Buying a house used to feel like a scripted play. You’d find a place, your agent would handle the paperwork, and at the end of the day, you didn't see a single line item on your closing statement for their services. It felt free. Honestly, it was never actually free, but the mechanics were hidden behind a curtain of industry standards and "cooperative compensation."
Then came 2024. The National Association of Realtors (NAR) settlement changed everything.
If you’re out there looking at Zillow or touring open houses right now, the question of who pays the buyer's agent is likely the biggest source of anxiety. You've probably heard horror stories about buyers having to cough up $15,000 in cash at the closing table just to pay their own representative. Or maybe you heard that sellers don't pay anything anymore. Both of those extremes are kinda wrong. The reality is more of a "choose your own adventure" situation where negotiation is finally—for better or worse—at the forefront of the transaction.
The Old Way vs. The New Reality
For decades, the standard practice was simple. A seller would list their home and agree to pay their listing agent a total commission—say, 5% or 6%. That listing agent would then take half of that and offer it to whoever brought the buyer. This was called the "participation rule." It was baked into the Multiple Listing Service (MLS). As a buyer, you didn't really negotiate your agent's pay; the two brokers just split the pot the seller provided.
The courts decided this system lacked transparency and kept commissions artificially high.
Now, as of August 2024, listing agents can no longer advertise those commission offers on the MLS. It’s a ghost town for "buyer agent compensation" fields. This means that before you even step foot inside a house, you have to sign a written agreement with your agent. That agreement must state exactly how much they get paid. It can’t be an open-ended "whatever the seller gives us" anymore. It has to be a specific number or a clear percentage.
So, who pays that number?
💡 You might also like: Fast Food Restaurants Logo: Why You Crave Burgers Based on a Color
It depends on what you put in your offer. You might ask the seller to pay it. You might pay it yourself. Or, in many cases, it’s still coming out of the seller's proceeds, but it’s being negotiated as a "concession" rather than a pre-set fee.
Why Sellers Are Still Footing the Bill (Mostly)
You might think sellers would be jumping for joy, thrilled to stop paying the person working "against" them. Some are. But most sellers are finding out that if they refuse to pay the buyer's agent, they drastically shrink their pool of potential buyers.
Think about it.
Most first-time homebuyers are already scraping together every penny for a down payment and closing costs. If a house costs $400,000 and the buyer's agent needs a 2.5% commission, that’s another $10,000 cash. Many buyers simply don't have it. If Seller A says "I won't pay your agent" and Seller B says "I'll cover it," Seller B is going to get the offers.
I’ve talked to agents in hot markets like Austin and Charlotte who say that despite the rules changing, about 80% to 90% of transactions still involve the seller paying the buyer's agent. It’s just being done through a different legal mechanism. Instead of it being an automatic offer in the MLS, it's a line item in the purchase contract. It’s a negotiation.
The Buyer Agency Agreement: Your New Shadow
You cannot dodge this. If you want a Realtor to show you a house, federal law (via the settlement) now requires a signed Buyer Representation Agreement.
📖 Related: Exchange rate of dollar to uganda shillings: What Most People Get Wrong
This document is where who pays the buyer's agent gets legally defined. If you agree to pay your agent 2.5%, and the seller only agrees to pay 2%, you are technically on the hook for that 0.5% difference. This is the part that scares people. However, savvy buyers are using this as leverage. If a seller won't bridge that gap, the buyer might just walk away or lower their offer price to compensate for the extra out-of-pocket cost.
It’s messy. It’s definitely more work than it used to be. But it’s also the first time buyers can actually see what they are paying for.
Breaking Down the Payment Methods
There isn't one single way this happens anymore. Here are the three most common paths:
- The Seller Concession: This is currently the most popular route. In your offer, you include a clause that says, "Seller shall pay Buyer's Broker $X or X% at closing." This keeps the commission wrapped into the loan, provided the house appraises for the full amount.
- The Direct Pay: You pay your agent out of your own pocket. This usually only happens with high-net-worth buyers or in extremely competitive "bidding war" scenarios where the buyer wants their offer to look as "clean" as possible to the seller.
- The Dual Agency/Unrepresented Route: You go it alone. You call the listing agent directly. In some states, that agent can represent both of you (Dual Agency), or they can just treat you as a "customer." Be careful here. The listing agent’s primary job is still to get the highest price for the seller. You might save on the commission but lose way more on the purchase price because you didn't have someone negotiating for you.
The Appraisal Gap Risk
Here is a detail a lot of people miss. If you wrap the buyer's agent commission into the purchase price by asking for a concession, the house has to appraise for that higher value.
Let's say a house is worth $500,000. You offer $500,000 but ask for $15,000 back to pay your agent. The lender sees the purchase price as $500,000. If the appraiser says the house is only worth $490,000, the bank isn't going to give you that extra money. Suddenly, that "who pays" question becomes very urgent. You either need the seller to drop the price, or you need to find that cash yourself.
In a cooling market, this is less of an issue. In a 2021-style frenzy? It’s a nightmare.
👉 See also: Enterprise Products Partners Stock Price: Why High Yield Seekers Are Bracing for 2026
Is This Making Houses Cheaper?
That was the goal of the lawsuits. The theory was that if sellers didn't have to pay 6% in commissions, they’d lower their home prices.
Has it happened? Not really.
Home prices are driven by supply and demand, interest rates, and inventory. Sellers generally want to net the most money possible. If they save $10,000 on commission, they usually try to keep that $10,000 as profit rather than passing the savings to the buyer. What is happening is that commission rates themselves are becoming more flexible. You’re seeing more "flat fee" buyer agents or agents willing to work for 1.5% or 2% instead of the old standard 3%.
Strategies for Savvy Buyers
The "free" era is over. You have to be an active participant in the financial side of your representation now. It’s not just about finding a house with a nice kitchen; it’s about understanding the math of the deal.
- Interview multiple agents. Ask them point-blank: "How do you handle it if a seller refuses to pay your fee?" If they don't have a clear, confident answer, find someone else.
- Check the math on your "Net." When comparing houses, look at what each seller is offering. A house that is slightly more expensive but offers a full commission credit might actually be cheaper for you out-of-pocket than a lower-priced house where you have to pay the agent yourself.
- Read the fine print. Some buyer agreements have "retainer fees" or "protection periods." Make sure you know exactly when you owe money and when you don't.
- Negotiate the percentage. Everything is negotiable. If you are looking at very expensive properties, a percentage-based fee might be overkill for the amount of work involved. Don't be afraid to ask for a cap or a flat fee.
What Happens Next?
The industry is still in a "feeling out" phase. We’re seeing new models pop up every week. Some companies are offering "touring packages" where you pay $50 per house shown rather than a percentage at the end. Others are sticking to the traditional model but with much more disclosure.
Ultimately, the person who "pays" is always the person bringing the money to the table—the buyer. Whether that money is funneled through the seller's proceeds or paid directly, it’s your mortgage and your savings. The change in rules just means you finally have the right to negotiate how that money is spent.
Practical Next Steps
- Get your finances in order earlier. Since you might need to cover a commission gap, you need a clearer picture of your liquid cash than buyers did three years ago.
- Ask for the "Seller Disclosure of Compensation" early. Many listing agents are now hosting documents on their own websites (since they can't put them on the MLS) that state exactly what the seller is willing to pay. Have your agent check these before you fall in love with a house.
- Don't skip representation to save money. Real estate contracts are dense, 20-page legal documents. Navigating inspections, title issues, and local zoning without an advocate is a recipe for a much more expensive mistake than a 2% commission fee.
- Watch the comps. Look at what houses are actually selling for, but also ask your agent to find out if those sales included buyer agent concessions. A "sale price" of $500,000 might actually be $485,000 if the seller paid $15,000 in commissions. This distinction is vital for your own offer strategy.