Understanding Real Estate Commissions

A real estate commission is the fee paid to the agents on a home sale, set as a percentage of the final sale price and paid at closing. Nationally, the total commission typically runs between 5% and 6%, with recent averages around 5.5% to 5.7%.

There is no standard or legal rate.

That is, every commission is negotiable. Since the 2024 NAR settlement, buyers and sellers decide who pays the buyer's agent deal by deal.

Bentley's Real Estate, a Newburyport, Massachusetts brokerage, helps buyers and sellers understand commissions before they sign. We'd rather you see the full math up front, in dollars.

What a commission is and when it gets paid

That math starts with one simple fact. A real estate commission is a service fee paid only when a sale closes.

Agents don't earn an hourly wage or salary, and the commission comes out of the closing proceeds.

Term	What it means
Total commission	The percentage of the sale price paid to the agents on the deal
Listing agent	The agent who represents the seller
Buyer's agent	The agent who represents the buyer
Brokerage	The firm that receives the commission first

Ask any agent to show the commission on your likely sale price in dollars.

How much a commission costs

Once you have that dollar figure, you'll want to know how the agent calculated it. The total commission equals the final sale price times the commission percentage.

For example, a 6% commission on a $400,000 home equals $24,000.

Sale price	Total commission at 5%	Total commission at 6%
$400,000	$20,000	$24,000

Rates vary by market, property value and services included. And sellers of higher-priced homes often have room to negotiate the percentage, because the dollar amount stays significant.

How a commission is split

That dollar amount rarely lands with one person, though. A real estate commission is usually split four ways.

It's first divided between the listing side and the buyer's side, often 50/50, and then each agent splits their side with their brokerage.

Step	Typical split	Example on a $24,000 commission
Listing side vs buyer's side	50/50	$12,000 each
Agent vs brokerage	50/50 to 70/30 in favor of the agent	Agent keeps $8,400 on a 70/30 split

Agents pay their own marketing, licensing and business costs from that share, which is why the headline percentage isn't what an agent takes home.

If an agent offers a deep discount, ask which services go away with it.

Who pays the commission after the NAR settlement

Negotiation used to stop at the percentage. Since 2024, it reaches the question of who pays at all.

Sellers still often pay, but buyers can now owe their own agent's fee. For decades, sellers paid the full commission and the listing broker shared it with the buyer's agent through the MLS.

The NAR settlement changed that, with new rules taking effect in August 2024.

• Listings no longer advertise buyer-agent compensation on the MLS.
• Buyers must sign a written agreement with their agent before touring homes, spelling out the buyer's agent's pay.
• Sellers can still offer to cover or contribute to the buyer's agent fee as a negotiated concession.

Option	Best fit	Tradeoff
Seller pays both sides	Sellers who want the widest buyer pool	Lower net proceeds
Buyer pays own agent	Buyers with cash to cover the fee at closing	More cash needed from the buyer
Shared through negotiation	Deals where both sides want flexibility	Terms must be clear in writing

Sellers do best deciding their position on buyer-agent compensation before listing. Buyers do best when they read their written agreement and ask what happens if the seller won't pay.

How Bentley's handles commissions in Greater Newburyport

Those early decisions are where we start with clients. As the #1 real estate brokerage in Greater Newburyport by market share seven years running, we explain commissions in dollars, in writing and tied to the work, in Newburyport, Amesbury, Newbury and across the North Shore.

Case in point: for sellers, we review what our listing fee covers and how buyer-agent compensation can be handled in an offer. For buyers, we go over the written buyer agreement before the first tour.

In Massachusetts, attorneys typically handle closings, and commission terms can appear in the offer and the Purchase and Sale Agreement. Your attorney can confirm how your terms are written.

Questions to ask before you sign

Whoever you hire, a few questions cover the essentials:

1. What is the total commission, in dollars, on my likely price?
2. What services does the fee include?
3. How will buyer-agent compensation be handled?
4. Is any part of the fee due if the home doesn't sell?
5. How long does the agreement last, and how do I end it?

The agent you choose matters more than a fraction of a percent, since a strong negotiator can protect more value than a small discount saves.

Talk with Bentley's Real Estate

When you're ready for that conversation, we're here. Every commission is negotiable, and you deserve to understand yours.

Buying or selling in Greater Newburyport? Call us at (978) 572-1200 or stop by 2A Winter Street or 31 Market Square in Newburyport.