After the National Association of Realtors settlement took effect on August 17, 2024, either the buyer or the seller can pay the buyer’s agent commission, and which one actually pays comes down to what you negotiate in your written agreement with the agent and what the seller agrees to in the purchase contract. Buyer agent commissions now average roughly 2.4% to 3% of the sale price, and buyers must sign a written agreement fixing that fee before touring a home.
Why This Is Now a Negotiation
Before August 2024, sellers routinely funded both sides of the commission through a single listing agreement, and the buyer’s agent share was published in the MLS.1Board of Governors of the Federal Reserve System. Commissions and Omissions: Trends in Real Estate Broker Compensation The NAR settlement removed that field. Listing agents can no longer publish what the seller will pay a buyer’s agent on the MLS, and they cannot work around the rule by posting the figure in the remarks section.2NAR (National Association of Realtors). NAR Settlement FAQs
At the same time, any agent participating in a NAR-affiliated MLS must have a signed written agreement with a buyer before showing them a home in person or by live virtual tour.3National Association of REALTORS®. Written Buyer Agreements 101 That agreement has to state the compensation as a flat dollar amount or a percentage, and it must make clear the agent cannot receive more than the agreed amount. The number in that agreement is what the buyer is on the hook for. Where the money ultimately comes from is a separate question, answered by the purchase contract.
The Four Ways the Buyer’s Agent Actually Gets Paid
The settlement preserved multiple paths for payment, and each has different consequences for your cash at closing.2NAR (National Association of Realtors). NAR Settlement FAQs
Seller Concession
The most common arrangement in practice is still the seller paying, but the mechanism is different. The buyer requests a seller concession as a specific clause in the purchase offer. If the seller agrees, the settlement agent deducts the amount from the seller’s proceeds at closing and routes it to the buyer’s brokerage. Sellers can also offer buyer concessions on the MLS for general closing costs, though those concessions cannot be conditioned on or tied to payment for a buyer’s agent specifically.4National Association of REALTORS®. Compensation, Commission and Concessions
In a soft market, most sellers still agree to cover the commission because refusing shrinks the pool of interested buyers. In a competitive market, sellers are more willing to reject concession requests or favor offers that don’t include them.
Direct Payment by the Buyer
If the seller won’t cover the fee, the buyer pays their agent directly at closing. The amount shows up as a buyer closing cost on the Closing Disclosure, and the funds have to arrive by wire or certified check along with the down payment and other closing costs.5Consumer Financial Protection Bureau. Closing Disclosure Explainer On a $400,000 home with a 2.5% buyer agent commission, that’s an extra $10,000 in cash at the table.
This option hits hardest for first-time buyers already stretched by the down payment. If your written agreement says you owe 2.5% and the seller refuses a concession, you’re contractually on the hook. Failing to bring the funds can breach the representation agreement and expose you to legal action from the brokerage.
Listing Broker Sharing
A listing broker can still choose to share a portion of their own commission with the buyer’s brokerage. This happens through direct negotiation between the two brokerages, not through the MLS.2NAR (National Association of Realtors). NAR Settlement FAQs It resembles the old model, but nothing about it is guaranteed or standardized; your agent has to reach out and ask.
Hybrid Arrangement
The payment can be split. A seller might agree to contribute 1.5% and the buyer covers the remaining 1% directly. The written buyer agreement sets the ceiling, and no combination of sources can push the agent’s total compensation above that number.
How Much a Seller Is Actually Allowed to Pay
Even when a seller is willing to cover the buyer’s agent, your mortgage type caps how much they can contribute. These caps apply to total seller concessions, so the commission competes with any other concessions you want, like help with origination fees or prepaid taxes.
Conventional Loans
For Fannie Mae and Freddie Mac loans, the maximum depends on your loan-to-value ratio:6Fannie Mae. Interested Party Contributions (IPCs)
- Down payment under 10% (LTV above 90%): seller concessions capped at 3% of the sale price or appraised value, whichever is lower.
- Down payment of 10% to 24.99% (LTV of 75.01%–90%): cap rises to 6%.
- Down payment of 25% or more (LTV of 75% or less): cap rises to 9%.
- Investment properties: capped at 2% regardless of down payment.
The 3% cap is the one that bites most buyers. If you’re putting 5% down on a $350,000 home, the seller can contribute a maximum of $10,500 toward all concessions combined. A 2.5% buyer agent commission alone eats $8,750 of that, leaving little room for other closing cost help.
FHA Loans
FHA loans allow seller concessions up to 6% of the purchase price or appraised value, whichever is lower. The nuance that matters: if the seller pays the buyer’s agent commission as a matter of local custom and the amount is reasonable, FHA does not count that payment as an interested party contribution at all.7U.S. Department of Housing and Urban Development. FHA INFO 2024-12 The full 6% concession limit may remain available for other closing costs, which makes FHA financing notably more flexible when you need the seller to cover the commission.
VA Loans
VA borrowers face a unique situation. The VA issued a temporary variance in 2024 allowing veterans to pay their own buyer-broker charges, as long as the purchase is in a market where the MLS no longer facilitates commission offers.8Veterans Benefits Administration. Temporary Local Variance for Certain Buyer-Broker Charges That variance remains valid until the VA rescinds it. The buyer-broker fee cannot be rolled into the VA loan amount. The veteran must have enough liquid assets at closing to cover it, and the lender must confirm those assets during underwriting. Sellers can still pay the veteran’s buyer-broker charges, and that remains the path of least resistance for most VA transactions.
USDA Loans
USDA rural development loans allow up to 6% in seller concessions toward eligible closing costs, with a single cap regardless of down payment.
Can You Roll the Commission Into Your Mortgage?
Not currently. If you pay your agent directly, the money has to come from your own funds at closing. As of early 2026, neither Fannie Mae nor Freddie Mac allows buyer agent commissions to be financed into the loan principal. Industry groups have lobbied the Federal Housing Finance Agency to change this, but no rule change has been finalized. Plan on paying out of pocket if the seller won’t cover it.
If You End Up Paying: Tax Basis and Admin Fees
Paying the commission yourself has one small consolation. The IRS treats commissions and similar transaction costs as part of your home’s cost basis.9Internal Revenue Service. Publication 551, Basis of Assets When you eventually sell, your taxable gain equals the sale price minus your adjusted basis, so a higher basis means less taxable profit. On a $400,000 purchase where you paid a $10,000 commission, your starting basis is $410,000. That difference won’t matter for most homeowners who qualify for the capital gains exclusion on a primary residence, but it can matter for an investment property or a gain that exceeds the exclusion thresholds of $250,000 for single filers and $500,000 for married filing jointly.10Internal Revenue Service. Publication 523, Selling Your Home
Watch for a second charge on top of the commission. Many brokerages tack on a flat administrative or transaction fee, sometimes called a broker service fee or regulatory compliance fee. These typically range from a few hundred dollars to nearly $2,000, and no law requires them. Ask about it before you sign a buyer agreement so it doesn’t surprise you on the Closing Disclosure.
What If You Skip Buyer Representation Entirely?
No law requires you to hire a buyer’s agent, and some buyers try to avoid the commission by going unrepresented. The listing agent, however, has a fiduciary duty to the seller. That agent is legally obligated to get the best possible terms for the seller and cannot advise you on pricing, negotiate on your behalf, or flag problems with the property that might benefit you.
Going unrepresented also doesn’t automatically save you money. Sellers who see an unrepresented buyer don’t always reduce the price by the amount they would have paid a buyer’s agent; they may pocket the savings. You also take on the full burden of reviewing disclosures, interpreting inspection results, understanding contingencies, and meeting deadlines that, if missed, can cost you your earnest money deposit or your right to walk away.
Some states allow a middle path: limited-service or transaction-facilitation arrangements where an agent handles paperwork and logistics without full advisory duties. These cost less than traditional representation, but the agent cannot offer opinions on whether a deal is good for you or suggest negotiation strategies. Whether that trade makes sense depends on how comfortable you are evaluating a property and a contract on your own.