How Real Estate Agents Get Paid: A Simple Guide for Buyers and Sellers

1. Commission-Based Payment

Most real estate agents are paid on commission. This means they only get paid when a property sale is successfully completed. The commission is usually a percentage of the final sale price of the property.

In most cases, this ranges from 4% to 6%.
This fee is usually split between the buyer’s agent and the seller’s agent.

Example:

If a home sells for ₹1 crore and the total commission is 5%:

₹5 lakhs goes towards commission.
This amount is often split 50/50: ₹2.5 lakhs to the seller’s agent, and ₹2.5 lakhs to the buyer’s agent.

2. Who Pays the Commission?

In most real estate transactions:

The seller pays the full commission out of the sale proceeds.
So, buyers rarely pay the agent directly.

This commission is agreed upon beforehand in the listing agreement signed between the seller and their agent.

3. Brokerage Split

Agents work under a real estate broker, and the commission is often shared with them as well. Here's how that typically looks:

The agent may give 30%–50% of their share to their brokerage.
So, from that ₹2.5 lakhs, an agent might take home only ₹1.25 lakhs or less after the split.

This split varies depending on:

The agent's experience
Their agreement with the brokerage
The services provided by the brokerage

4. Other Compensation Models

Though commission is the standard, some agents may work on alternative models, especially in commercial or luxury real estate:

a. Flat Fees

Some agents charge a fixed rate instead of a percentage—usually in lower-value markets.

b. Hourly or Consulting Fees

Rarely, an agent might charge an hourly fee for services like pricing consultation or market research.

c. Referral Fees

If an agent refers a client to another agent (e.g., in a different city), they may receive a referral fee, which is a portion of the commission.

5. When Do Agents Get Paid?

Real estate agents only get paid after the transaction closes. This means:

The deal must be finalized.
The paperwork signed.
The money exchanged.

If a deal falls through—no payment.

6. What Services Does the Commission Cover?

That commission covers a wide range of work:

Marketing the property
Hosting open houses
Negotiating offers
Coordinating inspections
Managing paperwork and legalities
Advising on pricing and staging

Agents often invest time and money upfront, with no guarantee of a paycheck unless the sale goes through.

Final Thoughts

Real estate agents play a crucial role in making property deals smooth, legal, and profitable. Their commission-based income means they are highly motivated to get you the best deal possible. Whether you’re buying or selling, understanding how they get paid can help you better navigate your transaction and appreciate the value they bring.