How Commission Splits Actually Work for New Real Estate Agents

The split is between you and your brokerage — not the buyer or seller

The listing or buyer's agent commission (commonly 2.5–3% of the sale price, negotiated per listing) is paid by the brokerage that represented that side of the deal. Your brokerage then splits that commission with you according to your agreement — 50/50, 70/30, 80/20, or a graduated scale that improves as you produce more.

Splits usually cap — then you keep more

Many brokerages use a capping model: once your company-dollar contribution hits a set amount for the year (say $18,000), your split jumps to 100% minus a smaller transaction fee for the rest of the year. New agents rarely reach the cap in year one, but it's worth understanding before you compare offers.

Franchise and royalty fees stack on top

If your brokerage is a franchise, a royalty fee (often 6–8% of your commission) may come off the top before your split is calculated. A "70/30" split at a franchise brokerage can net out closer to 65% after royalties — ask for the actual math, not just the headline number.

Don't forget the costs that come out after the split

• E&O insurance (sometimes a flat per-transaction fee, sometimes annual)
• MLS and association dues
• Transaction coordinator fees, if you use one
• Marketing and lead-generation costs you pay yourself

A deal that nets 70% at the brokerage level can net meaningfully less once these are subtracted. Model your actual take-home before you count a commission as income.

Bottom line

Compare brokerage offers on net take-home, not headline split percentage. Ask directly: what's the cap, what's the royalty fee, what per-transaction fees apply, and what do I actually keep from a $10,000 commission. The honest answer to that question matters more than any recruiting pitch.