Real estate commissions are one of the largest costs in any home transaction, yet many buyers and sellers don’t fully understand how they work, who pays them, or how recent industry changes have affected the landscape. Commission structures in 2026 look different than they did just a few years ago, with greater transparency, more negotiability, and evolving models that give consumers more options. This guide explains how commissions currently work so you can make informed decisions about agent compensation.
The Traditional Commission Model
Traditionally, the home seller paid a total commission of 5% to 6% of the sale price, which was split between the listing agent’s brokerage and the buyer’s agent’s brokerage. On a $400,000 sale, a 6% commission totaled $24,000, with $12,000 going to each side. The agents then split their portion with their brokerage according to their individual agreements.
This model evolved over decades and was embedded in the standard listing agreement. The seller agreed to pay the total commission when they listed their home, and the buyer’s agent’s compensation was offered through the MLS as an incentive for agents to bring their buyers to the property.
What Changed: The NAR Settlement
In 2024, the National Association of Realtors reached a landmark settlement that fundamentally changed how buyer’s agent compensation is handled. The key changes include the elimination of blanket offers of buyer agent compensation on the MLS, the requirement for buyers to sign written agreements with their agents before touring homes, and greater transparency around how agents are compensated on both sides of the transaction.
These changes haven’t eliminated agent commissions, but they’ve increased transparency and opened the door for more diverse compensation models. The practical impact varies by market, with some areas seeing significant shifts and others continuing largely as before with more explicit documentation.
How Seller’s Agent Commissions Work Now
Listing agent commissions remain negotiated between the seller and their agent as part of the listing agreement. Common structures include a percentage of the sale price, typically ranging from 2% to 3% for the listing side alone, flat fees that don’t vary with the sale price, tiered structures where the rate decreases as the sale price increases, and performance-based models with lower base rates and bonuses for exceeding price targets.
The listing commission covers the agent’s marketing costs, time, expertise, and brokerage overhead. While the rate is always negotiable, the cheapest option isn’t always the best value. An agent who charges 2.5% and sells your home for $410,000 delivers more net proceeds than an agent who charges 1.5% and sells it for $390,000.
How Buyer’s Agent Commissions Work Now
The biggest change in 2026 is how buyer’s agents get paid. Buyers are now required to sign representation agreements that specify how their agent will be compensated before the agent begins showing them homes. The compensation can come from several sources.
The seller may still offer to contribute toward the buyer’s agent’s compensation as part of the sale. This is still common because it makes the property more accessible to buyers who might otherwise struggle with the additional cost. The buyer may pay their agent directly, either as a flat fee, an hourly rate, or a percentage of the purchase price. In many transactions, the compensation is negotiated as part of the offer, with the buyer requesting that the seller cover their agent’s fees as a term of the deal.
The practical reality in most markets is that seller contributions toward buyer agent compensation remain common, but the process is more transparent and the amounts more variable than under the traditional model.
What Buyers Should Know
As a buyer, you now have more clarity and control over what you pay your agent. Before touring homes, you’ll sign a buyer representation agreement that specifies the compensation terms. Read this agreement carefully and ask questions about anything you don’t understand.
When evaluating what an agent charges, consider the value they provide rather than focusing solely on the cost. A buyer’s agent who identifies the right property, negotiates a strong purchase price, catches red flags during the process, and manages the transaction smoothly provides value that typically far exceeds their compensation. Our article on what a real estate agent actually does details the full scope of services.
What Sellers Should Know
As a seller, you negotiate your listing agent’s commission directly in the listing agreement. You may also choose to offer compensation toward the buyer’s agent, which remains a strategic decision that affects your home’s marketability.
Offering buyer agent compensation makes your property more accessible and attractive to represented buyers, who make up the majority of the market. Properties that don’t offer buyer agent compensation may receive fewer showings and less competitive offers, potentially costing more in a lower sale price than the commission would have cost. Your listing agent can advise on the optimal strategy for your market.
Can You Negotiate Commissions?
Yes. Commission rates are always negotiable and are not set by any industry organization or government entity. Factors that influence negotiation include local market conditions and competition among agents, the price of your property where higher-priced homes sometimes command lower percentage rates, the scope of services you need, and the agent’s experience and track record.
When negotiating, focus on net outcome rather than just the commission rate. An experienced agent who charges a standard rate but achieves a higher sale price or better purchase terms delivers more value than a discount agent who costs you money through weaker pricing, marketing, or negotiation.
Alternative Commission Models
The market now offers more diverse commission structures than ever before. Flat-fee listing services charge a fixed amount regardless of sale price, typically $3,000 to $7,000, in exchange for listing on the MLS with limited additional services. Discount brokerages offer reduced rates, typically 1% to 2%, sometimes with technology-driven service models that reduce agent involvement. Tiered services let you choose which services you want and pay accordingly, from full-service representation to limited listing-only packages.
Each model has trade-offs between cost and service level. Full-service agents provide the most comprehensive support but at a higher cost. Discount and flat-fee options save money but may provide less hands-on guidance, marketing, and negotiation support. Our article on FSBO vs. using an agent helps quantify these trade-offs.
Making Informed Decisions
The evolving commission landscape gives buyers and sellers more options and transparency than ever. The key is understanding the value you’re receiving relative to the cost and making decisions based on net outcome rather than commission rate alone.
NearbyRealtors’ free matching service connects you with top-performing local agents who are transparent about their compensation structures and focused on delivering results. For more on choosing the right agent, visit our guide on finding the best real estate agent near you.