How Real Estate Agents Actually Get Paid

If you've ever bought or sold a home, you've probably noticed that the real estate agents involved get paid a substantial sum. Where does that money come from, and who decides how much they get? The answer is more layered than most people realize, and the rules changed in important ways in 2024.

Here's a plain-English breakdown of how the money flows.

Agents vs. Brokers: They're Not the Same Thing

Before talking about money, an important distinction: agents and brokers are not the same.

Every real estate agent works under a real estate broker. The broker is the licensed business entity that represents clients and handles transactions. The agent is the individual professional who shows you houses, negotiates on your behalf, and walks you through the process.

This distinction matters because all the money flows to the broker first. The principal — meaning the buyer or seller paying for representation — pays the broker, and the broker then pays the agent.

So when we talk about commissions, we're really talking about two layers: how the broker gets paid, and how the broker pays the agent. Let's start with the broker.

How Brokers Get Paid (And What the NAR Settlement Changed)

You may have heard about the National Association of Realtors (NAR) settlement, with new rules that took effect in August 2024. A lot of headlines at the time suggested that buyer's agents might get paid less — or even that the role of buyer's agent might disappear entirely. Some analysts predicted total commission costs would compress from the typical 5–6% down to 3–4%. Others thought home prices would fall once commissions stopped getting baked into the sale price, or that many buyers would start going unrepresented because they couldn't afford to cover an agent's fee out of pocket. More than a year and a half later, almost none of that has played out. Commission rates have stayed roughly where they were, buyer's agents are still firmly part of the process, and home prices haven't moved because of the rule change. What actually changed was narrower: not the amounts, but the flow of money.

Who pays the commissions hasn't really changed. Sellers still typically pay both their own broker's commission and the buyer's broker's commission (often abbreviated BBC). What did change is how that money flows from seller to brokers.

Before the settlement: When a homeowner listed their property, they signed an agreement with their broker for one combined commission — usually 4% to 6% of the sale price. That single check went to the seller's broker, who would then decide how much to share with the buyer's broker as an incentive to bring buyers to the property. The customary share offered to the buyer's broker was 2% to 3%.

The lawsuit that led to the settlement — Sitzer-Burnett, decided in October 2023 — argued that this system was structurally anticompetitive. NAR rules effectively required sellers who wanted to list on the Multiple Listing Service (MLS, the dominant marketplace for home listings) to offer compensation to the buyer's broker, with the listing broker controlling how much was offered. Plaintiffs argued this kept buyer-broker commissions artificially uniform around 2.5–3% nationwide and gave sellers little real ability to negotiate them down. A federal jury agreed.

After the settlement: The seller still pays both sides. But now the seller typically signs an agreement with their broker for only the seller-broker commission — usually 2% to 3%. When offers come in from buyers, each offer specifies a separate amount the buyer is asking the seller to pay toward the buyer's broker, again typically 2% to 3%.

The dollar amounts often look identical to what they used to. The structural difference is that the seller now pays the buyer's broker directly and has a say in negotiating that figure on a per-offer basis.

Why Buyers Ask the Seller to Pay Their Broker

This is the part of the new system most people misunderstand. Why would a buyer ask the seller to pay their broker?

The reason is regulatory. By law, a buyer's broker cannot work with a buyer — or even show them a house — until they have a signed agreement specifying what the broker will be paid if a purchase happens. That fee is usually 2% to 3% of the eventual purchase price.

So when the buyer makes an offer on a home, they typically request that the seller cover the full amount of that pre-agreed broker fee. The buyer would rather have the seller absorb the cost — and most of the time, sellers do, because it's still cheaper than losing the deal.

When the Numbers Don't Line Up

Things get more complicated when the seller isn't willing to pay as much as the buyer agreed to pay their broker.

Suppose a buyer signed an agreement to pay their broker 3%, but the seller is only willing to pay 2%. On a $500,000 home, that's a $5,000 gap. Where does it come from?

Technically, the buyer is on the hook for the difference. In practice, most buyer's brokers will accept the lower amount rather than make their client pay out of pocket — they'd rather close the deal at 2% than lose it. But not all brokers will. Some will hold the buyer to the original 3%.

When that happens, there are a couple of options. The buyer can simply pay the broker the extra 1% in cash at closing. Or the buyer and seller can agree to bump the purchase price up so the seller can cover the full 3% out of the higher sale proceeds — in effect folding the broker's fee into the home loan.

Either way, the structural takeaway is the same: when the numbers don't match, the buyer is the one ultimately covering the gap, even if it's hidden inside a higher purchase price.

How Agents Get Paid

The agent side is simpler.

Once the broker collects the commission from the sale, they pay the agent according to the contract between the two of them. These splits vary widely.

Some agents are on a 50/50 split with their broker. Some pay their broker a small flat fee per transaction — for example, $450 to cover the broker's oversight and errors-and-omissions insurance — and keep everything else.

The agent never gets paid directly by the buyer or seller. The money always flows in one direction: buyer → seller → brokers → agents — with most of the buyer's funds typically coming from a mortgage lender.

So Who Really Pays?

Zooming out, here's the honest summary.

On paper, real estate agents are paid by sellers. In rare cases, part of the buyer's agent's payment comes directly out of the buyer's pocket — specifically, when the seller won't cover the full amount the buyer agreed to.

Indirectly, though, both sides are paying. If commissions disappeared tomorrow, sellers would likely accept lower offers, and buyers would pay less for the same houses. The commission is baked into the price.

The clearest way to think about it: the buyer is paying for everything bundled into the home — including the commissions — and the seller is deciding how much of that money to give away to brokers and agents.

Finding the Right Agent

Once you understand how the money works, the next question is who you actually want representing you. A good agent more than earns their commission by negotiating better terms, catching problems early, and steering you away from bad deals. A bad one can cost you far more than they ever charge.

If you're looking for a vetted agent matched to what you actually need, that's exactly what we built SLC Agent Match for. We make the introduction; you get someone who's a fit.