Let's talk about something most home buyers and sellers wonder about but rarely ask: what happens to that commission check when their agent sells a house? You might think your agent pockets the whole thing and heads straight to the bank, but the reality is way different—and honestly, pretty eye-opening.
Understanding how agent compensation works can actually help you make better decisions about who you hire to represent you. Because here's the thing: not all agents are created equal, and the one you choose can have a massive impact on both your wallet and your sanity during what's probably one of the biggest transactions of your life.
The Commission Split Nobody Talks About
When a home sells, the total commission (usually around 5-6% of the sale price) gets divided right down the middle between the listing agent and the buyer's agent. So on a $400,000 home with a 6% commission, that's $24,000 total—$12,000 to each side.
But wait, there's more. Each agent doesn't actually take home that full $12,000. Most agents work under a brokerage and split their commission with that brokerage. The split varies wildly depending on experience, production level, and the brokerage itself. A newer agent might have a 50/50 split with their broker, meaning they'd take home $6,000 from that $12,000. More experienced agents who generate higher volume often negotiate better splits—maybe 70/30, 80/20, or even higher.
That same agent also has to cover their business expenses out of that remaining amount. We're talking about marketing costs, professional photography, staging consultations, gas driving clients around, transaction coordination fees, errors and omissions insurance, continuing education, association dues, MLS fees, and more. When you add it all up, many agents spend 20-30% of their gross income just keeping their business running.
So that $24,000 commission? By the time it gets split between two agents, divided with their brokerages, and after covering business expenses, each agent might clear somewhere between $3,000 and $7,000, depending on their situation. Still a decent chunk of change for a single transaction, but nowhere near what most people assume agents make.
What the Average Agent Actually Earns
According to the National Association of Realtors, the median gross income for agents hovers around $49,700 a year. But that's gross income—before all those splits and expenses we just talked about. When you factor everything in, many agents are taking home considerably less, especially in their first few years.
Here's why those numbers stay relatively low: the vast majority of agents don't sell that many homes. About 20% of agents handle roughly 80% of all transactions. There are tons of part-timers, people who got their license "just to see," and folks who treat it more like a side hustle than a career. These agents might close one, two, maybe five deals a year. That's not going to pay the bills.
The barrier to entry in real estate is pretty low. Take a course, pass a test, hang your license somewhere, and boom—you're an agent. Compare that to most professions where you need years of education and experience before you can start practicing, and you can see why the average income stays on the lower end.
The Experienced Agent Difference
Now let's talk about the agents who are actually making a living at this—the ones who've been in the game for years and have proven track records.
Experienced agents (we're talking five-plus years of consistent production) typically earn significantly more. Top producers can bring in six figures annually, and the elite ones? They're well into multiple six figures. But they've earned every penny of it.
These agents have something invaluable: experience dealing with problems. And trust me, problems come up in almost every transaction. The inspection reveals foundation issues. The appraisal comes in low. The buyer's financing falls through at the last minute. The title company discovers a lien nobody knew about. A seasoned agent has seen it all before and knows exactly how to navigate these situations without everyone losing their minds.
They've also built relationships throughout the industry—with lenders, inspectors, contractors, title companies, and other agents. Those relationships mean faster responses, better communication, and smoother transactions. When your agent can text their favorite lender and get your pre-approval questions answered in an hour instead of three days, that matters.
Experienced agents also bring sharper negotiation skills to the table. They know when to push, when to compromise, and how to structure offers that actually get accepted in competitive markets. They can spot overpriced listings, identify homes with hidden potential, and advise you on which repairs are worth negotiating for and which ones aren't worth the fight.
From a financial standpoint, a skilled agent can often save or make you thousands more than their commission costs. They price homes strategically to maximize offers. They market properties to reach serious buyers. They know how to position your offer to stand out from the crowd. They catch issues in contracts that could cost you money down the road.
And let's not forget customer service. Agents who've been doing this successfully for years understand that their reputation is everything. They return calls and texts promptly. They explain things clearly. They show up prepared. They treat your money like it's their own money. They're not juggling six other careers while helping you buy or sell—this is what they do, and they're damn good at it.
"Real estate sales is a noble profession, but not everybody is cut out for it," says Mike Oddo, CEO of HouseJet. "The agents who get in and stay in the real estate market are the ones who work the hardest, smartest and who take the best care of their clients. Those are the professionals you want in your corner when you're making one of the biggest financial decisions of your life."
How to Choose the Right Agent
So how do you find one of these experienced, capable agents instead of accidentally hiring someone who got their license three months ago and has only sold one house (their own)?
Do your homework. Interview multiple agents before you commit. Ask how many transactions they closed last year. Find out how long they've been in business. Request references from recent clients. Look at their online reviews. Ask about their marketing strategy if you're selling, or their buyer representation approach if you're purchasing.
Pay attention during your initial conversations. Do they ask good questions about your situation and goals? Do they explain things in a way that makes sense? Do they seem genuinely interested in helping you, or just interested in getting a signature on a listing agreement?
HouseJet recommends that buyers and sellers always do some research about the agent(s) you are considering working with. Choosing your agent because they were the one sitting at the open house you went to could cost you thousands in the long run.
The best agents interview you just as much as you interview them. They want to make sure you're a good fit too, because they understand that successful transactions require good working relationships.
The Bottom Line
HouseJet is not blind to the reality of how agents get paid and where the money goes. Real estate agent compensation might seem straightforward from the outside, but it's actually pretty complicated once you understand all the splits and expenses involved. The agents who stick around and build successful careers do so because they're genuinely good at what they do—and that expertise is worth paying for.
When you're buying or selling a home, you want someone who's seen every curveball the market can throw and knows how to handle it. You want someone whose phone relationships can solve problems fast. You want someone who treats your transaction like it's the most important deal they've ever done.
That person might cost the same commission percentage as the brand-new agent, but the value they deliver is light-years ahead. Choose wisely, and you (and your bank account) will thank yourself later.
