Real Estate Agent Commission Explained: Who Pays and How Much in 2025

What Changed in 2025

The March 2024 National Association of Realtors (NAR) settlement reshaped how real estate commissions work in the United States. Starting August 17, 2024, buyers must sign a written buyer representation agreement before touring homes, and buyer agent commissions are no longer displayed in MLS listings.

This means commissions are now fully negotiable, transparent, and documented upfront — a major shift from the old "5-6% split between listing and buyer agent" model.

How Much Is Real Estate Commission in 2025

The national average real estate commission is now 5.32%, down from 5.95% in 2019. But this varies dramatically by market:

• West Coast (CA, WA, OR): 4.5-5.0% average
• Northeast (NY, MA, NJ): 5.0-5.5% average
• Sun Belt (FL, TX, AZ): 5.5-6.0% average
• Midwest (OH, MI, IL): 5.5-6.5% average

Who Pays the Commission

Historically, the seller paid both the listing agent and the buyer's agent commission from the sale proceeds. In 2025:

• Seller pays their listing agent (typically 2.5-3.0%)
• Buyer pays their agent (typically 2.0-3.0%) — but this can be negotiated into the offer

Buyers can request that the seller cover their agent commission as a concession in the purchase agreement. Many sellers agree to this to close the deal, especially in buyer's markets.

How to Negotiate Lower Commission

1. Interview Multiple Agents

Don't accept the first agent you talk to. Interview 3-4 agents and ask each:

• What is your standard commission rate?
• What services are included?
• Can you offer a lower rate for a 90-day exclusive listing?

2. Use a Flat-Fee MLS Service

If you're willing to handle showings and negotiations yourself, flat-fee MLS services list your home on the MLS for $299-999 (vs. 3% listing commission). However, you'll likely still pay the buyer agent commission.

3. Bundle Your Transactions

If you're selling and buying with the same agent, ask for a 0.5-1.0% discount on the listing side. Agents love repeat clients and will often cut commission for a guaranteed double dip.

4. Offer a Bonus for Fast Sale

Instead of negotiating commission down, offer a bonus: "Full 3% listing commission if you sell within 30 days; 2.5% if it takes longer." This aligns incentives.

5. Use AI Tools to Reduce Workload

Tools like LeadHunting AI handle lead qualification, follow-up, and CRM automation — reducing the hours your agent spends on busywork. This can justify a lower commission rate.

Red Flags to Avoid

• Agents who refuse to put commission in writing — required by 2024 NAR settlement
• "Discount" agents with hidden fees (marketing, photography, staging)
• Agents who demand 6-month exclusive contracts with no exit clause
• Buyer agents who won't show you homes because of low commission (illegal post-settlement)

Sample Commission Calculation

For a $500,000 home sale with 5% total commission:

• Listing agent: $7,500 (1.5%)
• Buyer agent: $7,500 (1.5%)
• Brokerage split: Agent keeps 60-80% ($4,500-$6,000)
• Marketing + overhead: $1,500-$2,500
• Agent's net take-home: $2,000-$4,000

This is why agents are selective about which clients they take on.

Key Takeaways

• The 2024 NAR settlement made commissions fully negotiable and transparent
• Average US commission in 2025 is 5.32%, down from 5.95% in 2019
• Sellers pay their listing agent; buyers pay their agent (but can negotiate seller concessions)
• Interview 3+ agents and ask for written commission breakdown
• AI tools like LeadHunting AI reduce agent workload, justifying lower rates