What is a real estate commission?

A real estate commission is the fee that a real estate broker receives for assisting a client with

the sale or purchase of a property. In most transactions, two different brokers receive a

commission - one broker represents the seller and the other represents the buyer.


Who determines the commission amount?

Traditionally, the seller and the seller’s broker establish the total commission amount. They also

decide how much of that commission to offer to a buyer’s broker.


Is there a “standard” commission rate?

No. Different brokers have different business models and can charge clients different amounts

for their services. There is no “standard” rate. Commissions are most often calculated as a

percentage of the sale price, but they can also be expressed as a flat dollar amount.


Who pays the real estate commission?

In most cases, the real estate commission is deducted from the seller’s proceeds at the time of

sale and allocated between the buyer’s broker and seller’s broker.


So does that mean the buyer receives their broker’s services for free?

Not exactly. The real estate commission is included in the price that the buyer pays for the

home. So one could argue that it is actually the buyer who pays the commission, at least



Are real estate commissions negotiable?

Absolutely. In any transaction, the commission will be whatever the parties involved agree on.

Some brokers will charge more than others. Some will charge less but may offer more limited

services. And not all clients will want or need the same level of service and support.


What’s wrong with the “traditional” commission model?

Critics of the traditional commission model argue that it limits competition among brokers and

raises prices and transaction costs for both buyers and sellers. The buyer often has no say in

how much compensation their broker receives, regardless of the broker’s skill and experience or

the level of service that they provide. In addition, when commissions are expressed as a

percentage of the sale price, the buyer’s broker is “rewarded” with a higher commission when

the sale price of the house increases. There is no financial incentive for the buyer’s broker to

negotiate a lower sale price.


What does “decoupling” mean?

“Decoupling” of real estate commissions is a concept that has received increased attention in

recent years. When commissions are decoupled, the seller and seller’s broker no longer decide

how much commission to offer to the buyer’s broker. Instead, the buyer and buyer’s broker will

agree on a commission amount for the buyer’s broker, and the seller and seller’s broker will

agree on a commission amount for the seller’s broker.


Is the traditional compensation model likely to change?

The US Department of Justice (DOJ) believes that the traditional commission model is

fundamentally unfair and should be abolished. On February 16, 2024, the DOJ filed a brief in

the case Nosalek vs. MLSPIN et al. in which it argued that seller’s and seller’s brokers should

be prohibited from offering compensation to buyer brokers. Instead, buyers and sellers would

each be empowered to negotiate commission rates with their own brokers.

You can read the DOJ’s full brief here: https://www.justice.gov/d9/2024-02/420087.pdf


How does Stikeleather Real Estate handle commissions?

We believe that all commission arrangements with our clients should be a “win-win”. The client

must receive value from our services, and we should receive compensation that is

commensurate with the value that we deliver. We are always happy to explore different

commission options that are tailored to our client’s needs. These include traditional “percentage

of sale price” commissions, flat dollar amount commissions, and “decoupled” commissions in

which we establish a commission rate in advance for our service as either a buyer or seller’s



Where can I get more information?

If you are thinking of buying or selling a home, and would like more information about our

services and different commission options, please contact our Managing Broker Shepard Long

directly at 781-690-3630 or shep@stikehomes.com.