Understanding how real estate commissions work allows buyers and sellers to move forward with clarity and confidence. While commissions are often referenced in passing, few people realize just how much strategy, expertise, and behind-the-scenes work are encompassed within that single line item.
This guide offers a thoughtful look at what commissions truly represent and the value they support throughout your transaction.
What Is a Real Estate Commission?
A real estate commission is the fee paid for professional representation in a real estate transaction. It is typically calculated as a percentage of the final sale price and is paid at closing.
That commission is most often shared between the listing agent and the buyer’s agent, ensuring that both sides of the transaction are represented by experienced professionals advocating for their clients’ best interests.
Who Pays the Commission?
Traditionally, the seller pays the full commission at closing from the sale proceeds, and the buyer does not write a separate check for agent representation. In many transactions today, that structure still applies.
With the new NAR settlement in 2024, commission structures have become more flexible, particularly in how a buyer’s agent is compensated. Rather than following a single standard model, compensation is now negotiated as part of each transaction.
In some cases, a seller may still choose to cover the entire buyer’s agent fee. In others, the seller may cover only a portion, with the buyer responsible for the remaining amount. That difference can be structured in several thoughtful ways.
One option is adjusting the purchase price so the seller pays the additional percentage to the buyer’s agent at closing, allowing the buyer to effectively roll that cost into their mortgage. In other scenarios, the buyer may pay a portion out of pocket, similar to other professional services, in exchange for dedicated representation and strategic advocacy.
While some buyers and sellers may initially focus on the exact percentage, the more meaningful metric is the net result.
For sellers, if a thoughtful strategy delivers the strongest possible net sale price, the difference between a 5% and 6% commission often becomes secondary. What matters most is what you walk away with after all terms are considered.
For buyers, contributing an additional portion toward representation can feel significant on paper. But if that structure positions you to win the home you truly want, secure favorable terms, and purchase at a price that works within your long-term financial plan, there is real value in that outcome.
The key takeaway is that each home and each scenario are approached with care. Terms are structured with intention, based on what makes the most financial and strategic sense for both sides, while ensuring buyers continue to receive professional guidance, negotiation support, and protection during one of the largest financial decisions they will ever make.
What Does the Commission Actually Cover?
Real estate commissions extend far beyond showing homes or placing a sign in the yard. They support a comprehensive, white-glove experience designed to protect your investment and elevate your results.
Here is what that includes.
For Sellers: What You Are Paying For
Strategic pricing and market positioning
A refined pricing strategy grounded in real data, neighborhood trends, and buyer behavior ensures your home enters the market with strength, clarity, and purpose.
Professional marketing
This includes elevated photography and video, staging guidance, digital campaigns, print exposure, agent outreach, and targeted promotion designed to reach qualified buyers and create meaningful demand.
Showing management and buyer vetting
From scheduling to screening interest, your agent manages every detail of the showing process while prioritizing serious, well-qualified buyers.
Offer strategy and negotiation
Every offer is more than a number. Your agent evaluates price, terms, timelines, contingencies, and financing strength to position you for the most favorable outcome.
Contract-to-close management
Once under contract, your agent coordinates inspections, appraisals, attorneys, lenders, and timelines with precision so nothing falls through the cracks.
For Buyers: What You Are Receiving
Market guidance and access
Your agent provides early insight into new listings, discreet opportunities, and neighborhood trends so you remain ahead in a competitive market.
Touring and evaluation support
Each home is reviewed through the lens of value, condition, resale potential, and long-term fit, not just surface appeal.
Offer strategy and positioning
From pricing guidance to clean, compelling terms, your agent crafts an offer that resonates with sellers and listing agents alike.
Negotiation and protection
Whether navigating inspection credits, repair requests, or appraisal challenges, your agent advocates for your interests at every step.
Transaction coordination
From accepted offer to closing day, your agent manages deadlines, documentation, and communication so the process feels seamless and composed.
Why Commission Is an Investment, Not Just a Cost
A skilled advisor often saves or earns their clients far more than the commission itself. Strategic negotiation can mean a stronger sale price, better terms, or meaningful savings on the purchase side. More importantly, expert guidance reduces risk, minimizes stress, and prevents costly missteps.
Real estate is not merely a transaction. It is a major financial and lifestyle decision, and the right representation safeguards both your equity and your peace of mind.
Final Thoughts
Real estate commissions reflect far more than what is visible on the surface. They represent the strategy, expertise, and hands-on service that guide your transaction from the first conversation to the closing table.
With today’s more flexible commission structures, understanding your options is more important than ever. The real focus is not the headline percentage, but the outcome, the strongest net result for sellers and the right home secured on the best possible terms for buyers.
If you are beginning your buying or selling journey and want to understand how representation works in today’s market, a private consultation is the perfect first step. It offers the opportunity to ask questions, explore your options, and move forward with clarity and confidence.
When you are ready, I am here to help guide the way.