Definition
Commission is the percentage of a home's sale price paid to the real estate agents involved in the transaction, traditionally around 5% to 6% split between the listing agent's side and the buyer's agent's side. This fee is deducted directly from the seller's proceeds at closing, meaning it comes off the top before you ever see your final check. For homeowners weighing a traditional listing against a direct sale, commission is often one of the single largest costs in the entire transaction. Recent industry changes have made buyer-side commission structures more openly negotiable than in the past, giving sellers a bit more flexibility to discuss rates with their agent. Selling directly to a buyer, without an agent representing either side, removes this cost from the equation entirely. Understanding exactly how much commission will reduce your proceeds helps you compare a listed sale honestly against other selling options.
Example
Renee listed her home in Sacramento for $325,000 and signed a standard agreement paying a 6% commission, split evenly between her listing agent and the buyer's agent. When her house sold at full price, that commission came to $19,500, money that never reached her side of the final settlement statement. She'd budgeted around the $325,000 sale price and was caught off guard by how much smaller her actual check turned out to be once commissions and other fees were subtracted. Looking back, she wished she'd asked for a full net-proceeds estimate before signing her listing agreement. When she later compared that outcome to a direct cash sale with no agents involved on a rental property she owned, the absence of any commission made a noticeable difference in what she ultimately kept.