How Real Estate Commissions Work

A broker or agent earns a commission when a buyer and seller negotiate a real estate transaction. The commission split can vary and can be negotiable or evenly split. The real estate commission is usually paid to a brokerage, who then distributes it to the agent. There are three main types of real estate commissions: Principal broker, Negotiable, and Evenly Split. Here is a breakdown of how each type of commission works.


If you’re thinking about hiring a real estate agent, knowing how to negotiate a lower commission is essential. If you’re not familiar with how to negotiate a real estate commission, you can use information such as the price of homes in your neighborhood to your advantage. You can use this information to justify your request. Listed below are some tips to help you bargain with your agent. Read on to learn how to negotiate a lower real estate commission.

Agent fees can be negotiated, but not all agents are able to set their own rates. While new agents rarely have the leverage to negotiate a lower rate, those who have been in the business for more than two years may have a little more flexibility. Be aware that some agents are inflexible with fees and won’t negotiate. If you’re a seller, it is best to negotiate a lower commission with a real estate agent.

5% – 6%

Most homebuyers in Florida assume that they don’t have to pay a real estate agent. This is a myth, and many agents advertise that they don’t charge their clients any money at all. In fact, buyers and sellers pay real estate agents directly and indirectly. The following information will help you decide if you can afford to pay a 5%-6% real estate commission. Listed below are some benefits to hiring a realtor and how they will work with you.

In NYC, a typical 5%-6% real estate commission will equal around $100,000. This figure is higher than the national average, because real estate agents earn disproportionately more than other agents. If you can, list your home for less than this amount, as this will save you money. If you don’t want to pay a commission to a real estate agent, consider listing your home FSBO or using a flat-fee MLS listing service, like Hauseit.

Evenly split

Although it may not seem fair, an unevenly split real estate commission may be legal in some states. Specifically, a real estate agent may not charge more than 70 percent of the total commission for the sale of a property. This practice is legal and can be defended as a matter of competition. Evenly split real estate commissions are generally legal, but they may be illegal when the commissions are not disclosed to sellers.

There are two brokers involved in a sale: the listing broker and the buyer’s broker. When the commission is “evenly split,” each gets half of the total commission. A variation of this question asks how much the listing broker gets. The answer depends on the specific situation. If the commission is divided equally between the buyer’s and the seller’s brokers, the listing broker receives 60 percent and the buyer’s broker gets 40 percent, for example.

Principal broker

A principal broker is responsible for the oversight of the firm’s licensing. The Commission may disassociate a licensee or change the association between an agent and a broker for any number of reasons. These include a change of address, death, or physical incapacity. In such cases, the licensee must request a release from affiliation by submitting a notarized Affidavit of Release and a completed TREC Form 1 or online submission.

A principal broker is also called a managing broker or qualifying broker and supervises the agents in the brokerage firm. This broker is not always present during the transaction between the buyer and seller, but receives override on all sales made by the agents. In some states, a principal broker is required to have real estate experience before they can apply for a Principal Broker position. These brokers are typically fearless business owners who are skilled in the art of real estate.