NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Compensation Structures for REALTORS®
NAR Member Profile (National Association of REALTORS®, 2021)
In the annual NAR Member Profile, Chapter 3, “Income and Expenses of REALTORS®,” details the compensation structure for REALTORS®, the income REALTORS® earn, and the expenses REALTORS® face, both business and otherwise. 37% of REALTORS® earn a fixed commission split (under 100%), 23% earn a graduated commission split, 15% have a capped commission split, 14% earn 100% commission, and 12% of REALTORS® earn commission in another way. The compensation structure is then broken down by type of compensation by experience and by gross personal income.
Compensation Plan Basics
The Real Estate Commission: How Much are Realtor Fees? (realtor.com®, Mar. 18, 2022)
Learn from a REALTOR® about how real estate agents are paid and how buyers/sellers compensate real estate agents. The article discusses what the real estate commission covers, what a typical compensation structure looks like for buyers and sellers’ agents, how the buyer/seller splits the compensation, and answers the question “Is a real estate commission negotiable?”
Who Pays the Commission to the Real Estate Agent? (The Balance, Jan. 7, 2022)
“Many home buyers and sellers don't understand exactly who pays the real estate agent involved in the transaction. To understand who pays real estate commissions—whether it's sellers or buyers or both—look at how real estate agents are paid and how they share cooperating commissions.”
What is a Real Estate Commission? 5 Myths Busted for First-Time Sellers (HomeLight, Jan. 6, 2022)
In this article, learn the basics about agent fees and commissions and how commission rates fluctuate with the market. Then understand the breakdown of services for both buyers and sellers that are offered because of commissions, including “prepping and presenting the house,” “working with the appraiser,” “reviewing offers,” showing properties,” and “building relationships with the sellers.” Finally, bust a few common commission related myths, including myths about discounted commissions, negotiation, and dual agency.
How Do Real Estate Commissions Work? (U.S. News and World Report, Mar. 16, 2021)
“While many professional services, like attorneys or accountants, charge by the hour, real estate agents typically work for a commission in the form of a percentage of the money exchanged in the final transaction. This money is paid out only when the deal closes, so if you are not successful in buying or selling your home, your real estate agent does not make any money. Some agents may offer flat fees for individual services, or you may find a broker that pays agents an annual salary, though this is less common than payment through commission.”
2021 National Real Estate Compensation Survey (CEL & Associates, 2021)
The annual National Real Estate Compensation Survey by CEL & Associates provides compensation salary ranges and bonus percentages for real estate agents, but also for “over 190 positions and nearly 400 participant companies in the office, industrial, retail, residential, advisory and brokerage/services sectors. It incorporates public and private companies engaged in investment, management, development, construction, leasing, and many other real estate functions.” Utilize this data to compare salary ranges for various roles throughout the real estate industry.
Methods of Compensating Real Estate Agents (The Balance, Nov. 20, 2019)
“Real estate agents are compensated in various ways, so when choosing a broker, understand that the commission arrangement may not be the most important factor. Weigh the services your broker provides to agents, as well as the expected number of prospect leads and their quality.” Understand the different types of real estate compensation structures, including “the Traditional Broker/Agent Commission Split,” “the 100% Commission Split Model,” “Referral Fees from One Brokerage to Another and Agent Split,” and “Percentage Paid to Real Estate Franchise for Business.”
Compensation and Short Sales
Short Sale Transaction and Processing Requirements (Freddie Mac, Jun. 9, 2021)
This “Seller/Servicer Guide” outlines Freddie Mac’s guidelines for short sales. “Unless a real estate broker's sales commission exceeds 6% of the Mortgaged Premises sales price, the Servicer must not, as a condition of the Servicer's acceptance of an offer, renegotiate the real estate broker's sales commission to an amount that is lower than the amount that was originally agreed upon between the broker and the Borrower. In the event the sales commission exceeds 6%, the Servicer must renegotiate the commission to limit it to 6% of the Mortgaged Premises' sales price.”
HAFA Commissions Policies (Government Affairs, National Association of REALTORS®)
This two-pager from NAR explains the Home Affordable Foreclosure Alternatives Program (HAFA) rules on commissions. Understand the differences between non-Fannie Mae/Freddie Mac loans and Fannie Mae/Freddie Mac loan rules. Regardless of the type of loan, the commission rate on short sales is limited to 6%.
Freddie Mac Short Sales Commission Policy (Government Affairs, National Association of REALTORS®)
“In discussions between NAR and Fannie Mae, Fannie Mae has reconfirmed its short sale commission policy and established a process for REALTORS® to follow if issues arise. On February 24, 2009, Fannie Mae sent Announcement 09-03 to its servicers instructing them not to negotiate commissions on short sales below the amount negotiated by the listing agent, unless the commission exceeds 6 percent. Private mortgage insurance companies and second lien holders may still seek to reduce commissions. In response to concerns raised by NAR that some servicers of Fannie Mae loans are unaware of this policy or believe it is not binding, Fannie Mae has established a process for NAR members when short sale commission issues arise.”
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
Ready-Made Employment Contracts, Letters & Forms (Kindle, eBook)
What Your CEO Needs to Know About Sales Compensation (Kindle, eBook)
Beyond 401(k)s for Small Business Owners: A Practical Guide to Incentive, Deferred Compensation, and Retirement Plans (Kindle, eBook)
Compensating the Sales Force (eBook)
Books, Videos, Research Reports & More
As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.
Center for REALTOR® Financial Wellness (National Association of REALTORS®)
31 Reasons Your Real Estate Agent is Worth Their Commission (Brand Face Real Estate, 2018)
111 Ways to Justify Your Commission: Value Adding Strategies for Real Estate Agents and Brokers (New York, NY: Kaplan, 2007) HD1382 .L44
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The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.