Understanding Agent Commissions as a First-Time Home Seller

12 August 2025

Selling your first home can feel like stepping into uncharted territory, and one of the most confusing aspects is real estate agent commissions. How much do you actually have to pay? Where does your money go? And most importantly, is it worth it?

In this guide, we'll break everything down so you can confidently navigate agent commissions and make informed decisions.

What Are Real Estate Agent Commissions?

Agent commissions are the fees you pay to your real estate agent (and the buyer’s agent) for their services in selling your home. Instead of charging hourly rates or flat fees, real estate agents typically work on a commission basis.

This means they only get paid when your home sells. Sounds fair, right? But let’s dig into the details.

How Are Commissions Calculated?

Real estate commissions are usually a percentage of the home's final sale price. In most cases, this percentage hovers around 5% to 6% of the total sale price, though it can vary depending on the market, location, and agreement with your agent.

For example, if your home sells for $400,000 at a 5% commission rate, the total commission would be:

$400,000 × 5% = $20,000

This commission is then split between the seller's agent (your agent) and the buyer's agent.

Who Pays the Commission?

As the home seller, you are typically responsible for paying the full commission, which is then divided between the agents involved in the transaction.

While it may seem like you're covering everything, consider this: the commission is already factored into the sale price. In other words, the buyer indirectly contributes as well, since the home price has been adjusted to accommodate commissions.

The Commission Split

Let’s break down a standard 6% commission on a $400,000 home sale:

- Total commission (6% of $400,000) = $24,000
- Split between listing agent and buyer’s agent (typically 50/50) = $12,000 each

In most cases, agents don’t pocket the entire amount. They have to share a portion with their brokerage, covering office fees, marketing costs, and other expenses.

What Do Real Estate Agents Actually Do to Earn Their Commission?

You might be wondering, “What exactly am I paying for?” Selling a home involves much more than just listing it online or setting up showings. A good real estate agent provides:

1. Pricing Strategy

Your agent conducts a Comparative Market Analysis (CMA) to help you price your home competitively—high enough to maximize profit, but not so high that it scares away buyers.

2. Marketing and Advertising

Selling a home is all about visibility. Here’s what a solid marketing plan includes:
- Professional photography to make your home stand out
- Virtual tours that attract online buyers
- Listing on major real estate platforms (MLS, Zillow, Redfin, Realtor.com)
- Social media marketing and targeted ads
- Open houses and private showings

3. Negotiation Skills

When offers start rolling in, your agent negotiates on your behalf to secure the best price and terms possible. A skilled negotiator can mean the difference between an average sale and a great deal.

4. Handling Paperwork and Legalities

Selling a home involves legal complexities, disclosures, and contracts. A mistake in the paperwork can delay—or even derail—the entire transaction. Your agent ensures everything is handled correctly.

5. Managing Inspections and Appraisals

Inspections and appraisals can create hurdles in the selling process. An experienced agent helps you navigate these challenges, addressing any issues that come up and keeping the deal on track.

Can You Negotiate Agent Commissions?

Yes! Commissions are not set in stone, and you may be able to negotiate a lower rate under certain conditions. Here are a few factors that might work in your favor:

- Selling in a hot market – If homes are selling instantly, agents may be more willing to lower their commission.
- Selling a high-priced home – Agents might accept a lower percentage when the sale price is on the higher end.
- Using the same agent to buy and sell – Some agents offer a discount if they represent you in both selling your home and purchasing a new one.
- For Sale By Owner (FSBO) assistance – If you've already found a buyer but need an agent to close the deal, you may be able to negotiate a reduced rate.

That said, don’t just focus on getting the lowest commission—make sure you're getting the best value for your money. A lower commission doesn’t help much if it means poor service or less marketing effort.

Are There Alternatives to Traditional Agent Commissions?

Yes! If you’re looking to save on commission fees, here are a few alternative options:

1. Discount Brokers

Some real estate brokerages offer reduced commission rates in exchange for fewer services. This could work if you’re confident in handling some aspects of the sale yourself.

2. Flat-Fee MLS Services

Instead of hiring a full-service agent, you can pay a flat fee to have your home listed on the MLS (Multiple Listing Service). However, you’ll have to handle marketing, negotiations, and paperwork on your own.

3. For Sale By Owner (FSBO)

Selling your home without an agent can save you on commission fees. However, it requires a lot of effort—pricing, marketing, negotiating, and handling contracts all fall on you. Plus, you'll still likely need to pay a commission to the buyer’s agent.

4. iBuyers and Cash Buyers

Companies like Opendoor and Zillow Offers buy homes directly from sellers, cutting out the need for a traditional agent. While convenient, these sales often come with lower offers than what you’d get on the open market.

The Bottom Line: Is an Agent Worth the Commission?

Absolutely—if you work with the right one. While it’s tempting to focus solely on commission percentages, remember that a strong agent can help you sell faster and for a higher price.

Think of it this way: if an agent helps you sell your home for $20,000 more than you could on your own, their commission practically pays for itself.

Before choosing an agent, do your homework:
✔ Interview multiple agents and compare their marketing plans
✔ Check reviews and past sales
✔ Ask about their commission structure and what’s included

At the end of the day, paying a fair commission for reliable service can make a huge difference in your experience—and your profit.

Final Thoughts

Understanding real estate agent commissions is crucial for first-time home sellers. While the 5-6% commission may seem steep at first, it covers the expertise, marketing, negotiation, and legal work that goes into a successful home sale.

If you're thinking about selling, take the time to find an agent who earns their commission—someone who will market your home effectively and negotiate the best deal on your behalf.

Selling a home is a major financial transaction, and having a skilled professional in your corner can mean the difference between a smooth sale and a stressful one.