What does a real estate agent actually do, and who pays them?

On the selling side an agent prices the property against comparable sales, prepares and markets it, manages showings, screens offers, negotiates terms, and coordinates the transaction through inspection, appraisal, and closing. On the buying side an agent identifies properties, advises on value and offer strategy, negotiates, and manages deadlines and paperwork through closing. The value varies considerably by agent, and the difference between an experienced local specialist and someone doing this part-time is substantial in both price outcome and transaction reliability.

Compensation historically worked in a way many participants did not understand: the seller paid a total commission, commonly around five to six percent, which was split between the listing brokerage and the buyer's brokerage. Because it came out of sale proceeds, buyers often believed their agent was free while the cost was embedded in the price they paid. Following the National Association of Realtors settlement that took effect in August 2024, offers of buyer-agent compensation can no longer be advertised on the multiple listing service, and buyers must sign a written agreement with their agent specifying compensation before touring homes. The practical result is that buyer agent fees are now explicitly negotiated and may be paid by the buyer directly, by the seller as a negotiated concession, or some combination.

What this means in practice. Commission rates have always been negotiable and are now more visibly so, and the written buyer agreement is a contract worth reading rather than signing at a showing, particularly regarding its duration and exclusivity. Compare agents on relevant recent transactions in your specific market and price range rather than on brokerage brand. Understand who your agent represents, since dual agency, where one agent represents both sides, is permitted in some states and creates an obvious conflict. And note that discount and flat-fee models exist and have become more viable, though the tradeoff in service level is real and worth evaluating rather than assuming either way.