Honestly, most folks don’t put much thought into how real estate Realtors make money – neither the commission percentages nor from which side of the deal the fees come.  Obviously, one must assume that compensation comes from somewhere, or no one would be in business. Office space, copy machines, and yard signs don’t pay for themselves.

Most buyers are surprised to learn that real estate commissions usually come from the seller.  When the home is sold, the seller’s Realtor splits the listing fee with the buyer’s Realtor.   Sometimes, the listing side commission is not enough to cover the buyer side compensation.  In these cases, the buyer is responsible for paying their brokerage at closing.  The amount will be credited with any amount paid by the seller.   For example, buyer broker compensation is 3%.  Seller is paying 2%.  Buyer is responsible for 1% to buyer’s brokerage at closing.

Splits between Realtors are normally 50/50, so if a listing Realtor procures a 6% listing fee, the buyer and seller Realtors will each receive 3% when the deal is done.

Here’s an example of how real estate commissions work