The Truth About Real Estate Commissions
Real estate commissions are one of the most misunderstood parts of the buying and selling process—and lately, one of the most talked about. With lawsuits, market shifts, and increasing demand for transparency, many are wondering: what exactly am I paying for? Let’s clear things up!
How It Works
A real estate commission is the fee paid to agents (both the listing agent and the buyer’s agent) for helping to close a sale. It’s typically around 5%–6% of the sale price, split between both agents.
But keep in mind: that amount doesn’t all go directly into the agent’s pocket. Most agents work under a brokerage, which takes a portion. There are also marketing costs, taxes, and time invested before a deal ever closes.
Why It’s Controversial and How NYC Is Different
Recent lawsuits are challenging how commissions are structured—arguing that buyers are indirectly paying more. These cases may reshape the system nationwide, but NYC already works a bit differently. In New York City buyers rarely pay agent fees when purchasing. (Though in rentals, they often do—yes, we all know “the broker fee” pain.) Sellers pay the commission out of their proceeds as part of the closing costs.
Because NYC real estate is hyperlocal and ultra-competitive, the value of a skilled agent is often seen in the price achieved, not just the transaction itself.
What Does a Real Estate Agent Actually Do for That Commission?
On the listing (seller) side, an agent is responsible for:
Pricing strategy (based on deep market knowledge)
Staging & prepping the home for market
Professional photography and marketing
Open houses and private tours
Negotiating offers and counteroffers
Managing attorneys, inspections, appraisals, and board approvals (hello, co-ops!)
Keeping the deal alive through bumps and delays
On the buyer side, an agent:
Educates on the market, comps, and process
Finds and vets listings that match the buyer’s goals
Schedules and attends showings
Strategizes on offer terms and negotiation
Guides through board packages, inspections, and every nerve-wracking step in between
It’s not just “unlocking doors” and collecting a check—it’s being a guide, advocate, strategist, and fixer from day one to close (and often beyond).
Are Commissions Negotiable?
Yes. But keep in mind: lower commission often means fewer services or less marketing power, and that can impact your bottom line more than you expect. Like anything else in real estate, you get what you pay for.
Final Thoughts: Value Over Cost
Commission conversations are uncomfortable for some, but they shouldn’t be. Like with any professional service, it’s not just about the fee—it’s about the value. An experienced agent helps you:
Sell for more (or buy for less)
Avoid costly mistakes
Save time and stress
Navigate a fast-moving, high-stakes market
If you’re working with someone who brings strategy, integrity, and results to the table? That commission pays for itself.
Have questions about buying, selling, or how commissions work in NYC? Let’s talk.
