The real estate industry experienced a seismic shift in August 2024 when new commission rules from the National Association of Realtors (NAR) took effect. If you’re planning to buy or sell a home, these changes will directly impact your wallet and how you work with real estate agents. Here’s what you need to know.
What Changed and Why?
For decades, home sellers typically paid a total commission of 5-6% of the sale price, which was split between their listing agent and the buyer’s agent. In March 2024, NAR agreed to pay $418 million in damages and make significant changes to their policies following a federal jury’s finding that NAR’s cooperative compensation policies inflated commissions and incentivized buyer’s agents to steer clients toward homes with higher commissions.
The practice changes went into effect on August 17, 2024, fundamentally altering how real estate commissions work.
The Three Major Changes
1. No More Commission Offers on MLS
Offers of compensation are no longer allowed on Multiple Listing Service (MLS) platforms, though sellers can still offer compensation off an MLS. This means buyers and their agents can no longer see upfront what the seller is willing to pay for buyer representation.
The goal? To stop the practice of “steering,” where buyer’s agents would guide clients toward properties with higher commission payouts instead of those best suited to their preferences such as location, neighborhood, home features, and budget.
2. Mandatory Written Buyer Agreements
Real estate agents who use MLS are now required to enter into written agreements with buyers before touring a home, and those agreements must include a specific and conspicuous disclosure of the amount or rate of compensation the agent will receive.
This is a significant change. Previously, many buyers worked with agents informally, without ever signing an agreement or explicitly discussing fees.
3. Full Commission Transparency
Written agreements must include a conspicuous statement that broker fees and commissions are fully negotiable and not set by law. This puts the power of negotiation squarely in the hands of consumers.
What This Means for Home Buyers
You May Need to Budget Differently
The biggest question buyers are asking: “Do I have to pay my agent now?” The short answer is—it depends. Buyers must now negotiate commissions directly with their agents and sign a buyer’s agency agreement before touring homes.
However, buyers have several options:
- Negotiate for the seller to pay: Many sellers are still offering to pay buyer agent commissions to make their homes more attractive to buyers
- Request seller concessions: Buyers can ask for closing cost credits that effectively cover their agent’s fees
- Pay directly: Some buyers are paying their agent’s commission as an out-of-pocket expense
The Reality Check: Most Buyers Aren’t Paying (Yet)
Here’s the surprising news: Overall buyer-agent commissions have barely budged since new real estate commission rules went into effect on August 17, 2024, with the average buyer’s agent commission at 2.37 percent for homes sold in the fourth quarter.
The majority of agents (55%) reported that home sellers are offering competitive rates of 2.5% or higher, while 37% noted buyer-broker commission offers below 2.5%.
Why? In a buyer’s market with increasing inventory, sellers know they need to sweeten the deal. Buyers can walk away if the seller does not pay the buyer’s agent commission, and they’ll likely be able to find another home with a seller who is willing to pay what the buyer is asking for.
Tips for Home Buyers
- Sign agreements carefully: Read every clause of your buyer agreement, paying attention to exclusivity terms, commission rates, and duration
- Negotiate upfront: Don’t be afraid to negotiate your agent’s commission before you start house hunting
- Ask about commission early: When making an offer, clarify whether the seller will contribute to your agent’s commission
- Budget conservatively: Plan for the possibility of paying 2-3% in agent fees, even if you hope to negotiate seller coverage
What This Means for Home Sellers
More Control Over Costs
The good news? Sellers now decide what, if anything, they would like to offer to buyer’s agent at the time of listing or at the time of negotiation. You’re no longer automatically on the hook for both sides of the commission.
The Strategic Decision
However, choosing not to offer buyer agent compensation comes with trade-offs. Some sellers no longer offering buyer’s agent commission can lead to fewer buyer inquiries, longer days on market, or price negotiations.
On the flip hand, if you offer a concession to pay the buyer’s agent’s fees, you will likely have a larger buyer pool and a quicker sale.
Tips for Home Sellers
- Discuss strategy with your agent: Talk through whether offering buyer agent compensation makes sense in your local market
- Use seller concessions creatively: You can offer closing cost credits without directly advertising commission
- Communicate off-MLS: While you can’t advertise commissions on MLS, you can share this information through other channels like your agent’s website or social media
- Be prepared to negotiate: Expect buyers to request commission coverage or closing cost assistance in their offers
The Bottom Line: What’s Really Changed?
After more than a year under these new rules, the real estate industry hasn’t transformed as dramatically as many predicted. Commissions remain relatively stable, and most sellers are still paying buyer agent fees.
The biggest changes in the first year are that buyer agent agreements are signed earlier in the homebuying process and more discussions about commission rates are taking place.
The real test will come when the market shifts. If we move back to a strong seller’s market with limited inventory, sellers may have more leverage to refuse paying buyer agent commissions. At that point, buyers may need to come to the table prepared to pay their agent directly.
What Happens Next?
The future of real estate transactions could see even more shifts as transparency and flexibility become central to the process, potentially ushering in more competitive commission structures with buyers and sellers benefiting from greater control.
For now, the most important takeaway is this: everything is negotiable. Whether you’re buying or selling, work with an experienced agent who understands these changes and can help you navigate the new landscape strategically.
The days of standard 6% commissions split automatically between agents are over. In their place is a more complex—but potentially more fair—system where consumers have more control over what they pay for representation.
Have questions about how the NAR commission changes affect your specific situation? The best time to discuss commission structure is before you start your home search or listing process, not after you’ve found your dream home or accepted an offer.
