Real estate commissions are a fundamental part of buying or selling a home, but they’ve evolved significantly in recent years. Traditionally, these fees compensated agents for their services in facilitating transactions. However, following the 2024 National Association of Realtors (NAR) settlement, the landscape has shifted toward greater transparency, negotiation, and flexibility. This article breaks down how commissions operate today, what costs sellers and buyers might face, and key considerations for navigating them in 2026. Note that rates can vary by location, market conditions, and individual agreements—always consult a professional for personalized advice.

How Real Estate Commissions Work

Real estate agents and brokers earn commissions based on a percentage of the home’s final sale price. This fee covers services like marketing the property, negotiating offers, handling paperwork, and guiding clients through closing. In the past, a standard 5-6% total commission was common, often split evenly between the seller’s (listing) agent and the buyer’s agent. The seller typically paid the full amount from the sale proceeds.

The 2024 NAR settlement changed this model dramatically. Key updates include:

• Negotiability and Transparency: Commissions are no longer “standard” or mandated. Both buyers and sellers must negotiate and sign written agreements with their agents outlining services and fees upfront.
• Decoupled Fees: Sellers are not required to pay the buyer’s agent commission. Instead, buyers now handle their own agent’s compensation unless the seller offers a “concession” (a voluntary contribution) to make the deal more attractive.
• Market Averages: As of late 2025 data, the national average total commission is about 5.57%, with listing agents receiving around 2.82% and buyer’s agents 2.75%. In areas like Washington, D.C., it’s slightly lower at 5.5%.

These fees are paid at closing, deducted from the sale proceeds. If no sale occurs, agents typically don’t get paid (though some may charge flat fees or retainers).

What Sellers Should Expect to Pay

Sellers have historically borne the brunt of commission costs, and while the NAR changes provide relief, they still often pay to incentivize buyers.

• Listing Agent Fee: This is the core cost for sellers, averaging 2.5-3% of the sale price. For a $650,000 home (median in D.C.), that’s about $16,250-$19,500. It covers listing the home on the Multiple Listing Service (MLS), marketing, showings, and negotiations.
• Buyer’s Agent Concession (Optional): Many sellers still offer 2-3% to cover the buyer’s agent, as it can attract more offers and speed up sales. Without it, buyers might skip the property due to added costs. In competitive markets like the D.C. metro area, offering at least 2.5% is common to maximize bids.
• Total Potential Cost: If offering a concession, expect 5-6% total ($32,500-$39,000 on a $650,000 home). However, low-commission brokers or discount services can reduce this to 1.5% or less for the listing side, saving thousands.
• Other Seller Expenses: Beyond commissions, sellers pay closing costs (about 2% of sale price, including title fees, transfer taxes, and attorney costs) and possible concessions for repairs or buyer incentives.

Sellers can negotiate aggressively—rates aren’t fixed by law. Opting for full-service agents might justify higher fees, but discount options like flat-fee MLS listings are increasingly popular.

What Buyers Should Expect to Pay

Buyers now have more direct responsibility for agent fees, marking a shift from the old system.

• Buyer’s Agent Fee: Typically 2.5-3% of the purchase price, paid by the buyer unless covered by a seller concession. For a $650,000 home, that’s $16,250-$19,500 out of pocket if not negotiated otherwise. Buyers sign a buyer-broker agreement specifying this fee before viewing homes.
• Seller Concessions: In many cases, sellers still offer to pay this to make their home more appealing, effectively keeping the buyer’s cost at zero for commissions. However, in buyer-friendly markets, you might need to cover it yourself.
• Total Potential Cost: If paying your own agent, add this to other closing costs (2-5% of purchase price, including inspections, appraisals, and loan fees). Some buyers negotiate flat fees or hourly rates with agents to cap expenses.
• Benefits of Paying: While it adds upfront cost, having a dedicated buyer’s agent can save money through better negotiation, market insights, and avoiding pitfalls.

Buyers should shop around for agents and clarify fee structures early. In some states, like Maryland or Virginia near D.C., local variations might apply.

Recent Changes and Tips for 2026

The NAR settlement has empowered consumers by making commissions more competitive. Expect continued downward pressure on rates—some predict averages could drop below 5% as negotiation becomes the norm. In D.C. and surrounding areas, focus on local market data for accurate expectations.

Tips:

• Negotiate Everything: Interview multiple agents and discuss fees openly. Ask about value-added services.
• Understand Agreements: Read buyer-broker or listing contracts carefully—know who’s paying what.
• Factor in Taxes and Location: In D.C., transfer taxes add to seller costs; buyers might qualify for first-time programs.
• Consult Professionals: Always involve a real estate attorney or financial advisor for complex deals.

Conclusion

Real estate commissions remain a key expense in home transactions, but the 2024 changes have made them fairer and more customizable. Sellers can expect to pay 2.5-3% for their agent (plus optional concessions), while buyers might cover a similar amount unless negotiated away. By understanding the process and negotiating wisely, both parties can reduce costs and achieve better outcomes. For the latest in your area, reach out to local experts—markets like D.C. evolve quickly.