How much do real estate agents cost?

Interest rate cuts could be coming later this year, which could mean a further drop in mortgage rates. Currently, 30-year fixed mortgage rates are below 7% and could continue to drop even further, with many expecting dips to 6%.

Lower mortgage rates mean many people could be looking for a new home, especially those who might have put those plans on hold with higher mortgage rates. If you're thinking about house hunting, you might want to enlist the help of a real estate agent. 

You don't necessarily need a real estate agent to purchase or sell a home, but they are some of the most helpful people in executing the process. Most agents handle home sales affiliated with the National Association of REALTORS (NAR) — the largest trade association in the country. 

How much agents get paid depends on a few factors, including location, the home sale price, and what both buyers and sellers negotiate with each of their agents. Below, we'll detail how much real estate agents cost and how that impacts what you pay for your home.

Ready to buy a home now that mortgage rates have dropped? See what rate you could secure here today.

How much do real estate agents cost?

There isn't a one-size-fits-all cost for real estate agents. All of the experts we spoke to note that real estate commissions have always been negotiable. 

"Most real estate commissions in the U.S. range between 4.8% and 6.6%," says Tiffany Banks, the CEO of Nevada REALTORS. "Numerous data sets show the national average for a real estate transaction commission is around 5.5%."

While buyers and sellers may cover agents' costs, the amount agents earn can vary depending on each agreement. 

"Compensation has been and will continue to be negotiable between agents and their clients," says Jennifer Stevenson, 2024 NAR Regional Vice President, Region 2. "Those fees can take many forms, such as fixed commissions paid directly by clients, fee for service, concessions from a seller or a portion of a listing broker's fee."

But that amount might not last for long. The NAR settled a lawsuit earlier this year and agreed to cut commission fees. In some cases, commission costs could go down as much as 30%. 

While the NAR settlement is still going through how much agents will get paid going forward, you can see how much agents get based on what they previously earned. For a $400,000 home at 5% commission, the agents would earn $20,000. Keep in mind that amount is split not only between the buyer and seller, but also between the team of people who helped both parties, including listing agents and brokers.

Learn more about your potential homebuying costs here.

Who pays real estate agents?

For many home sales, the sellers pay for the real estate agents of both the buyers and the sellers of the home. But that's not always the case. 

"While buyer agent compensation was typically offered by listing brokers as a condition of listing property in the MLS prior to August 13, now buyers and sellers will be financially responsible for their agent's compensation," says Emily Chenevert, CEO of the Austin Board of Realtors. "But [buyers] may still seek seller contributions to offset the buyer's expenses in the transaction."

Remember that commissions are negotiable, so who pays what and how much are always up for discussion and debate. Going forward after the NAR settlement, sellers could pay much less to agents if commissions are cut.

Why you should use reliable real estate agents

Using a real estate can make the homebuying process much easier for both parties involved. Homebuying and selling can be very long and challenging undertakings.

"Realtors understand the legal requirements and ethical standards of the real estate industry," Banks says.

Use your agent's expertise, including their existing connections to brokers, neighborhoods, properties, communities and more. You should find an agent that knows the ins and outs of where you want to live and how your budget and lifestyle fits into that. An agent should lead with your needs first.

"Agents understand what is in the best interest of the buyer and know how to manage what are often complicated processes," Banks says. "There are many difficulties that can come up during a transaction that most buyers would not be aware of or understand how to navigate without the help and representation of an agent."

Ask friends and family who they recommend for real estate agents or if they know anyone who would be a good fit. You don't have to take the first one you find, but word-of-mouth is one of the best ways to find a reputable and trustworthy agent.

The bottom line

The real estate industry can be challenging for many people, especially those who are buying homes for the first time or have never taken on this large of a purchase before. 

Real estate agents come with a cost, but they also come with a wealth of knowledge and access that you may not otherwise have if you went down the homebuying or selling road alone. The cost of real estate agents might go down in the future, so if you're hoping to buy a home in the coming months, you may want to use a real estate agent to help.

Have more questions about the homebuying process? Learn more here today.