, sellers may choose to still offer compensation through their listing agent, hoping to attract a bigger pool of buyers. We should also state that as a seller, selling your home on your own (also known as for sale by owner or FSBO), you would only owe the buyer’s agent fees if you offered that compensation.

How do real estate commissions work?

Assuming both parties have representation in the home transaction, fees are owed to both agents regardless of who pays them. REALTOR^® fees are negotiated in advance and put in writing. Here’s how the new rules work:

• You must have a signed agreement with your agent that specifies the agent’s fee (flat rate, percentage of purchase price, hourly rate)
• What you’re paying the agent for (full-service or specific items)
• Term stating that the agent can’t receive compensation beyond what they’ve agreed to with you
• How long you need to exclusively work with that agent
• Statement that fees and commissions are completely negotiable and not set by law

Other changes include the fact that sellers can’t list an offer of buyer’s agent compensation on any multiple listing service (MLS), platforms that show all the publicly available home listings in an area. If the offer is made, it must be done individually with the potential buyer. You can list seller concessions for closing costs.

Finally, you have to have an agreement in place with an agent prior to going on in-person or live virtual home tours. This tour agreement requirement doesn’t apply to open houses.

Fees for listing and buyer’s agents don’t go strictly to them in most cases. They’re split with a real estate brokerage. A real estate broker helps the agents who work with them with issues related to licensing and compliance with the law. Brokerages also often help with marketing services and MLS access.

Are REALTOR^® fees included in closing costs?

REALTOR^® fees aren’t included in closing costs or listed on a closing disclosure for the buyer or seller. When an agent is paid depends on whether they represent the client through the entire process or just provide certain services. If it’s the latter, they would be paid by the buyer or seller at the negotiated rate when services are rendered.

If the agent represents you throughout the entire transaction, you would pay them at the close of the sale. The funds for the payment are given to the closing agent handling the settlement to be distributed to the real estate agents once the final paperwork is signed.

How much are REALTOR^® fees?

Every contract is different, but historically, fees of 5% to 6% are split between the agents when they’re representing you throughout the transaction. If you’re only paying for your own agent, the standard is 2.5% to 3%. Of course, historical standards only mean so much when the rules have changed, so let’s look at some recent data.

Our friends at Redfin^® did an analysis that shows the average commission for a buyer’s agent was 2.4% in Q1 2025. This is down from 2.43% at the time the settlement was announced. While this study only looked at buyer agents because those compensation rules changed, if they were split evenly, that means they averaged 4.8% total in commissions for the buyer’s and seller’s agents combined.

The median sale price in the U.S. was $447,054, according to Redfin data for June. Let’s round that up to $450,000 and take a look at what the commission would be at various rates if the commission was split between the listing agent and buyer’s agent.

Buyers and sellers might look to save some money through dual agency, having one agent represent both parties. Licensing requirements say that clients are always supposed to expect representation in their interests, but it’s often not possible to adequately represent two people. Some states don’t allow dual agency.

Can REALTOR^® fees be negotiated?

REALTOR® fees are absolutely negotiable for both the buyer and seller. You can negotiate not only the cost, but also what you need the agent to do on your behalf.  

Do REALTORS^® add value to sales transactions?

You may save money by representing yourself, but if the other party has a real estate agent, you could still end up paying part of that fee, depending on what’s negotiated. Moreover, there’s real evidence that having an expert in your corner can make a big difference.

Here are some key points, courtesy of the NAR:

• The average home sells for $55,000 more if you have a listing agent than if you sell yourself, based on 2023 data. It’s worth noting that part of this may be the family and friends discount, as that was a main reason for going FSBO.
• Homes listed by agents may sell faster. Owners who sold themselves reported one of the top difficulties as being able to sell within a given time frame.
• Buyer’s agents understand the full picture of the market and can help you find the right home with the features you want.
• Having someone in your corner as a buyer will help you find the unique things about the unique things about the market and the house that you can leverage to prevent overpaying.

Seller’s agents

Seller’s agents can help with all the following:

• Pricing appropriately by conducting a comparative market analysis to see what similar homes in your area are selling for.
• Evaluating the home for quick changes that can be made to improve marketability to potential buyers
• Giving advice on how to properly stage your home for both open houses and private showings
• Sourcing or taking professional photos
• Advising on offer selection
• Negotiating purchase agreements

Buyer’s agents

Buyer agents do the following for those looking to purchase homes:

• Together with a mortgage lender, advise clients on what to expect during the home buying process
• Advise on readiness given budgets
• Source potential homes
• Like the listing agent, use comparative market analysis to determine competitive offers
• Attending the home inspection to point out things the seller may need to fix or lower the price for
• Advise on other clauses that might be put in the offer for buyer protection
• Negotiate purchase agreement

Dual agency

As mentioned above, dual agents represent both sides in a home purchase. This makes it difficult for them to represent either side to the best of their ability. Where this is legal, dual agents must disclose to both sides the fact that they represent both parties.

One scenario in which this might make sense is if you are dealing with a sale between family or friends. All the details may be worked out and you may just need help to hammer out the paperwork.

Will I get a statement of costs from my agent?

Buyers and sellers will both negotiate an agreement with the real estate agents. That should specify a list of services the agent will provide, what the fee is, and when the agent gets paid. You should keep a copy of this contract for your records.

The bottom line: Professional service warrants professional fees

Both the fee for a real estate agent and who pays that agent are always negotiable. The fee is negotiated between the client and the agent, and payment may be negotiated between the client, agent, and seller. They can be paid on commission, flat fee, or à la carte for services.

Now that you know what to expect, find a real estate agent you can be confident in. Get started with our friends at Redfin.