Real Estate Agent Commission in 2025: New Rules, Average Rates & Splits Explained

Real estate commissions are the way that most real estate agents get paid. This means that an agent will be paid an amount of money relative to the price of the home sold.

For some people, this is extremely exciting. Alarms might be going off in their head because they know that there is no limit to how much money they can earn. Nobody dictates how much money a real estate agent can earn in a year.

For others, it might be terrifying knowing that they won't have a yearly salary. Although, there are some brokerages that will pay you a yearly salary.

In this article, I will explain to you how the real estate commission works and whether or not it's actually a lucrative deal.

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How Do Real Estate Agents Get Paid?

Real estate agents are paid on commission. A commission is a small percentage of the earnings made from selling a home. 2025 salary surveys the average income real estate agents in California show $112,378 (Indeed) and $84,669 (ZipRecruiter)

A real estate agent’s yearly earnings will depend on several factors, including the overall number of sales they complete, commissions on those sales, and the percentage of that commission that they pay their broker.

How Much is the Real Estate Agent’s Commission?

The commission earned is determined by the following factors:

• How much the home sold for
• Agreed commission rate between the agent and client
• The split between agent and broker

As example, the buyer's agent could have agreed with their client on a 2% commission rate on a house. That means, the buyer's agent will receive 2% of what the home sold for. If the home sold for $700,000, the buyer will pay their agent $14,000.

Use our real estate agent commission calculator below to see how much money you could make.

Who Pays a Real Estate Agent’s Commission?

The National Association of REALTORS® (NAR) antitrust settlement reshaped commission rules starting August 17 2024:

• No more blanket offers of compensation on the MLS. Listing brokers may not publish how much—if anything—they will pay a buyer’s agent inside an MLS listing. Sellers can still cover that cost, but any offer must be negotiated off-MLS or written into the purchase contract.
• Written buyer-broker agreements are now mandatory. Before a buyer tours a property, the buyer and agent must sign a contract that spells out the fee arrangement and who will pay it.

What the new rules mean in practice

Buyer’s agent

‍The buyer negotiates this fee in the mandatory buyer-broker agreement. Payment can come (1) directly from the buyer at closing, (2) via a seller credit negotiated in the offer, or (3) by rolling the cost into the mortgage if the lender allows. Sellers may still fund the buyer-agent fee, but that arrangement must be documented outside the MLS.

‍Listing agent

‍The seller negotiates a separate commission with the listing broker. If the seller wants to cover the buyer-agent fee, the two brokers document that off-MLS or in contract addenda.

There is still no fixed or “standard” commission rate. Every fee is negotiable between each client and their agent. Early post-settlement data show the combined commission on a typical sale slipping from about 5.6 % to roughly 5.0 %nationwide, but splits vary widely by market, property type, and agent experience.

Is there a Limit to a Real Estate Agent’s Commission?

There is no cap on how much a real estate agent can make. So long as the agent represents clients through the deal, they will earn a commission. The only limits is how much the agent is willing (or capable of) to sell in year.

This is what attracts a lot of people to the industry. They are able to have complete control over their own working schedule and their yearly earnings is determined by how much they sold. Total work freedom.

How Does the Real Estate Commission Get Split?

The real estate agent’s commission is split between the agent and their brokerage—this is called the commission split. In 2025, most California-based national franchises now start new agents on a 70 / 30 split (70 % to the agent, 30 % to the brokerage), replacing the older 60/40 model. Keller Williams, for example, puts every recruit on 70/30 before they cap.
Seasoned, high-volume producers still negotiate more favorable terms—85 / 15 or even 90 / 10, sometimes moving to 100 % once they hit an annual cap.

Example: $1 million sale at a 3 % commission

• Gross commission: 3 % × $1,000,000 = $30,000
• 70 / 30 split:
  • Agent keeps 70 % = $21,000
  • Brokerage keeps 30 % = $9,000

With most California escrows closing in roughly 30 days, that agent would pocket $21,000 for the month—before taxes and business expenses.

How Commissions Get Split Between Real Estate Agents

Sometimes a real estate agent can get paid by the other agent. This is similar to how commission were traditionally earned. A small percentage of the listing price would be given to the listing agent, who would then split it with the buyer's agent.

In these situations, the listing agent would negotiate the commission rate with the buyer agent. So, when agents find themselves in deals where the other agent is paying them, make sure you are being fairly compensated.

How Commission Gets Split with the Broker

The typical commission split between a new agent and broker is 70/30 in the agent’s favor. This ratio could increase in the agent's favor with experience over time. But a new agent with little to no experience could expect to receive 70% of commissions earned.

Of course, this isn't a hard set rule. You can be a new agent with a higher split, so long as you are able to make a compelling case for yourself.

Can Real Estate Agents Negotiate a Higher Commission Split?

An agent can negotiate a higher commission split with a brokerage the same way they would ask for a raise in a more traditional job. Performance, experience, productivity, and even better offers from other firms are solid arguments for negotiating a higher commission split.

What is the Average Real Estate Agent Commission in California?

California’s lofty home prices mean agents often earn larger dollar commissions even though the percentage is only a touch above the U.S. norm. Fresh 2025 surveys of closed sales show sellers pay an average 5.18 % of the final price in total commission, typically split about 2.61 % to the listing broker and 2.57 % to the buyer’s broker. ‍

At May 2025’s statewide median sale price of $900,170, that equates to roughly $46,600 in commission on a “typical” single-family transaction.

Remember, California law (and the 2024 NAR settlement) keeps all commission rates 100 % negotiable. There is no legally “standard” 3 % per side. Because property values vary from sub-$500 k inland homes to multimillion-dollar coastal estates, negotiated totals usually land anywhere between 4 % and 6 %.

Can a Real Estate Agent Split their Commission with a Buyer or Seller?

California, and at least 39 other states, allows agents to share their commission with buyers and sellers. It may act as an incentive for the client to work with the agent. Another motivation may include lowering your commission rate. Since there are no set commission rates, agents can negotiate their fees.

How this works is as follows:

• Client pays agent
• Agent splits payment with brokerage
• Agent then splits again with their client

The money moves through a few parties before coming back to the client.

This is advised against, though. Ultimately, the agent will be lowering the amount they get paid and therefore this deal won't be a priority for them compared to other, most lucrative deals. Therefore, agents should always stick to their gut and use this in specific situations.

Final Thoughts on a Real Estate Commission Works

While being a real estate agent does require hard work, the payoffs can be phenomenal. Since agents work on commission, there is no limit to how much they can make in the industry. Agents set their own hours, work at their own pace, and ultimately control their own commission rates. 

An agent gains will experience and be more successful over time, thus allowing them to negotiate lower brokerage fees and higher commission rates. So, their potential for a higher salary increases over time. 

For agents working in California real estate, the sky truly is the limit.