Realtors in Texas get paid through commissions on closed home sales, not salaries. The commission is a negotiated fee, usually a percentage of the final sale price, that comes out of the closing proceeds and flows through each agent’s sponsoring broker. Total commissions typically land somewhere between 5% and 6% of the sale price, split between the listing side and the buyer’s side, though every piece of that number is open to negotiation.
Who Pays the Commission
For decades, the seller paid one lump commission that covered both agents. The listing brokerage advertised a buyer-agent commission on the MLS, and the whole amount came out of the seller’s proceeds at closing. That system ended on August 17, 2024, when the National Association of Realtors settlement took effect. Sellers are no longer required to cover the buyer’s agent fee, and MLS platforms can no longer display offers of buyer-agent compensation.
Many Texas sellers still choose to contribute toward the buyer’s agent fee because it makes the listing more attractive. The standard Texas residential contract now handles this in two places: one provision covers brokerage fees the seller has agreed to pay directly, and a separate provision lets the seller contribute a specific amount that the buyer can apply toward their own agent’s fee.1Texas Real Estate Commission. Clearing Up Compensation Confusion, Water Disclosure Discussion, and More: BLC Recap That second contribution is a seller concession negotiated deal by deal, not an obligation baked into the listing agreement.
So depending on the transaction, a buyer’s agent may be paid by the seller directly, paid through a seller concession the buyer applies to their agent, or paid by the buyer out of pocket.
Typical Commission Rates in Texas
No Texas law sets a standard commission rate, and no industry group can set one either. Every commission is a private negotiation between you and the brokerage.
Total commissions in Texas currently average around 5.8% to 5.9%, typically divided roughly in half between the listing side and the buyer’s side. On a $350,000 home at a combined 5.88%, that works out to about $20,580 total, with each brokerage receiving roughly half. Full-service listing agents who price the home, coordinate showings, manage negotiations, and handle contract compliance typically charge in the 2.5% to 3% range for their side alone.
Percentages aren’t the only structure. Some brokerages offer flat-fee arrangements, particularly on the listing side, where sellers pay a fixed amount (often a few hundred to a few thousand dollars) for MLS access and basic marketing, then handle showings and negotiations themselves. The trade-off is straightforward: lower fees usually mean more work on your end.
How Brokerages and Agents Divide the Money
Commission money moves through two separate splits. The first is between the listing brokerage and the buyer’s brokerage, based on whatever was negotiated in the transaction. The second is inside each brokerage, between the firm and the individual agent.
Individual agents never receive commission directly from a client or from the other side’s brokerage. Texas law is explicit: a sales agent can only accept compensation from the broker who sponsors them, and can only pay commissions through that broker.2State of Texas. Texas Occupations Code 1101.651 – Certain Practices Prohibited If an agent wants commission checks made out to their own LLC or S-corp, that entity has to be licensed as a broker or meet specific registration requirements with the Texas Real Estate Commission.3State of Texas. Texas Occupations Code 1101.355 – Additional General Eligibility Requirements for Business Entities
How much of the brokerage’s share the agent keeps depends on their independent contractor agreement. Common arrangements include:
- 50/50 splits, the traditional starting point, especially for newer agents.
- 60/40 or 70/30 splits for more experienced or higher-producing agents. On a $10,000 brokerage commission at 70/30, the agent keeps $7,000.
- 100% models, where the agent keeps the entire commission but pays the brokerage a flat monthly desk fee regardless of production. This rewards high-volume agents and punishes slow months.
Beyond the split itself, agents at many brokerages pay for errors-and-omissions insurance, MLS access fees, technology platforms, and marketing out of their own share. An 80/20 split does not mean the agent pockets 80% of the gross commission as take-home pay.
When and How Agents Actually Get the Check
The money moves at closing, managed by a title company acting as escrow agent. The title company calculates each brokerage’s commission from the final sale price and the terms of the listing agreement and any buyer-broker compensation arrangement. Those amounts are deducted from the seller’s proceeds, and from the buyer’s funds if the buyer is paying their own agent, and appear as separate line items on the Closing Disclosure.4Consumer Financial Protection Bureau. Closing Disclosure
Once the loan funds and the deed is recorded, the title company wires or cuts checks to each brokerage. Agents then wait for their sponsoring broker to process the payment and issue their individual share. Some brokerages pay within a day or two of closing; others run on a weekly or biweekly payroll cycle.
Brokerages can also rebate a portion of their fee back to the party they represent, and a listing broker can agree to reduce its commission at the seller’s request.5Texas Real Estate Commission. Intermediary Relationships – What You Need to Know
Written Buyer Agreements Starting January 1, 2026
Starting January 1, 2026, any Texas license holder working with a residential buyer must have a signed written agreement in place before showing property or submitting an offer on the buyer’s behalf.6State of Texas. Texas Occupations Code 1101.563 – Written Agreement Required The rule covers residential property, including single-family homes and small multi-unit buildings. It does not apply to commercial property or tenant representation.
The agreement has to spell out what services the agent will provide, when the agreement expires, whether the buyer is locked in exclusively with one agent, the exact amount or rate the broker will receive and how it’s calculated, and a conspicuous statement that broker compensation is not set by law and is fully negotiable. Showing-only agreements, where the agent isn’t representing the buyer, are capped at 14 days and must be non-exclusive. If a showing-only arrangement turns into an offer, the agent has to execute a separate representation agreement before doing anything more.7Texas Real Estate Commission. What Changes in 2026 About Buyer/Tenant Representation in Texas
The takeaway for buyers: before your agent takes you to a showing, you’ll be asked to sign an agreement that says, in writing, how much they will be paid and by whom.
Taxes on Commission Income
Nearly all Texas real estate agents work as independent contractors, not employees. Instead of having Social Security and Medicare taxes withheld from a paycheck, agents owe self-employment tax on their net earnings at a combined rate of 15.3%: 12.4% for Social Security and 2.9% for Medicare.8Internal Revenue Service. Topic No. 554, Self-Employment Tax The Social Security portion applies only to the first $184,500 of net earnings in 2026; the Medicare portion has no cap. An additional 0.9% Medicare surtax kicks in on earnings above $200,000 for single filers.
Because no employer withholds taxes, agents make quarterly estimated tax payments to the IRS. For 2026, the deadlines are April 15, June 15, September 15, and January 15, 2027.9Taxpayer Advocate Service. Making Estimated Payments Missing a deadline or underpaying triggers a penalty even if the return itself is accurate in April.
Texas has no state income tax, but federal self-employment tax alone takes a significant bite. An agent who nets $80,000 in commission income after business expenses owes roughly $12,240 in self-employment tax before federal income tax is even calculated. Setting aside 25% to 30% of every commission check for taxes is a common rule of thumb in the industry.
VA Loan Buyers: A Special Rule
Veterans using a VA home loan face a specific wrinkle. VA regulations have historically prohibited veterans from paying real estate brokerage charges, and after the NAR settlement removed automatic seller-paid buyer-agent compensation, VA buyers had no reliable way to compensate their own agent if a seller refused to contribute.
The VA issued a temporary variance effective August 10, 2024, allowing veterans to pay reasonable buyer-broker fees. Under that policy, any buyer-broker charges paid by the veteran cannot be rolled into the loan amount and must come from the veteran’s own funds, and VA lenders count these charges when evaluating whether the borrower has enough cash to close.10Veterans Benefits Administration. Circular 26-24-14 – Temporary Local Variance for Certain Buyer-Broker Charges The VA has said it will develop a permanent rule through formal rulemaking once the market stabilizes. If you’re buying with a VA loan, confirm the current policy status with your lender before signing a buyer representation agreement that commits you to paying your agent directly.