How Much Does Working With a Real Estate Agent Cost?

If you’re considering working with a realtor on a home sale or purchase, you’re making a wise choice. Real estate transactions are complex, and you want to work with someone who has the market and technical know-how to ensure yours is successful.

A real estate agent’s expertise comes at a cost—a reason that some might be tempted to take the for sale by owner (FSBO) route or purchase a property on their own. However, these journeys are legally riskier and can be less efficient. In the long run, paying for an agent’s services is a small price and one that might even end up earning you a return on your investment in a higher home sale price (if you’re a seller) or finding you a dream home quickly (if you’re a buyer).

If you’re not a first-time home buyer or seller, you may be familiar with both agent payments and the benefits of working with one. But times are changing: new regulations are shifting real estate agent fee structures and how clients experience commission splits.

So, how much does working with a real estate agent cost now? Here’s everything you need to know. 

How real estate agents get paid

The majority of real estate agents receive commissions (rarely do realtors charge a flat fee), meaning they earn a percentage of a home sale when the transaction is complete. Most realtors do not earn a cent from their clients before selling a property, nor do they earn a salary from their agency. So, real estate professionals are motivated to sell not only out of a desire to help their clients but to earn a living. 

So, how much is a real estate agent commission? 

Commission amounts range but have traditionally been around 5 to 6%. So, if a home sells for $700,000, a commission in this range would work out to around $40,000. This amount then gets split several ways, as several agents and brokers are involved in a transaction.

The seller’s and buyer’s agents get their cut, as do the brokers supporting those realtors. Agents (unless they are also licensed brokers) must be backed by a broker, who receives and distributes commissions. The exact amount each party received is based on an agreement among them.

But commissions are changing

The U.S. Department of Justice (DOJ) has been assessing the 5 to 6% real estate commission structure supported by the National Association of Realtors (NAR), arguing that having known rates prevents competition—the logic being: if rates for agents are all the same, these professionals can’t compete on price. In other words, there’s no room for an agent to set a lower commission rate and attract clients looking to save.

The DOJ also argues that the payment structure negatively affects the consumer, as buyer’s agents may be tempted to show their clients more expensive properties—whether or not they’re the right homes and the purchaser can comfortably afford them—since the commission on the sale of those homes is greater. 

Due to a settlement with the NAR, the rules around commissions are changing, in effect on August 17th, 2024. The multiple listing service (MLS) can now no longer advertise an agent’s commission rate, and these fees must be shared with potential clients in other ways, like over the phone, in a meeting, or in marketing not on the MLS. 

While historically a seller may have covered the entire commission, home buyers are now expected to pay a certain percentage to their realtor if the seller doesn’t wish to pay this fee. Buyers must sign an agreement with their agents that stipulates the rate the client will pay in that scenario.

And who pays the commission? 

As mentioned above, a seller would traditionally pay the entire commission. Technically, the buyer’s funds were feeding into the fee, since they just paid for a property, but the party responsible for an agent’s commission was often the home seller.

Under new regulations, the seller and buyer may split fees. 

How much will I pay to work with an agent? 

There is only one way to know how much working with a real estate agent will cost you—especially in light of the new commission rules. You must talk with your agent to understand their payment structure. Be sure to sign a representation agreement that clarifies rates in writing. 

What am I getting for my money? 

Take another look at the traditional real estate commission fees on a home selling for $700,000. That $45,000 total commission, even when split between parties, amounts to a significant payment. Suppose, as was often the custom, that the buyer’s and seller’s agents received half of the commission, making $22,500 each. Their brokerages would retain a certain amount (say, 5%), leaving each realtor with roughly $21,000. And while that’s a good deal of money, an agent does a ton of work to earn it. 

The tasks agents perform depend on whether they represent a buyer or a seller, but here’s a high-level overview. 

For a buyer: A buyer’s realtor will find exceptional properties in the client’s price range and set up viewings. This real estate professional will also take care of legal documentation related to the purchase and help their client navigate the offer process, as well as closing costs and proceedings. 

For a seller: A listing agent will suggest the client improve their property through renovations and repairs to make it more attractive to potential buyers, market the home as widely as possible, and show it off in open houses and viewings. The seller’s agent will also take care of legal documents and help their client accept an outstanding offer on the home. 

Whichever side of the real estate transaction you’re on, you pay for peace of mind and a more streamlined, secure transaction by working with an agent. This professional is a cool and collected force during negotiations, has access to an ample network of buyers and sellers and can find or move a property quickly, and has the industry and technical know-how to ensure a legally sound, fairly priced transaction. 

Get more for your money by working with a Titus partner agent 

If you’re selling your home, you get more by working with a Titus-affiliated realtor. Agents who partner with Titus can access a unique line of credit on their client's behalf for renovations and repairs, helping a property attract interest quickly and earn a higher sale price. 

Titus’s closing lines of credit (CLoCs) offer sellers zero-interest financing for aesthetic upgrades, fixes, and even other fees associated with the real estate process, like hiring movers or staying in a rental while renovations are being done at home. To be eligible, a seller needs to be close to going to market and working with a Titus partner agent. Learn more about how it works here.