How Do Real Estate Agents Get Paid? Understanding commission structure
If you're buying or selling a home in Myrtle Beach, SC, one of the questions you're likely to have is: How do real estate agents get paid?
Most people have heard about “real estate commission,” but the actual process can be confusing. Who pays the commission? How much does a real estate agent make? Does the seller pay the buyer's agent? Are commissions negotiable? And what has changed with the recent real estate industry rules?
The short answer is that real estate agents are generally paid through commissions or other compensation agreed to as part of the real estate transaction. However, how that compensation is structured can vary depending on whether you're buying or selling, the agent's agreement with the client, and the negotiations between the parties.
If you're considering buying or selling a home in Myrtle Beach, Carolina Forest, Conway, North Myrtle Beach, Murrells Inlet, or anywhere along the Grand Strand, understanding how real estate commissions work can help you make better decisions.
Here's what you need to know.
How Does Real Estate Commission Work?
Traditionally, real estate agents are compensated based on a percentage of the home's sale price.
For example, if a home sells for $400,000 and an agent's agreed compensation is 3%, that would equal:
$400,000 × 3% = $12,000
However, it's important to understand that there is no universal “standard” real estate commission rate.
Compensation is negotiable and can vary based on the agent, brokerage, services provided, property, market conditions, and the agreement between the agent and client.
This is one reason you should have a conversation with your real estate agent about compensation before signing an agreement.
Who Pays the Real Estate Agent?
This is where things can get confusing.
There are typically two agents involved in a residential real estate transaction:
- The listing agent, who represents the seller
- The buyer's agent, who represents the buyer
Each agent has a separate relationship with their client and may have a separate compensation agreement.
When You're Selling a Home
As a seller, you enter into an agreement with your listing agent that explains the services they will provide and how they will be compensated.
The listing agent may provide services such as:
- Developing a pricing strategy
- Preparing the property for market
- Professional photography
- Creating the MLS listing
- Marketing the property
- Digital advertising
- Social media marketing
- Coordinating showings
- Communicating with buyers' agents
- Negotiating offers
- Managing contract deadlines
- Coordinating inspections and repairs
- Helping navigate the closing process
The exact services vary by agent and agreement.
When You're Buying a Home
If you're purchasing a home, you'll generally enter into a written buyer representation agreement with your real estate agent.
That agreement should explain how your agent will be compensated.
Depending on the transaction, the buyer's agreed compensation may potentially be paid by the buyer, paid or contributed toward by the seller, or handled through another arrangement permitted by the agreement and applicable rules.
The important point is this:
Don't assume the seller automatically pays your buyer's agent's compensation. Discuss it with your agent before you start shopping for homes.
Can a Seller Pay the Buyer's Agent?
Yes, a seller may agree to contribute toward a buyer's agent's compensation as part of negotiating the transaction.
This is different from assuming that the seller is automatically responsible for paying the buyer's agent.
The parties can negotiate different terms as part of an offer.
For example, a buyer might make an offer that requests the seller contribute a certain amount toward the buyer's transaction costs, which could potentially include agreed buyer-agent compensation where permitted.
Whether the seller agrees is part of the negotiation.
This means that buyer-agent compensation can become part of the overall financial conversation when negotiating a home purchase.
Are Real Estate Commissions Negotiable?
Generally, yes.
Real estate commissions and other forms of agent compensation are negotiable and are established through agreements between the agent and client.
That doesn't necessarily mean you should automatically choose the agent offering the lowest fee.
Instead, consider the value you're receiving for the compensation you're paying.
For a seller, that might include:
- How the home will be priced
- Marketing strategy
- Photography and video
- Online exposure
- Advertising
- Showing strategy
- Communication
- Negotiation skills
- Contract management
- Local market knowledge
- Experience handling problems when they arise
For a buyer, it may include:
- Understanding your needs
- Finding appropriate properties
- Access to homes
- Market analysis
- Negotiating the purchase
- Identifying potential concerns
- Coordinating inspections
- Managing the transaction
- Helping you navigate the contract and closing process
The cheapest agent isn't necessarily the agent who will save you the most money.
Does a Real Estate Agent Get the Entire Commission?
No.
This is another common misconception.
When you see a real estate commission amount, that does not necessarily represent the amount of money the individual real estate agent takes home.
A real estate agent may work under a brokerage and have a commission split or other financial arrangement with that brokerage.
There may also be business expenses involved, including:
- Marketing
- MLS and association expenses
- Photography
- Signs
- Insurance
- Technology
- Lead generation
- Advertising
- Gas and vehicle expenses
- Office expenses
- Transaction-related services
- Taxes
So if an agent earns a $10,000 gross commission on a transaction, that does not mean the agent puts $10,000 in their pocket.
What Is the Difference Between a Realtor and a Real Estate Agent?
You'll often hear people use “Realtor” and “real estate agent” interchangeably, but they're technically not the same thing.
A real estate agent is a licensed professional who can represent buyers and/or sellers in real estate transactions.
A REALTOR® is a real estate professional who is a member of the National Association of REALTORS® and agrees to follow its Code of Ethics.
Not every real estate agent is a REALTOR®.
Regardless of the title, what matters when you're choosing an agent is whether that professional is a good fit for your particular transaction.
How Much Does a Real Estate Agent Make on a $500,000 Home?
This is one of the most common questions people ask.
The answer depends on the compensation agreement.
For example, if an agent's agreed compensation were 3% on a $500,000 transaction:
$500,000 × 3% = $15,000
But remember: this is the gross compensation amount before any brokerage split, business expenses, taxes, or other costs.
Also, a real estate transaction can involve compensation for more than one professional, depending on the agreements between the parties.
That's why it's misleading to simply look at a home's sale price and assume an agent is taking home a particular percentage.
Do Real Estate Agents Get Paid If a House Doesn't Sell?
Usually, real estate agents are paid when a transaction closes, but the answer depends on the specific agreement between the agent and client.
Listing agreements can contain different provisions regarding compensation, cancellation, protection periods, and other circumstances.
Before hiring a real estate agent, read the agreement and ask questions about exactly when compensation is earned and when it is payable.
A reputable agent should be comfortable explaining this to you.
What Changed With Real Estate Commissions?
The way real estate compensation is discussed and handled has changed significantly in recent years.
One of the biggest changes is that buyer-agent compensation is no longer displayed on REALTOR®-owned MLSs in the same way it historically was, following the National Association of REALTORS®' settlement practice changes that took effect in August 2024.
Buyers are also generally required to enter into a written agreement with their agent before touring a home, depending on the circumstances and applicable rules.
These agreements explain important details, including how the buyer's agent will be compensated.
The changes don't mean real estate agents suddenly work for free or that commissions have disappeared.
Instead, they make it more important for buyers and sellers to have clear conversations about representation and compensation before entering into a transaction.
Does Hiring a Real Estate Agent Cost Money?
Potentially, yes—but the actual cost depends on the agreement you enter into with your agent.
For sellers, compensation to the listing agent is generally addressed in the listing agreement.
For buyers, compensation is addressed in the buyer representation agreement.
There can also be situations where another party agrees to contribute toward some or all of an agent's agreed compensation.
Because there isn't one universal structure, ask your agent to explain exactly how they get paid before signing an agreement.
You should know:
- How much the agreed compensation is
- What services are included
- When compensation is earned
- When it is paid
- Whether there are additional fees
- What happens if the transaction doesn't close
- Whether another party may contribute toward the compensation
There should be no mystery surrounding the financial side of your relationship with your real estate agent.
Should I Choose a Real Estate Agent Based on Commission Alone?
I wouldn't recommend it.
If you're selling a $500,000 home, saving a small amount on commission might sound attractive.
But consider what happens if a stronger marketing strategy, better negotiation, better pricing, or better transaction management results in a significantly better outcome.
The lowest fee doesn't automatically equal the lowest overall cost.
For example, an agent who prices your home incorrectly could cost you far more than you saved in commission.
Likewise, an agent who isn't a strong negotiator could potentially leave money on the table during the transaction.
When interviewing a Myrtle Beach real estate agent, I'd recommend asking:
“What exactly am I getting for your compensation?”
That's a much better question than simply asking:
“What's your commission?”
What Should I Ask a Myrtle Beach Real Estate Agent About Their Commission?
Before hiring an agent, consider asking:
- How do you get paid?
- What is your compensation for representing me?
- What services are included?
- Are there any additional fees?
- How does buyer-agent compensation work if I'm selling my home?
- If I'm buying, what happens if the seller doesn't contribute toward my agent's compensation?
- What happens if the transaction doesn't close?
- What are my obligations under the representation agreement?
- How long is the agreement?
- What happens if I want to cancel the agreement?
- What makes your service different from another agent's?
A good agent should be willing to walk through these questions without making you feel uncomfortable for asking.
What Does a Myrtle Beach Real Estate Agent Actually Do for Their Commission?
This is perhaps the most important question.
When you hire an experienced Myrtle Beach real estate agent, you're not simply paying someone to unlock a door or put your property on the MLS.
A good agent can serve as your:
Market analyst.
They help you understand what your property is worth and how it compares with competing homes.
Marketing strategist.
They determine how your property should be presented to attract the right buyers.
Negotiator.
They help you evaluate offers and negotiate price and terms.
Transaction manager.
They help keep track of deadlines, inspections, appraisals, repairs, paperwork, and communication.
Local resource.
A local agent should know the neighborhoods, market conditions, common property issues, and the people and businesses involved in getting a transaction to closing.
Problem solver.
Real estate transactions don't always go according to plan. Inspection problems, appraisal issues, financing delays, repair negotiations, title issues, and other surprises can happen.
That's when experience matters.
Real Estate Commission in Myrtle Beach: What Should Buyers and Sellers Know?
The Myrtle Beach real estate market has its own characteristics.
The Grand Strand includes everything from:
- Oceanfront condos
- Second homes
- Vacation properties
- Primary residences
- Golf communities
- New construction
- Townhomes
- Investment properties
- Intracoastal Waterway homes
- Manufactured homes
- Luxury properties
The right strategy can be very different depending on what you're buying or selling.
For example, marketing a primary residence in Carolina Forest isn't the same as marketing an oceanfront investment condo in Myrtle Beach.
That's why I believe local experience matters when you're evaluating an agent's value—not just their commission rate.
An agent who understands Myrtle Beach and the surrounding communities can help you make decisions based on what's actually happening in the local market.
The Bottom Line: How Do Real Estate Agents Get Paid?
So, how do real estate agents get paid?
Real estate agents are generally compensated through an agreed commission or other compensation arrangement established with their client.
The amount and structure can vary.
For sellers, compensation for the listing agent is typically established in the listing agreement.
For buyers, compensation for the buyer's agent is addressed in a written buyer representation agreement.
A seller may also agree to contribute toward a buyer's agent's compensation as part of negotiating the transaction.
The most important thing is to understand the agreement before you sign it.
And when you're comparing real estate agents, don't look at commission in isolation.
Look at the entire value proposition:
Experience + Marketing + Local Knowledge + Negotiation + Communication + Transaction Management = The Value of Your Agent
If you're thinking about buying or selling a home in Myrtle Beach, SC or anywhere along the Grand Strand, I'd be happy to explain exactly how my compensation works, what services I provide, and what you can expect from me throughout the transaction.
There shouldn't be anything confusing or hidden about how your real estate agent gets paid.
You should know what you're paying, what you're getting, and why it matters.
Dusty Rhodes Properties is the Best Realtor in Myrtle Beach! We do everything in our power to help you find the home of your dreams. With experience, expertise, and passion, we are the perfect partner for you in Myrtle Beach, South Carolina. We love what we do and it shows. With more than 22 years of experience in the field, we know our industry like the back of our hands. There’s no challenge too big or too small, and we dedicate our utmost energy to every project we take on. We search thousands of the active and new listings from Aynor, Carolina Forest, Conway, Garden City Beach, Longs, Loris, Murrells Inlet, Myrtle Beach, North Myrtle Beach, Pawleys Island, and Surfside Beach real estate listings to find the hottest deals just for you!
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