When Do Real Estate Agents Get Paid Commission?
Quick Answer – How Do Real Estate Agents Get Paid?
In most traditional American real estate deals, real estate agents get paid when the transaction officially records and the escrow officer (or closing attorney) releases funds, often within minutes of the wire hitting the brokerage trust account.
Because state regulations and brokerage policies differ, an agent may sometimes wait until the next business day for bank clearance, yet the lion’s share of agents are paid at closing when money moves from buyer to seller and commissions are disbursed.
Typical Payment Timeframe at Closing
On closing day, the escrow or settlement company tallies the Closing Disclosure, verifies that buyer funds and lender proceeds arrive, and then wires out the commission paid to each brokerage listed on the commission instructions.
Many big brokerages accept same‑day wires, so a listing agent or a buyer’s agent can see the money hit the brokerage account before they leave the parking lot.
Smaller outfits that rely on paper checks might require overnight courier delivery or next‑day mobile deposit, which means the agent’s bank may release cash one business day later.
Either way, that commission is typically available to the agent once the brokerage accountant “checks in” the file—often the same afternoon.
How Real Estate Commission Works
Commission Split Percentage and Calculation
Residential real estate commission is usually based on a percentage of a home’s sale price rather than a flat fee.
A seller and listing agent might agree to 5 percent commission, then advertise half of that to the buyer’s agent.
For example, on a $400,000 home sale, a 5 percent real estate commission produces a total commission of $20,000.
If the split between the listing agent and the buyer’s agent is even, each side earns $10,000 before the brokerage cut.
Listing Agent vs. Buyer’s Agent Splits
The listing agent and the buyer’s agent take separate paths to the closing table, but they share the commission.
Market norms—plus how aggressively agents negotiate the commission—determine whether the split between the listing agent and the buyer’s agent is fifty‑fifty or skews in favor of one side.
In competitive markets where agents often slash fees to win listings, a listing agent could advertise just 2 percent to the cooperating buyer agent and keep the remainder, yet other regions prefer a balanced arrangement so buyer agents stay motivated.
Brokerage Splits and Team Arrangements
Real estate agents are paid through their brokerage, not directly from escrow.
Brokerages keep a slice of the commission, dubbed the commission split, for risk management, overhead, and brand value.
According to the National Association of Realtors‘ latest Member Profile, 35 percent of Realtors® work under a fixed split, while 20 percent use a graduated split that improves with production.
In a typical 70/30 structure, a new agent might pay 30 percent of their gross commission income to the broker.
Teams layer another override: the team leader may collect an additional 5‑10 percent before the remaining commission is split with the individual agent.
The Transaction Timeline That Triggers Commission
From Accepted Offer to Closing Day
An agent’s right to commission kicks in the instant the buyer and the seller sign an accepted offer, but payment doesn’t flow until the real estate transaction closes.
Over the next thirty to forty‑five days, the listing agent shepherds inspections, appraisal, and any repairs, while the buyer agent coordinates loan underwriting. Once underwriting issues a “clear to close,” the closing cost figures lock, documents are generated, and both sides schedule the signing.
Escrow and Contingencies
Escrow officers or closing attorneys hold the earnest money deposit in a neutral account, safeguarding it until contingencies such as financing and appraisal are satisfied.
If the sale collapses because a buyer can’t get a loan, no commission is paid even though agents work countless hours.
This contingency‑driven environment explains why agents work on commission, no salary, and why a commission-based model incentivizes them to see a deal through every hurdle.
Post‑Closing Disbursement Process
At the signing table, buyers and sellers execute loan documents, transfers, and the final Closing Disclosure.
The escrow officer uploads the deed for recording, then releases funds by wire according to the settlement statement.
Commission paid to the brokerage splits instantly, and each agent keeps their contracted share once the brokerage accounting team approves the file.
Some brokers require proof of recorded deed before they post commission to an agent’s account, which can add a few hours if the county recorder is backlogged.
Exceptions and Variations
Early Release of Commission
A handful of states allow early release of commission—sometimes called “broker lien rights”—when certain milestones occur, like loan funding the day before the deed records.
In that scenario, a listing agent would receive wire confirmation, and the brokerage disburses the agent’s commission one day ahead of closing.
Early release remains rare because most lenders require funds to stay in escrow until title officially transfers.
Rental Transactions and Referral Fees
Rental transactions typically pay a flat commission or one month’s rent, and payment timing depends on local custom.
Property managers often cut a check the same day a tenant moves in, whereas apartment communities pay the referring agent after the tenant’s first rent clears.
Inter‑agent referrals, where an agent represents a client outside their service area, follow a similar pattern: the referring realtor earns their share after the primary agent closes, and commission paid flows through the accepting brokerage.
State and Local Law Differences
Some states mandate that commissions disburse only after the deed records, while others allow funding and disbursement as soon as lenders sign off.
Attorneys handle closings in many Eastern states, so the attorney’s trust account distributes funds once local recorders confirm the transfer.
Agents entering the real estate industry should read their independent contractor agreements carefully because state rules supersede brokerage policy.
What Can Delay Commission Payment?
Appraisal or Financing Issues
Lenders can pause the clock if an appraisal comes in low or buyer credit changes.
An experienced agent often negotiates repairs or price adjustments so the deal survives, but until financing reapproves, agents work without compensation.
Agents can negotiate for an extension, yet every day of delay postpones when real estate agents are paid.
Title Problems
Clouded title—liens, unpaid taxes, encroachments, or probate questions—stalls closing.
Clearing judgments might take weeks, and the commission split for new agreements may shift if the seller must relist at a different price.
Because the seller pays the commission, a delay eats into proceeds and may force renegotiation.
Broker Processing Delays
Even after funding, a broker must process compliance paperwork.
Missing initialed disclosures, expired signatures, or holidays can push payment to the next business day.
Agents often gripe that broker processing takes longer than the bank, so solid record keeping and prompt uploads are the best way real estate agents protect their paycheck.
How Realtors Can Protect Their Commission
Solid Independent Contractor Agreements
Every agent or broker relationship hinges on an independent contractor agreement that spells out the commission split, desk fees, and timing.
Without clear language, an agent could face disputes about how much a real estate agent earns or when agents get paid their commission. New agents, especially, should insist on a document that outlines how higher commission tiers unlock and whether the agent keeps bonuses.
Using Commission Advance Services Responsibly
When deals drag or market cycles thin, agents work on commission advances—a short‑term loan against a pending commission.
These services wire funds within hours but charge agent fees that can mimic credit‑card interest. An agent must weigh whether faster cash flow outweighs paying a percentage of their earnings.
Record Keeping and Compliance
Real estate professionals who submit complete files—receipts, repair invoices, mileage logs—reduce broker holds and speed up commission disbursement.
Lenders likewise reward clean files with faster Clear to Close notices, so agents often store documents in cloud systems from day one.
Tax Implications and Bookkeeping Tips for Agents
Setting Aside Funds for Quarterly Taxes
Real estate agents receive 1099 income, not W‑2 wages.
A safe rule of thumb is to squirrel away twenty‑five to thirty percent of every gross commission for estimated federal and state taxes.
Because agents are paid at the end of the month or quarter, setting up automatic transfers avoids tax‑time panic.
Tracking Expenses for Deductions
Mileage, marketing ads, staging supplies, client meals—these deductions shrink taxable income.
The Internal Revenue Service (IRS) lets agents deduct ordinary and necessary business expenses, so meticulous bookkeeping converts gross agent commission into a healthier net.
Experienced real estate agents often hire bookkeeping apps or even a part‑time accountant to reconcile statements weekly.
Key Takeaways and Next Steps for Agents and Consumers
Most real estate agents get paid their commission at closing, after escrow releases funds and the brokerage records the transaction.
That commission is split between the listing agent and the buyer’s agent, then divided again by the brokerage according to the agent’s commission split agreement.
While the average real estate commission hovers near 5.44 percent of the sale price, commission fees remain negotiable, and state laws can tweak timing.
Buyers and sellers who want to understand how agents charge a commission—or agents who want to forecast cash flow—should focus on the escrow timeline, compliance speed, and any local quirks that might delay funding.
If you have questions about how much a real estate agent might earn in your market, or you’re ready to hire real estate agents who know their way around the local real estate market, reach out and schedule a consultation.
Frequently Asked Questions
When do buyer and seller agents actually receive the funds?
Both the seller’s agent and the buyer’s agent usually receive their share once escrow or the closing attorney wires proceeds to each brokerage on recording day. The brokerage accounting office then releases the agent’s portion.
Who pays the commission—buyer or seller?
In most U.S. home sales, the seller pays the commission out of the sale proceeds, though the cost is factored into the overall economics that both buyer and seller negotiate.
Can real estate agents negotiate the commission rate after a contract is signed?
Yes, agents can negotiate the commission even after listing, but any change requires written consent from all parties, including the buyer’s agent if the cooperative split is modified.
Do agents ever get paid a salary instead of commission?
A handful of discount brokerages and referral incubators offer a modest base salary, yet the overwhelming majority of agents work on commission because that model aligns incentives with closing success.
What happens if the sale falls apart after the appraisal?
If financing fails or contingencies collapse, the real estate transaction terminates, and no commission is paid. Agents only earn a commission when the deal closes and records.