Commission Split in Real Estate: What It Is, How It Works

A commission split is the method by which real estate commissions are divided between agents and their brokerages, and sometimes between listing and buyer’s agents. When a property is sold, the seller typically pays a total commission—often around 5% to 6% of the sale price—which is then shared among the parties involved in the transaction.

For example, if a home sells for $400,000 with a 6% commission, that’s $24,000 in total. That commission is typically split 50/50 between the listing broker and the buyer’s broker, giving each side $12,000. From there, individual agents receive a portion of their broker’s share based on their agreement—this is the commission split.

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How Commission Splits Work

Commission splits are negotiated agreements between real estate agents and their brokerages. A new agent might start with a 50/50 split, meaning they keep 50% of the commission they earn while the brokerage keeps the other half. As agents gain experience, close more deals, or meet sales targets, they often renegotiate more favorable splits—such as 70/30 or 80/20.

Some brokerages offer “graduated splits,” where the percentage an agent keeps increases based on their sales volume throughout the year. Others implement a “commission cap,” where once an agent pays a certain amount to the brokerage, they keep 100% of commissions for the rest of the year.

The type of brokerage also affects how commissions are structured. Traditional brokerages may provide more support (leads, office space, training), in exchange for a larger share of commission. In contrast, flat-fee or virtual brokerages offer higher splits or full commission to the agent, with fewer services provided.

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Why Commission Splits Matter

For real estate agents, the commission split has a direct impact on earnings. Understanding the structure is essential for budgeting, setting goals, and evaluating different brokerage models. Agents should weigh the value they receive—such as training, marketing, admin support against the percentage they give up from each deal.

From the client’s perspective, commission splits don’t usually affect the total amount paid for services, since the full commission is agreed upon at listing and then internally divided. However, it's useful for buyers and sellers to understand how compensation is distributed within the real estate industry.

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Final Thoughts

Commission splits are a core part of how real estate professionals get paid. They reflect an agent’s experience level, the value of the brokerage, and the support systems behind every transaction. For new and experienced agents alike, understanding commission structures and how they evolve over time is key to long-term career success in the real estate industry.