Who pays the buyer’s agent fee is now a negotiated term of the purchase contract. The money can come from the seller, the buyer, the listing broker’s commission split, or some combination — whatever the parties agree to in writing. The typical buyer agent fee runs between 2.5% and 3% of the sale price, and since August 17, 2024, buyers have to agree to that number with their agent in writing before touring any homes.
What Changed in August 2024
In March 2024, the National Association of Realtors (NAR) settled a class-action lawsuit brought by home sellers who argued the old commission structure inflated costs. Two changes took effect on August 17, 2024.1National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers Listing brokers can no longer advertise buyer agent compensation on the Multiple Listing Service (MLS). And buyers must sign a written agreement with their agent before touring homes together.
Commissions themselves are still fully negotiable. The settlement didn’t cap fees or dictate who pays them. It just moved the conversation to the front of the transaction, so you know what your agent costs before you start shopping and before anyone assumes the seller will cover it.
The Written Agreement You Sign With Your Agent
Before an agent shows you a single property, in person or on a virtual tour, you sign a written buyer representation agreement. The document has to spell out compensation in concrete terms: a specific dollar amount, a flat fee, a percentage of the sale price, or an hourly rate. Open-ended language like “whatever the seller offers” is not allowed.2National Association of REALTORS®. Consumer Guide to Written Buyer Agreements The agreement also has to include a provision preventing your agent from collecting more than that agreed amount from any source in the transaction.1National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers
One exception: you don’t need a signed agreement to visit an open house on your own or to ask an agent general questions about their services.3National Association of REALTORS®. Consumer Guide to Open Houses and Written Agreements The requirement kicks in once you and an agent agree to work together.
Treat the number as a starting point, not a take-it-or-leave-it offer. You can push for a lower percentage, propose a flat fee for the whole transaction, or ask about an hourly rate for limited services. An agent who won’t discuss their fee at all is a warning sign — the new rules exist so that compensation reflects the service you’re actually getting.
Who Actually Pays at Closing
Whatever you sign with your agent, the money still has to come from somewhere on closing day. There are a handful of standard ways to structure it, and the right one depends on your cash reserves, the seller’s willingness to negotiate, and the loan program you’re using.
- The seller pays directly. You include a request in your purchase offer asking the seller to cover your agent’s fee. Many sellers still agree, especially in slower markets or when they want the widest pool of buyers.
- You pay out of pocket. You bring the fee to closing yourself, separate from your down payment and other closing costs. This gives you full control and can make your offer more attractive to the seller.
- The listing broker shares their commission. Even though the MLS can no longer advertise it, a listing broker may still agree through private negotiation to split their commission with your agent. This happens frequently.
- A seller concession built into the price. You negotiate a slightly higher purchase price with a corresponding seller credit that covers your agent. This effectively spreads the cost over the life of your mortgage, though mortgage rules cap how much sellers can contribute this way.
- A combination. The seller covers part of the fee and you pay the rest. If your agreement calls for 2.5% and the seller only agrees to 1.5%, the remaining 1% is on you.
These conversations happen during the offer stage, alongside the purchase price, inspection contingencies, and closing timeline. Commission money is now just another term of the deal.
How Your Mortgage Program Shapes the Options
You cannot add a buyer agent commission directly to your mortgage balance as a separate line item. No lender will allow it. But how you structure the payment matters, because mortgage programs treat seller-paid commissions differently from general seller concessions.
Commissions Versus Concessions
When a seller agrees to pay your agent’s commission directly, Fannie Mae and Freddie Mac do not count that payment as a financing concession subject to their contribution limits.4Fannie Mae. Selling Notice – Real Estate Commissions and Interested Party Contributions FHA takes the same view: real estate commissions paid by the seller in line with local custom are not treated as interested party contributions.5FHA. What Costs Can a Seller or Other Interested Party Pay on Behalf of the Borrower If you negotiate for the seller to pay your agent’s fee as part of the purchase agreement, it typically won’t eat into any contribution caps.
Things get tighter when you’re asking the seller for a general credit toward closing costs and then using that credit to pay your agent. That kind of arrangement is a financing concession, and each loan program caps how much sellers can contribute.
Conventional Loans
For conventional loans, financing concession limits depend on your down payment and how you’ll use the property. The less you put down, the less the seller can contribute. Fannie Mae’s selling guide sets the thresholds, and any concession above the limit is treated as a reduction to the sale price for underwriting.6Fannie Mae. Interested Party Contributions (IPCs) With a small down payment, this can be a real constraint, so raise it with your lender early.
FHA Loans
FHA loans allow interested party contributions of up to 6% of the sale price for items beyond the commission itself — closing cost credits, prepaid expenses, discount points. The seller paying your agent’s commission directly does not count against that 6% cap.
VA Loans
VA loans let sellers pay standard closing costs and real estate commissions on behalf of the buyer without limit. The VA’s 4% concession cap applies only to specific items such as prepaid property taxes, appliance credits, debt payoffs, and excess discount points.7Veterans Benefits Administration. VA Home Loan Guaranty Buyer’s Guide Having the seller pay your buyer agent’s commission on a VA loan is generally straightforward.
Buying Without an Agent, or Using Dual Agency
You can skip a buyer’s agent entirely. Without one, there’s no buyer agent fee to negotiate. That doesn’t guarantee a lower purchase price — sellers aren’t obligated to discount just because you’re unrepresented — but it removes one cost from the equation.
Dual agency is the other option: one agent represents both sides. The agent may accept a reduced total fee since they’re earning both ends. The tradeoff is a built-in conflict of interest, since the same person is supposed to get you the best price while also getting the seller the best price. Industry rules require agents to disclose the possibility of dual agency upfront and get informed consent from both parties.8National Association of REALTORS®. 2026 Code of Ethics and Standards of Practice About eight states ban the practice entirely.
Be realistic about what representation is worth. A good buyer’s agent earns the fee by catching inspection issues, negotiating repairs, handling appraisal shortfalls, and keeping the closing on track.
When the Numbers Don’t Match at Closing
Your written buyer agreement is a binding contract. If you close on a home and don’t pay the agreed fee, your agent’s brokerage can sue you for breach of contract. The usual remedy is a suit for the unpaid amount plus damages. In some states, brokers also have the right to place a lien on the property you just bought, which clouds title until the debt is resolved.
The more common problem is a shortfall. If your agreement calls for 2.5% and the seller agrees to only 1.5%, you owe the remaining 1%. It has to come from somewhere: your savings, a renegotiated fee with your agent, or a restructured deal. That’s why the number you sign matters so much before you ever tour a home.
How the Fee Affects Your Taxes
A buyer agent commission is not tax-deductible as a personal expense when you’re buying a primary residence. The IRS does allow you to add it to your property’s cost basis, which reduces your taxable gain when you eventually sell.9Internal Revenue Service. Basis of Assets If you paid your agent $10,000 on a $400,000 home, your cost basis becomes $410,000 plus other qualifying settlement costs. Years later, that higher basis means less profit subject to capital gains tax.
This applies whether you paid the commission directly or the seller paid it as part of the deal. Keep your closing disclosure and buyer agency agreement with your tax records. You’ll want them when you sell, even if that’s decades away.