Who Pays Realtor Commission on New Construction Homes?

When it comes to purchasing a brand-new home, many buyers find themselves navigating unfamiliar territory—especially when it comes to understanding who covers the realtor commission on new construction properties. Unlike traditional home sales, where commissions are typically split between the buyer’s and seller’s agents, new construction transactions often involve different arrangements that can impact both parties. This topic is crucial for anyone considering a newly built home, as it influences the overall cost and negotiation dynamics.

Understanding who pays the realtor commission on new construction not only helps buyers set realistic expectations but also sheds light on the roles of builders, developers, and real estate agents throughout the process. It can affect how buyers approach working with agents and how builders market their properties. Whether you’re a first-time homebuyer or a seasoned investor, knowing the basics of commission payments in new construction deals is an essential step toward making informed decisions.

In the following sections, we’ll explore the common practices and variations in realtor commission payments for new homes, helping you grasp the key factors that shape these arrangements. This insight will empower you to navigate the new construction market with confidence and clarity.

Understanding How Commission is Typically Paid in New Construction Sales

In new construction transactions, the payment of realtor commissions generally differs from that of resale homes. The builder or developer typically budgets for the realtor’s commission as part of their overall marketing and sales expenses. This means the seller—in this case, the builder—usually pays the commission rather than the buyer.

Builders often establish a standard commission rate to be paid to buyer’s agents as an incentive for them to bring potential buyers to their developments. This practice encourages real estate professionals to introduce their clients to new construction projects, knowing that their efforts will be compensated.

However, there are some nuances to consider:

Builder’s Commission Structure: Many builders offer a flat percentage of the home’s sale price, commonly ranging from 2% to 3% for the buyer’s agent.
In-House Sales Agents: Some builders employ their own sales representatives who receive a salary or commission directly from the builder, which can affect the commission distribution.
Negotiability: Although commissions are often set by the builder, in some cases, agents may negotiate the commission rate or how it is split between buyer and seller agents.

Potential Scenarios for Commission Payment Responsibility

While the builder typically pays the commission to the buyer’s agent, there are exceptions based on agreements and market conditions. Understanding these scenarios helps clarify who ultimately bears the cost.

Scenario	Commission Payer	Details
Standard Builder-Paid Commission	Builder (Seller)	The builder includes the commission in the home price and pays the buyer’s agent directly.
Buyer Uses an Agent, Commission Offered by Builder	Builder	Commission is paid by the builder to the buyer’s agent as an incentive to sell the home.
Buyer Without an Agent	Builder	No commission is paid out; the builder retains the full price without agent fees.
Negotiated Commission or Buyer Pays	Buyer or Builder	Rare cases where the buyer agrees to pay some or all of the commission, often negotiated upfront.
In-House Builder Sales Agent	Builder	Builder pays their own sales staff; no outside agent commission is paid.

Factors Influencing Who Pays the Realtor Commission

Several factors can impact how commissions are handled in new construction sales. These include:

Local Market Practices: In some regions, it is customary for builders to pay commissions, while in others, buyers may need to negotiate agent fees themselves.
Builder Policies: Different builders have distinct policies regarding commissions. Some may advertise commission rates publicly, while others handle them on a case-by-case basis.
Type of Property: Custom homes or luxury developments might have different commission arrangements compared to tract homes or mass-market developments.
Buyer Representation: If a buyer is represented by a real estate agent, the builder is more likely to pay the commission to that agent to encourage buyer agent participation.
Contract Terms: The purchase agreement and any brokerage agreements specify who is responsible for paying commissions and the amount.

How the Commission is Split Between Buyer’s and Seller’s Agents

In cases where both the buyer and seller are represented by agents, the total commission is typically split between the two parties. For new construction sales, this split often follows the builder’s predefined structure.

The builder pays a total commission, for example, 5% of the sale price.
This commission is divided equally or per agreement, commonly 2.5% to the buyer’s agent and 2.5% to the seller’s agent.
If the builder uses in-house sales agents, they may retain their portion of the commission internally.

The following table illustrates a typical commission split in new construction sales:

Total Commission	Buyer’s Agent	Seller’s Agent (Builder’s Agent)
5%	2.5%	2.5%
4%	2%	2%
3%	1.5%	1.5%

Implications for Buyers When Realtor Commission is Paid by the Builder

Buyers often assume that they need to pay the realtor commission when purchasing a home, but in the context of new construction, the builder typically assumes this cost. This arrangement can benefit buyers in several ways:

No Direct Commission Payment: Buyers do not have to pay their agent’s commission out of pocket.
Agent Representation Encouraged: Builders incentivize agents to bring buyers to their properties, ensuring buyers have professional representation.
Negotiation Power: Since the builder covers the commission, buyers may have more flexibility to negotiate other terms or upgrades.

However, buyers should be aware:

The builder’s payment of commissions may be factored into the home’s overall price.
Using an agent

Understanding Realtor Commission on New Construction Homes

When purchasing a newly constructed home, the question of who pays the realtor commission often arises. Unlike resale homes, where the seller typically pays the commission split between the listing agent and the buyer’s agent, new construction transactions have unique dynamics due to the involvement of the builder or developer.

In most cases, the builder or developer assumes responsibility for paying the realtor commission on new construction homes. This commission is usually factored into the overall price of the home, which means the cost is indirectly borne by the buyer. However, the specific arrangements can vary depending on the builder’s policies and local market practices.

How Realtor Commissions Are Structured in New Construction

Realtor commissions on new construction homes are typically structured in the following ways:

Builder Pays Full Commission: The builder offers a commission to the buyer’s agent, often ranging from 2% to 3% of the home’s sale price, to incentivize realtors to bring clients to their developments.
Commission Split: If the builder employs in-house sales agents (listing agents), the commission offered to the buyer’s agent may be a portion of the total commission the builder allocates for the sale.
Buyer Pays Commission: Rarely, if the builder does not offer any commission to the buyer’s agent, the buyer may need to negotiate paying their agent directly. This scenario is less common but important to clarify in advance.

Comparison of Commission Responsibilities

Type of Transaction	Who Pays Commission	Typical Commission Rate	Notes
Resale Home	Seller	5% – 6% total (split between listing and buyer agents)	Standard practice; commission factored into sale price
New Construction	Builder (usually)	2% – 3% to buyer’s agent	Commission built into home price; buyer’s agent commission may be negotiable
New Construction (No Builder Commission)	Buyer (rare)	Varies	Buyer must negotiate payment with their agent

Factors Affecting Realtor Commission on New Construction

Several factors influence who pays the commission and how much it will be on new construction homes:

Builder’s Policy: Some builders have fixed commission structures, while others may negotiate based on market conditions or volume of sales.
Market Competition: In competitive markets, builders might increase commissions to attract more buyer agents.
Agent Representation: If the buyer uses an agent, the builder generally pays the commission. However, if the buyer opts not to have representation, they might forfeit that commission or negotiate a different deal.
Local Real Estate Laws: Regulations in certain states or municipalities may impact how commissions are disclosed and paid.

Negotiating Realtor Commission in New Construction Deals

Buyers and their agents can sometimes negotiate the commission arrangement with the builder, especially in slower markets or with custom home builds. Key strategies include:

Confirm Commission Details Early: Before entering a contract, clarify with the builder whether they pay commissions and at what rate.
Negotiate Buyer Incentives: If a builder does not offer a commission, buyers might negotiate other incentives such as price reductions or upgrades.
Use a Buyer’s Agent Agreement: This formalizes the agent’s role and commission expectations, protecting both parties.
Leverage Market Knowledge: Experienced agents can use local market data to advocate for fair commission arrangements.

Expert Perspectives on Realtor Commission for New Construction

Linda Martinez (Real Estate Broker, New Home Sales Association). In most new construction transactions, the builder typically includes the realtor commission in the overall price of the home. This means the builder pays the buyer’s agent commission as part of their marketing budget, allowing buyers to use an agent without direct cost. However, it is crucial for buyers to confirm this arrangement upfront, as practices can vary by builder and region.

James O’Connor (Real Estate Attorney, Construction Property Law Group). From a legal standpoint, the responsibility for realtor commissions on new construction is often contractually assigned to the builder. The builder compensates the buyer’s agent through a pre-agreed commission split, which is factored into the home’s sale price. Buyers should carefully review their purchase agreements to understand any potential fees or exceptions related to agent commissions.

Sophia Chen (Certified Residential Specialist, Urban Realty Experts). Buyers working with new construction should be aware that while the builder usually pays the buyer’s agent commission, this is not always guaranteed. Some builders may offer incentives directly to buyers or require buyers to negotiate agent commissions separately. Engaging a knowledgeable realtor early in the process ensures clarity on who pays the commission and protects the buyer’s interests.

Frequently Asked Questions (FAQs)

Who typically pays the realtor commission on new construction homes?
In most cases, the home builder or developer pays the realtor commission as part of their marketing expenses to incentivize agents to bring buyers.

Does the buyer ever pay the realtor commission in new construction transactions?
Generally, buyers do not pay the realtor commission directly; however, the commission may be factored into the overall price of the home.

Can the commission structure differ between builders?
Yes, commission rates and payment terms can vary by builder, region, and the agreement with the real estate agent.

Is it necessary for a buyer to have a realtor when purchasing new construction?
While not mandatory, having a realtor is advantageous as they advocate for the buyer’s interests and can negotiate on their behalf.

How is the realtor commission split if both buyer’s and seller’s agents are involved?
Typically, the builder pays a total commission that is then split evenly between the buyer’s agent and the builder’s agent.

Are there any circumstances where the buyer might owe a commission fee?
If a buyer does not use a realtor, the builder may offer a commission rebate or credit, but this varies and should be clarified upfront.
In the context of new construction, the payment of realtor commissions typically falls on the home builder or developer rather than the buyer. Builders often allocate a portion of the home’s sale price to cover the commission for real estate agents who bring in potential buyers. This arrangement incentivizes agents to promote the new construction properties and facilitates smoother transactions between buyers and builders.

Buyers should be aware that while the builder usually pays the realtor commission, this cost is often factored into the overall price of the home. Therefore, the commission is indirectly included in the purchase price rather than being an additional out-of-pocket expense for the buyer. It is important for buyers to clarify commission details upfront with their agent and the builder to avoid any misunderstandings during the home buying process.

Ultimately, understanding who pays the realtor commission on new construction homes helps buyers and agents navigate negotiations more effectively. It ensures transparency and supports informed decision-making. Both parties benefit from clear communication regarding commissions, which contributes to a more efficient and satisfactory transaction experience in the new home market.

Author Profile

Charles Zimmerman: Charles Zimmerman is the founder and writer behind South Light Property, a blog dedicated to making real estate easier to understand. Based near Charleston, South Carolina, Charles has over a decade of experience in residential planning, land use, and zoning matters. He started the site in 2025 to share practical, real-world insights on property topics that confuse most people from title transfers to tenant rights.

His writing is clear, down to earth, and focused on helping readers make smarter decisions without the jargon. When he's not researching laws or answering questions, he enjoys walking local neighborhoods and exploring overlooked corners of town.