How Much Does It Cost to Hire a Realtor to Buy or Sell a Home?

June 8, 2026 · Khaki Realtor

One of the first questions people ask when they start thinking about buying or selling a home is a simple one: what is this going to cost me? Realtor compensation is a topic that comes up early in the process, and it's worth understanding clearly before you sign anything or make any decisions. As part of our complete guide on what a realtor actually does, this post takes a focused look at how realtor fees work, who pays them, how recent industry changes have affected the process, and whether professional representation is genuinely worth the cost. The short answer is yes — but understanding why requires a closer look at what you're actually getting for that fee.

How Realtor Commission Is Structured

Realtor compensation is almost always commission-based, meaning agents are paid a percentage of the home's final sale price at closing rather than charging an upfront fee. Traditionally, the total commission has ranged from 5% to 6% of the sale price, though this varies by market, property type, and negotiation.

On a $350,000 home, a 5.5% commission would equal $19,250. That might sound like a significant sum — and it is — but it's important to understand what that number represents before drawing any conclusions about its value.

How the Commission Is Split

That total commission is typically divided between two parties:

The listing agent — the realtor representing the seller
The buyer's agent — the realtor representing the buyer

Each agent also works under a brokerage, and part of their individual commission share goes to that brokerage. So when you hear "5% to 6%," that number is being divided multiple ways before any single agent sees their portion of it.

Who Traditionally Pays the Commission?

Historically, the seller has paid the entire commission out of the proceeds from the sale. This made sense logistically — the money is coming in at closing, the agents are paid from that pool, and the buyer never writes a separate check for agent services. This structure has been standard practice in residential real estate for decades, though recent changes have started to shift things in meaningful ways.

What Changed in 2024: The NAR Settlement and Buyer Agent Agreements

In 2024, the National Association of Realtors (NAR) reached a landmark settlement that brought significant changes to how buyer agent compensation works. If you've heard rumblings about this and aren't sure what it means for you, here's a plain-language breakdown.

The Key Changes

Before the settlement, sellers were typically required to offer buyer agent compensation through the Multiple Listing Service (MLS). This practice was challenged in a major antitrust lawsuit, and the resulting settlement eliminated that requirement. The two most important practical changes are:

MLS compensation offers to buyer agents are no longer permitted. Sellers are no longer required to advertise a commission for the buyer's agent through the MLS.
Buyers must sign a written agreement with their agent before touring homes. This buyer representation agreement outlines the agent's compensation expectations upfront so there are no surprises.

What This Means in Practice

This doesn't mean buyers are suddenly on the hook for thousands of dollars in fees out of pocket. In many transactions, sellers are still choosing to offer buyer agent compensation as a way to attract more buyers and facilitate smoother deals. What's changed is that this is now negotiated more openly and transparently rather than being baked into a system where buyers rarely saw or questioned it.

For buyers, the key takeaway is this: before you start touring homes with an agent, you'll sign a buyer representation agreement. That agreement will spell out what compensation your agent expects, how it will be paid, and what services you're receiving in return. If a seller isn't covering that fee, there are scenarios where it may be negotiated into the purchase offer or covered through other means. Your agent should walk you through all of this clearly before you begin.

Understanding the difference between the person working on your behalf and the person working for the seller is essential here — you can learn more about those distinct roles in our post on buyer's agent vs listing agent relationships.

What Services Are Included in the Commission?

A common misconception is that a realtor's commission is payment for showing homes or listing a property on the MLS. In reality, that fee covers a comprehensive range of services — many of which happen behind the scenes and long before (or after) the moment you hand over keys.

What a Listing Agent Does for Sellers

Conducts a comparative market analysis to determine accurate pricing
Advises on staging, repairs, and presentation to maximize value
Arranges professional photography and marketing materials
Lists the property on the MLS and syndicates to buyer-facing platforms
Manages showings, open houses, and agent feedback
Reviews and negotiates offers on the seller's behalf
Coordinates inspections, appraisals, and contingency timelines
Guides the transaction from contract to closing

What a Buyer's Agent Does for Buyers

Helps clarify the buyer's needs, budget, and priorities
Searches and identifies properties that match the buyer's criteria
Schedules and accompanies showings
Provides neighborhood and market context that online listings can't offer
Prepares and submits competitive offers
Negotiates price, repairs, and terms after inspection
Coordinates with lenders, title companies, and closing attorneys
Helps the buyer navigate contingencies and avoid costly missteps

When you look at the full scope of what's involved, the commission begins to look less like a transaction fee and more like a retainer for professional guidance through one of the largest financial decisions most people ever make.

Are Realtor Fees Negotiable?

Yes — commission rates are negotiable, and they always have been. There is no fixed, mandated percentage that every agent charges. Rates can vary based on the price of the home, the complexity of the transaction, local market norms, and the specific services being provided.

That said, negotiating purely on price without considering the full picture can sometimes work against you. An agent who agrees to a deeply discounted commission may also be reducing the resources they put toward marketing, negotiation, and transaction management. In a market where pricing strategy and offer negotiation can easily affect the final number by tens of thousands of dollars, the difference between a skilled agent and a less experienced one often far outweighs the difference in commission rates.

Flat-Fee and Discount Models

There are also flat-fee listing services and discount brokerages that offer reduced rates in exchange for a more limited scope of services. For some sellers — particularly those with experience in real estate transactions and the time to manage parts of the process themselves — these can be a reasonable option. For most buyers and sellers, especially those navigating the process for the first time, the full-service model tends to provide more value and peace of mind than the savings might suggest.

Does Professional Representation Actually Pay for Itself?

This is the heart of the question for most people, and the honest answer is: in most cases, yes.

For sellers, a well-prepared listing priced accurately and marketed strategically tends to sell faster and closer to — or above — asking price. An agent who negotiates effectively, manages competing offers well, and keeps the transaction from falling apart through the inspection period is actively protecting your financial outcome. Homes listed without professional representation often sell for less than comparable agent-represented listings, and the gap frequently exceeds what was saved on commission.

For buyers, having an agent who understands local pricing, flags red flags in disclosures, negotiates repair credits after inspection, and helps you avoid overpaying in a competitive market is genuinely valuable. Buyers working without representation may feel like they're saving money upfront, but they're also navigating one of the most complex financial transactions of their lives without a professional advocate in their corner.

If you're preparing to buy a home, our upcoming guide on what to expect when working with a realtor as a buyer walks through exactly how that representation plays out from your first conversation through closing day. And if you're considering selling, our guide on what to expect when working with a realtor as a seller covers how a listing agent manages the full process on your behalf.

A Note on Closing Costs vs. Commission

It's worth clarifying that realtor commission is separate from closing costs, though both are paid at settlement. Closing costs typically include things like loan origination fees, title insurance, escrow fees, property taxes, and prepaid homeowner's insurance. Buyers generally pay between 2% and 5% of the loan amount in closing costs, while sellers cover the commission and any other agreed-upon concessions from their proceeds.

Understanding the difference between these two categories helps avoid surprises on your closing disclosure. Your agent and your lender should both provide you with detailed estimates well before closing day so you know exactly what to expect.

Final Thoughts

Understanding how realtor fees work — and what you're getting in exchange for them — puts you in a much stronger position as a buyer or seller. The cost of professional representation is real, but so is the value it delivers through pricing strategy, negotiation skill, and transaction management. With the 2024 NAR settlement reshaping how buyer agent compensation is handled, transparency around these fees has actually improved. You'll know more upfront than buyers and sellers did even a few years ago.

If you'd like to talk through how commission works in our local market and what you can expect when we work together, reach out anytime. There's never any pressure — just honest answers to help you make the right decision for your situation.

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