How Do Real Estate Agents Get Paid?

Key takeaways

• Agents are paid through a negotiated commission agreed to in writing.
• Rates and payment structures vary by market, brokerage, and services.
• Buyers and sellers now have more flexibility in deciding how agent compensation is arranged.

Buying or selling a home often raises one big question: how do real estate agents get paid? Many people assume agents charge a flat fee or are paid directly by their clients, but in reality, real estate commissions are fully negotiable. The exact fee depends on several factors,  such as the market, the brokerage, and what’s agreed to in writing between the parties.

Whether you’re buying a house in Houston, TX, or looking at homes in Chicago, IL, understanding how real estate commissions work can help you make informed decisions when choosing an agent or negotiating an offer. In this Redfin guide, we’ll explain how real estate agents are paid, how commission splits work between agents and brokerages, and what to expect during the homebuying or selling process.

Who pays the real estate agent?

It depends on what’s negotiated between the buyer, seller, and their agents. Historically, real estate agent commissions were often paid from the seller’s proceeds at closing and split between both agents. Following the August 2024 NAR settlement, offers of buyer-agent compensation can no longer be made through the MLS. Sellers can still choose to offer compensation, but those agreements should be handled directly between the parties.

Today, there are several ways an agent’s compensation can be structured, depending on what’s agreed to in writing:

• Seller-paid commission: The seller may choose to pay their listing agent’s commission and may also offer compensation to the buyer’s agent, but this must be clearly disclosed and documented in the listing agreement.
• Buyer-paid commission: The buyer may agree to pay their agent directly, either as part of their closing costs or through a separate buyer-broker agreement.
• Negotiated arrangements: Buyers and sellers can agree to share or structure compensation differently,  as long as the details are negotiated, disclosed, and documented in writing before representation begins.

Both buyers and sellers must now have written agreements with their agents outlining how compensation will be handled before touring homes or listing a property.

Key takeaway: Real estate agent compensation is fully negotiable. The payment structure should be agreed upon early and put in writing so everyone understands how and when each agent will be paid.

Are buyers now responsible for paying their agent?

Not necessarily. Under the 2024 NAR settlement, buyers generally must sign a written agreement with their agent that clearly defines how much the agent will be compensated. Buyers can still ask the seller to cover their agent’s fee when they submit an offer to purchase a home. That payment becomes part of the overall negotiation between the buyer and seller. 

Sellers can still choose to cover the buyer’s agent commission, but those offers can no longer be listed on the MLS and should instead be handled directly between the parties in writing.

How is the real estate agent commission rate decided?

There’s no standard or fixed rate for a real estate agent commission. Compensation is fully negotiable and can vary based on factors like the local market, property type, and the level of service provided.

Some brokerages, such as Redfin, charge a percentage-based commission, while others offer flat-fee or charge hourly based on the services provided. Whatever the structure, the commission agreement must be discussed, agreed upon, and documented in writing before any representation begins.

How does a real estate agent earn commission?

Real estate agents earn commission by guiding clients through a home sale or purchase. They handle complex negotiations, legal paperwork, and deadlines to ensure a smooth closing. 

Seller’s agents earn their commission by helping home sellers:

• Research comparable home sales to set a competitive price.
• Recommend home improvements and connect sellers with service providers.
• Develop a pricing and marketing strategy to attract buyers.
• List the home on the MLS and promote it across platforms.
• Review, present, and negotiate offers to secure the best deal.

Buyer’s agents earn their commission by helping prospective home buyers:

• Search for homes that fit their needs and budget.
• Tour properties and provide local market insights.
• Write and negotiate offers that strengthen the buyer’s position.
• Coordinate inspections, appraisals, and closing tasks to keep the process on track.

How real estate commissions are divided and how much agents earn

After a home sale closes, each agent’s agreed-upon commission is paid to their respective brokerage, which then compensates the agent according to their individual agreement. Because agents must work under a licensed brokerage, typically the brokerage receives the payment first before splitting it with the agent. 

How agent earnings vary

An agent’s income depends on several key factors. The commission earned on a transaction is often based on the home’s sale price and the negotiated commission rate. Additionally, once the commission is paid by the buyer or seller, it may be further divided between the agent and their own sponsoring brokerage.  .

According to the NAR 2025 Member Profile, the median gross income for REALTORS® was $58,100 in 2024, remaining relatively steady even as the market slowed. Income levels vary widely depending on experience, transaction volume, and local market conditions.

When and how do real estate agents get paid?

Real estate agents are typically paid after a home sale closes, once the transaction is complete and all terms outlined in the agreements have been met. 

Here’s how the process generally works:

1. Offer accepted

Once the buyer and seller agree on price and terms, the property goes under contract. The commission rate and payment structure are documented in the listing agreement or buyer-broker agreement.

2. Escrow period

During escrow, the buyer’s payment, whether from financing, cash, or both, is held by the title or escrow company. The agent coordinates inspections, appraisals, and paperwork to help keep the real estate transaction on track.

3. Closing day

On closing day, the title or escrow company releases the agreed-upon commission funds from the sale proceeds. Each brokerage receives its portion based on the transaction documents and then compensates the agent according to their broker-agent split (for example, a brokerage may let an agent keep 70% of the commission and the brokerage will keep 30%.

4. Payment transfer

Once funds are disbursed, they are transferred to the respective brokerages and agents according to the written terms. Timing can vary slightly by state or title company, but funds are often processed promptly upon closing.

5. Special cases

In dual-agency transactions or cases where only one side has an agent, the total commission may differ based on what’s negotiated and disclosed in writing.

Key takeaway: Agents are paid after closing, but the amount and source of payment depend entirely on the negotiated terms outlined in the parties’ agreements.

How Redfin agents are paid

Redfin’s business model differs from many traditional brokerages. Like other agents, Redfin agents earn competitive commission splits for helping customers buy and sell homes. But since Redfin agents are employees instead of independent contractors, they also receive employee benefits, support, and the chance to meet new customers from Redfin.com.

This structure provides agents with everything they need to run their business  and covers certain business expenses, such as marketing, listing costs, and mileage. The goal is to allow agents to focus on what they do best: helping clients buy and sell homes.

Redfin also employs technology and support staff to assist with scheduling, lead management, and transaction coordination. These tools help streamline the process for both agents and clients.

How do real estate agents get paid FAQs

1. Do real estate agents get paid upfront or after closing?

Agents are paid after closing, once the home sale is complete. The title company releases the commission funds, which are then split between the brokerages and agents involved.

2. Who pays the real estate agent, the buyer or the seller?

It depends on what’s negotiated in writing. Historically, the seller’s proceeds often covered both agents’ commissions, but buyers and sellers can now decide how each agent is compensated. 

3. Are real estate commissions negotiable?

Yes. Real estate commissions are always negotiable. Rates vary by market, property type, and the level of service an agent provides.

4. Can buyers pay their agent’s commission directly?

Buyers can negotiate and pay their agent’s fee directly as part of their closing costs or through a separate agreement.

5. How do real estate agents get paid if a deal falls through?

If a home doesn’t close, agents generally don’t get paid. Commissions are typically only earned once a transaction is finalized.

6. Can sellers still offer to pay the buyer’s agent commission?

Yes. Sellers can still choose to compensate the buyer’s agent, but those offers can’t be displayed on the MLS—they must be handled directly between parties.

7. Do I have to pay a real estate agent commission at all?

No. You’re not required to use an agent when buying or selling, but hiring an agent can help with pricing, marketing, negotiations, and closing paperwork.

8. What do closing costs include?

Closing costs cover fees for loan processing, title work, appraisals, taxes, and insurance. They’re separate from commission fees and typically total 2%–7% of the home’s purchase price.

9. How can I find out exactly what I’ll owe in commissions and fees?

All commission and fee details should be outlined in your listing or buyer’s agreement. Review the contract before signing and ask your agent to explain each charge.