Who Pays the Real Estate Agent? What Changed in 2024

You are a few days from touring your first house and an agent has emailed you a representation agreement with a percentage in it. A handful of states required those before 2024; most did not, which is why the form is new to almost everyone. The rules did change in 2024, most of the coverage explained the new paperwork without explaining the money, and the practical question underneath all of it is the one buyers have always had: who is actually paying this, and out of whose money.

How it used to work, and why buyers thought it was free

For decades, most residential sales in the United States ran on a single negotiated fee. The seller signed a listing agreement with a listing broker for a total commission. The listing broker then published an offer of compensation in the Multiple Listing Service, promising to share part of that fee with whichever broker brought the buyer. At closing, whoever handles settlement in that state — a title or escrow company across much of the country, a closing attorney in states such as New York, Georgia and Massachusetts — paid both brokers out of the seller’s proceeds.

That structure is why buyers so often heard that representation was free. It was not. The money came out of the seller’s proceeds, and the seller had priced the home knowing the fee was coming out of it. The buyer funded it the same way they funded the seller’s loan payoff and the seller’s own attorney: through the purchase price. The fee was bundled and invisible, which is a different thing from absent.

The other consequence of that structure was that a buyer rarely saw the number before they were emotionally committed. Compensation was set between the seller and the listing broker weeks earlier. The buyer inherited it.

What the 2024 NAR settlement changed in practice

The National Association of REALTORS settled a group of antitrust claims brought on behalf of home sellers and agreed to a set of practice changes, which took effect across participating MLSs on August 17, 2024. Two of them matter to anyone buying or selling a home.

Offers of compensation left the MLS

A listing broker can no longer publish an offer of compensation to buyer brokers inside the MLS. Sellers may still choose to pay a buyer’s broker, and listing brokers may still communicate that offer by phone, by email, or on the brokerage’s own website, but the MLS itself is no longer the vehicle. NAR’s settlement FAQ is the primary reference for how the changes were implemented.

The practical effect is that buyer-broker compensation moved from a default that traveled with the listing to a term negotiated deal by deal, usually inside the offer itself.

Written buyer agreements before you tour

An MLS participant working with a buyer must now have a written agreement signed before touring a home with that buyer. The agreement has to state a compensation amount or rate that is objectively ascertainable rather than open-ended, and the agent cannot collect more than that amount from any source. It must also carry a conspicuous statement that broker commissions are not set by law and are fully negotiable.

What did not change

Commissions are not set by law and are not fixed by any association or board today. That was not always the case: boards once published mandatory fee schedules, and the Supreme Court held in United States v. National Association of Real Estate Boards (1950) that such a schedule violated the Sherman Act. Rates have been negotiable ever since. Antitrust enforcers have said so for years. Both the Federal Trade Commission and the Department of Justice Antitrust Division have long treated residential brokerage as a market where price competition is supposed to operate. What changed is visibility and timing, not legality.

Two cautions are worth stating plainly. Implementation varies: state license law, local MLS rules and individual brokerage policy all sit on top of the settlement terms, and several states already required written buyer agreements before 2024. And the settlement resolved claims on agreed terms. It is not a ruling that any particular commission level is right, wrong or unlawful.

The four ways a buyer’s agent actually gets paid

Your agreement sets what your agent is owed. A separate question is where that money comes from. There are four routes, and they can be blended.

Route	Who writes the check	Typical lender treatment
Seller concession	Seller, from proceeds at closing	Counted as an interested-party contribution; caps vary by loan program, occupancy and down payment
Listing-broker offer made off-MLS	Listing broker, out of the total listing fee	Handled broker to broker; the GSEs indicated in 2024 that customary seller-paid buyer-broker fees are generally treated as a seller cost rather than an interested-party contribution, but confirm it with your lender
Buyer pays the broker directly	Buyer, in cash at closing	Generally cannot be financed into the loan and does not count toward down payment
A blend of the above	Split across parties	Each component is treated on its own terms

Three things follow from that table.

First, a seller concession is a common route and it is capped. Interested-party contribution limits move with loan program, occupancy type and loan-to-value, and they also cover other things you may want the seller to fund, such as a rate buydown or closing costs. Ask your loan officer for your specific ceiling in writing before you negotiate, because a contribution above the cap is not simply ignored: underwriting reduces the value used to size your loan by the excess, which shrinks the loan and pushes the difference back onto you as cash at closing.

Second, direct buyer payment is real money at the table on top of your down payment and closing costs. If that is the structure, it belongs in your budget from day one rather than week six. The Closing Disclosure will show it, and you should be able to predict the figure long before that form arrives.

Third, tax treatment is not symmetrical. For a seller, brokerage commission is generally a selling expense that reduces the amount realized on the sale, which the IRS sets out in Publication 523; Topic 701 covers the related home-sale gain exclusion. For a buyer, transaction costs are generally not deductible, and whether a particular fee adds to your cost basis depends on what the fee is for. Confirm your own position with a CPA rather than with an article.

What your buyer representation agreement should say

Read it as a contract, because that is what it is. A workable agreement states all of the following in plain terms.

• The fee. A specific percentage or dollar amount, and what it is a percentage of.
• How it is earned. Normally on closing a purchase. Watch for language that makes the fee payable on any contract you sign, or on a property you merely viewed.
• The term. Measured in weeks or months, not left indefinite. A first agreement with a new agent can reasonably be short.
• The covered area and property type. A metro, a set of counties, a price band. Not the entire country.
• The named agent and broker. You are hiring people, and their names belong on the page.
• Termination. How either side ends it, with how much notice, and what survives.
• The offset. Confirmation that anything paid by a seller or listing broker reduces what you owe dollar for dollar, and that your agent cannot collect more than the stated fee from all sources combined.
• The protection period. If there is a post-termination clause covering homes you saw, it should be narrow, time-limited and tied to a written list of addresses.

Ask for a shorter term or a smaller covered area if you are not ready to commit. An agent who will not negotiate a single term of their own contract is telling you something about how they will negotiate yours.

What sellers should weigh now

You are no longer following a default, which means you have a real decision to make. Covering a buyer’s broker is neither required nor forbidden. The question is what it buys you.

Covering it widens your pool. A buyer who has agreed to pay their own agent has less cash available for down payment and closing costs, which bites hardest at entry and mid price points where buyer cash is already tight. Declining to offer can also mean fielding offers where the buyer asks for a large concession anyway, which puts the same money on the table in a less predictable form and later in the negotiation.

Weigh your price point, days on market in your submarket, what competing inventory is offering, and how much equity you need to carry into your next purchase. Your listing agreement is negotiable too, including the total fee and how it is allocated. Our selling page sets out how we frame that conversation, and it is a conversation worth having before the listing goes live rather than during the first offer.

Why “I will just use the listing agent” usually costs more

It feels like a discount. It generally is not.

The listing agent has a signed contract with the seller and a duty to get that seller the best terms available. That duty does not switch off because you are pleasant and unrepresented. In some states the arrangement becomes intermediary or dual agency with written consent, and in that posture nobody is advocating for you on price, repairs or credits. In others, the listing agent simply treats you as a customer, owing you honesty and the required disclosures, but not advice.

Meanwhile the seller’s total fee is usually already fixed in the listing agreement. If no buyer’s broker is paid, the saving typically accrues to the seller or to the listing brokerage, not to you, unless you negotiate for it directly, which is the exact task you just chose to take on without help. The common failure modes are overpaying in a multiple-offer situation, mishandling an inspection period, or missing a financing or title deadline a working agent would have calendared weeks earlier.

Questions to ask before you sign anything

• What is your fee, and what is it a percentage of?
• If the seller or listing broker covers part of it, does my obligation drop by that exact amount?
• How long does this agreement run, and how do I end it early?
• What happens if I buy new construction or a for-sale-by-owner property?
• Which properties are excluded, and is there a protection period after we part ways?
• Who else at your brokerage will touch my file?

Your next step

Before you tour anything, get two numbers in writing: the interested-party contribution cap your lender will allow on your loan, and the fee your prospective agent charges. Then read the agreement in front of you against the checklist above and mark every clause you want changed. If you want a second set of eyes on a draft, send it through our contact page and we will walk you through what each clause does and where the negotiable points are, whether or not you end up working with us. We are brokers, not attorneys — anything you want a legal opinion on belongs with a real estate lawyer licensed in your state. Our buyer guide covers the rest of the sequence and the FAQ answers the shorter questions people ask us on the phone. The federal overview at USA.gov and NAR’s competition materials are both worth reading before you sign.