Who pays who, and why
In a New York real estate sale, the seller pays the entire commission at closing. The buyer pays no commission directly, though they often pay it indirectly through a higher sale price. (Since the NAR settlement took effect in August 2024, buyer representation agreements have started to change this in some markets, but the underlying flow of money is the same.)
The commission is paid to the listing broker, meaning the brokerage that represents the seller, not the listing agent personally. The brokerage receives the full amount and then sends roughly half to the buyer’s broker, which is the separate brokerage that represents the buyer. Two brokerages end up holding the money before any agent sees a dollar.
The flow of a single commission
- 1
Seller
Pays the total commission at closing
- 2
Listing broker
Receives the full commission
- 3
Split between brokers
Roughly fifty-fifty between listing and buyer brokers
- 4
Each broker splits with agent
Anywhere from fifty-fifty to ninety-ten, depending on the agent
- 5
Agent pays taxes
Self-employment, federal, NY State, NYC city, and UBT
- 6
Agent take-home
Typically 50 to 60 percent of what the split produced
Inside each brokerage, the brokerage splits with its agent according to a prearranged agreement. This is what people mean when they talk about an agent’s “split.” A new agent on a fifty-fifty split keeps half of what the brokerage received. A more senior agent on a seventy-thirty keeps the larger share. Top producers often reach an annual cap, beyond which every additional deal that year flows entirely to the agent.
And then the agent pays taxes. Self-employment tax (which runs about 15.3 percent), federal income tax, New York State income tax, New York City income tax for city residents, and the New York City Unincorporated Business Tax once net earnings clear the threshold. The money that lands in the agent’s account is typically somewhere around 50 to 60 percent of what their split produced, and the split itself is 50 to 70 percent of what came in the door. Two stops between the sale price and the agent.
In practice
On an $850,000 Brooklyn sale at a 5 percent commission with a 70/30 broker split, the seller pays $42,500 in total. The buyer side receives $21,250, the agent keeps $14,875 after the broker takes a cut, and the take-home after every tax line is approximately $11,400. The agent does the work and ten different checks change hands. The commission calculator runs this cascade for any deal you plug in.
The seven people in every transaction
New agents often think a deal happens between a buyer, a seller, and an agent. In practice it is a coordinated dance between seven roles, and knowing who they are tells you who to call when something goes sideways.
Buyer
The person putting up the money. Interested in a fair price, clean title, sound property, and enough time to close.
Seller
The person taking money out. Interested in a strong price, a fast close, and confidence the deal will not fall apart.
Listing agent
Represents the seller. Markets the property, screens buyers, and negotiates on the seller’s side. Paid by the seller through the brokerage.
Buyer’s agent
Represents the buyer. Finds properties, runs comps, and negotiates on the buyer’s side. Paid through the listing brokerage, or sometimes by the buyer directly under post-NAR agreements.
Brokers (two)
The licensed brokerages each agent works under. They hold the money, manage compliance, and take their split before paying the agent.
Attorneys (two)
New York is an attorney state, and the buyer and seller each have one. Attorneys draft the contract, run due diligence, and handle the transfer at closing.
Title insurance company
Runs a title search, confirms the seller owns what they are selling, and issues insurance against undisclosed liens or claims discovered later.
On a New York City co-op there is an eighth role: the co-op board, which holds veto power over the buyer regardless of what the buyer and seller agreed to. On new development, the sponsor sits in the seller’s seat with their own attorney and their own customs (the sponsor pays no transfer tax, and the buyer absorbs both transfer taxes plus the sponsor’s attorney fee).
The shape of a deal
Every transaction follows the same arc, and only the timing varies. Knowing the shape lets you see where you are at any moment and what comes next.
- 1
Pre-listing
The listing agent does a comparative market analysis, agrees on pricing strategy with the seller, signs a listing agreement, takes photos, writes copy, and files with the MLS.
- 2
Offer
The buyer’s agent submits a written offer, and negotiation moves back and forth on price, contingencies, timing, and financing. A verbal acceptance carries no weight until a signed contract exists.
- 3
Contract
The buyer’s attorney drafts in NYC, the seller’s attorney drafts in most of the rest of New York. Both attorneys negotiate language. The buyer signs first and sends a 10 percent deposit, then the seller signs and the deal is legally binding.
- 4
Due diligence
Inspection if not waived, appraisal if financed, mortgage commitment letter that typically arrives 30 to 45 days later. Co-op deals add a board package and an interview. Condo deals require a right-of-first-refusal waiver. Every deal runs a title search.
- 5
Clear-to-close
The lender has its conditions met, the attorneys have settled every open item, title is clean, and any board has approved. The closing is then scheduled.
- 6
Closing
Walk-through that morning. All parties at the table or wires sent if remote. The deed is signed and delivered, keys change hands, and the commission is paid to the brokerage the same day. The agent receives their split a few days later.
A typical NYC timeline runs 60 to 90 days from accepted offer to closing on a condo, and 90 to 120 days on a co-op (the board package alone eats about a month). Cash deals can close in three or four weeks. Sponsor sales close on the sponsor’s calendar.
What is actually being signed
A NY transaction produces a stack of paper, most of which never gets read in detail. Each document has a purpose, and an agent who can explain them is an agent the client comes to trust.
Listing agreement
The seller hires the listing broker. Sets commission rate, listing period, and whether the arrangement is exclusive.
Buyer-rep agreement
Required in NY before showing any property under the NAR settlement rules that took effect August 2024. Defines who pays the buyer’s agent and how much.
Offer letter
Written and signed by the buyer. Not legally binding until both parties sign a contract, but creates a paper trail of intent.
Contract of sale
The binding document. Price, deposit, closing date, contingencies, and what conveys with the property. Drafted by an attorney.
Property Condition Disclosure Statement (PCDS)
NY law requires sellers of one-to-four family homes to complete it or credit the buyer $500. Most NYC sellers credit the $500.
Lead-based paint disclosure
Federally required for any property built before 1978.
Title commitment
The title company’s preliminary report on the property’s title history. Surfaces any liens, easements, or defects before closing.
Mortgage commitment
The lender’s written promise to lend, contingent on appraisal and final underwriting. The buyer’s financing contingency usually clears when this lands.
Deed
The document that transfers ownership. Signed at closing and recorded with the county clerk shortly after.
Settlement statement (ALTA / Closing Disclosure)
Every dollar in and out of the transaction. Required by RESPA for residential financed transactions.
The unwritten rules
These are the rules nobody puts on a slide. Breaking them will not cost you your license, but it can cost you a commission, a relationship, or a reputation in a market where most of the agents know each other.
Procuring cause
If you introduced a buyer to a property, even casually, and they later buy it through another agent, you may have a claim to part of the commission. Document every showing, every email, and every text. The first agent who created the chain that led to the sale is the procuring cause, and that is a legal concept rather than a courtesy.
Do not poach
When a property is listed by another brokerage, every conversation about that property goes through the listing agent. Calling the seller directly is a fast way to lose both your license and your reputation. The same goes for buyers who are already in contract with another agent.
Dual agency is risky
If you represent both buyer and seller on the same deal, you owe equal fiduciary duty to two people whose interests are opposed. NY allows it with written disclosure on form DOS-1735, though most experienced agents avoid it because the liability when anything goes wrong is enormous.
Referrals are tracked
If you receive a buyer from another agent, you owe a referral fee that typically runs 25 percent. This is only enforceable in writing. Never agree to a referral verbally on a deal you might actually close, and always get the referral agreement signed first.
The listing agent gets the call
If you have a buyer interested in a property listed by another brokerage, you call the listing agent rather than the seller or the building. The listing agent schedules the showing and represents the seller throughout.
Never trash other agents
The NY real estate market is small. Today’s competitor is tomorrow’s referral source. The agent you bad-mouth at the open house may be the one sitting on your next $3 million listing.
What changes when you cross the city line
New York is two real estate markets sitting under one license. The 77-hour course covers both, but in practice NYC and the rest of New York operate by different rules, different customs, and different math.
Want to run the math on your own situation?
Every concept on this page connects to a free calculator that runs the actual numbers for any deal you plug in.