Texas Realtor Commission Percentage Explained

If you are buying or selling a home in Lubbock or anywhere in West Texas, you are probably wondering at some point what the agent is actually getting paid and who is paying them. It is a completely reasonable question and one that the real estate industry has not always been great at answering clearly. Add in the 2024 NAR settlement that changed how buyer agent compensation works, and there is a lot of confusion out there about how commission actually functions right now.

Here is a straight, honest breakdown of how real estate commission works in Texas today.

Commission Has Always Been Negotiable in Texas

First and most important thing to understand: there is no set commission rate in Texas. There never has been. Any agent who tells you commission is a fixed percentage is not being accurate. It is negotiated between the seller and their listing agent when the listing agreement is signed, and it always has been. What has changed is how buyer agent compensation is handled and communicated, which we will get to in a moment.

What Was the Historical Norm?

Historically, total real estate commission on a transaction in Texas commonly fell in the range of five to six percent of the purchase price. That total was typically split between the listing agent and the buyer's agent, often somewhere around two and a half to three percent each. On a $300,000 home at six percent total commission, that is $18,000 split between both sides.

Those numbers were never universal and they varied by market, price point, brokerage, and what was negotiated. In markets like Lubbock where home prices are lower than coastal markets, commission structures can look different than they do in a city where the average home sells for $800,000. A percentage that makes sense on a high-value transaction may not make sense on a $150,000 home, and experienced agents in this market understand that.

What Changed After the 2024 NAR Settlement?

In August 2024, a landmark settlement involving the National Association of Realtors changed how buyer agent compensation is handled across the country. The two biggest changes that affect buyers and sellers in Texas are these.

First, buyer agent compensation can no longer be advertised or offered through the MLS. Before the settlement, sellers would typically agree to offer a specific buyer agent commission as part of their listing, and that offer would show up in the MLS for buyer agents to see. That practice is now prohibited. Sellers can still choose to offer compensation to a buyer's agent, but it cannot be communicated through the MLS.

Second, buyers are now required to sign a written buyer representation agreement before touring homes with an agent. That agreement must specify how the buyer's agent will be compensated. This means buyers and their agents are having a direct conversation about compensation upfront rather than it being something that happens invisibly in the background of every transaction.

So Who Pays the Buyer's Agent Now?

This is the question everyone is asking. The short answer is that it depends on what is negotiated. A seller can still choose to offer compensation to a buyer's agent as part of the transaction, and many do because it helps attract buyers. That offer just cannot be listed on the MLS anymore. It can be communicated through other channels, advertised on the seller's own marketing, or negotiated as part of the offer process.

If the seller is not offering buyer agent compensation, the buyer may need to either pay their agent directly or negotiate for the seller to cover it as part of the offer. This is new territory for a lot of buyers and it is exactly why having a clear conversation about compensation with your agent before you start touring homes is so important now.

What Does This Mean for Sellers in Lubbock?

As a seller, you now have more flexibility and more decisions to make around commission. You are still negotiating your listing agent's compensation directly when you sign the listing agreement. Whether and how much to offer a buyer's agent is now a separate strategic decision that you and your listing agent should discuss based on the current market conditions in Lubbock.

In some situations, offering buyer agent compensation makes your listing more attractive because it removes a potential friction point for buyers. In other situations, not offering it and letting buyers handle their own agent compensation may make sense. There is no one size fits all answer and the right approach depends on your specific property, your price point, and what the market is doing at the time you list.

What Should You Actually Expect to Pay in Lubbock?

Every transaction is different and every agent's fee structure is different. What you should expect is a direct, transparent conversation about compensation before you sign anything. Whether you are a buyer signing a representation agreement or a seller signing a listing agreement, you have every right to ask how your agent is being compensated, what services that compensation covers, and whether there is room to negotiate.

An agent who gets uncomfortable with that conversation or refuses to answer clearly is not someone you want handling one of the largest financial transactions of your life. Transparency around commission is not a red flag. It is a baseline expectation.

Is a Lower Commission Always Better?

Not necessarily. A listing agent who agrees to a significantly reduced commission may also be cutting back on what they provide in return. Professional photography, active marketing, skilled negotiation, and consistent communication all cost time and money. Understanding what you are getting for the fee you are paying matters as much as the number itself. The goal is not the cheapest agent. The goal is the best outcome, and those are not always the same thing.

The Bottom Line

Commission in Texas is negotiable, always has been, and the 2024 NAR settlement made it even more important for both buyers and sellers to have direct, upfront conversations about how their agent is being paid. Ask the question. Understand the answer. And make sure whoever you are working with can clearly explain their value before you sign anything. Can an agent set their commission and state, if you would like to work with me, this is my fee? Absolutely, but that is still a choice you get to make as a seller.