No law requires home sellers to pay the buyer’s agent commission. Since August 17, 2024, new rules from the National Association of Realtors settlement have removed buyer-agent compensation from Multiple Listing Service data entirely, turning that fee into a term you negotiate deal by deal. You can offer to pay all of it, part of it, or none of it. Many sellers still choose to contribute because it widens the pool of buyers who can afford their home, but the choice is yours.
Why the Fee Is Now Optional and Negotiable
For years, the buyer’s agent commission was effectively baked into the listing. Listing agents entered a compensation offer in the MLS, and the fee came out of the seller’s proceeds almost as a matter of course. That practice ended after the National Association of Realtors settled the Sitzer/Burnett antitrust litigation, with a court approving the settlement in November 2024.1National Association of REALTORS®. Judge Approves NAR Settlement in Sitzer/Burnett Case
Two rule changes took effect on August 17, 2024. Listing agents can no longer include any offer of buyer-agent compensation in the MLS, and the fields that used to display it are gone.2National Association of REALTORS®. Compensation, Commission and Concessions Separately, any agent working with a buyer must have a signed written agreement in place before touring a home, in person or virtually, and that agreement has to spell out the agent’s compensation as a specific dollar figure, percentage, or hourly rate. It cannot be a range or open-ended.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
The practical result: buyers now show up already owing their agent a defined amount. Whether the seller helps cover that amount is a separate negotiation.
Your Options as a Seller
You have several ways to handle the buyer’s agent fee, and you can decide before listing or wait until an offer comes in.
- Offer compensation upfront. You can announce a specific amount or percentage you’re willing to pay a buyer’s agent. Because the MLS is off-limits for this, your listing agent communicates the offer through brokerage websites, flyers, email, phone calls, and signage.2National Association of REALTORS®. Compensation, Commission and Concessions
- Wait for the buyer to ask. Buyers routinely include a request for the seller to cover their agent’s fee as a term of the purchase offer, negotiated the same way as price or closing date.4National Association of REALTORS®. Communicating Offers of Compensation
- Offer a general closing-cost concession. Rather than paying the agent directly, you can credit the buyer a lump sum toward closing costs, and the buyer applies it to their agent’s fee. Where local MLS rules allow, seller concessions can still appear in designated MLS fields, but the concession cannot be conditioned on the buyer using or paying a specific agent.4National Association of REALTORS®. Communicating Offers of Compensation
- Decline. The buyer then pays the fee themselves under their written buyer agreement.
The strategic question is who your buyers are. First-time buyers stretched by down-payment and closing costs may not have thousands of dollars in extra cash to pay their own agent. In a slower market, offering to cover the buyer’s agent fee can move your listing to the top of a buyer’s list. In a hot market with cash buyers or well-capitalized purchasers, you have more room to hold the line.
Different buyers may also arrive with different obligations. One buyer’s agent may have signed a 2% agreement; another may work on a flat $5,000 fee. That variability can shape how each offer is structured, and it means the amount you’re asked to cover may not be uniform.
How Payment Actually Happens at Closing
When you agree to pay or contribute toward the buyer’s agent’s commission, the amount is written into the purchase contract and appears on the Closing Disclosure, the standardized settlement form used for most residential mortgage transactions.5Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosure FAQs It is typically shown as a seller concession or closing-cost credit, debited from your proceeds.
You do not hand money to the buyer or the agent. The escrow or title company handling the closing verifies the credit against the contract and pays the buyer’s brokerage directly at the close of escrow.
Whether Loan Program Limits Get in the Way
If the buyer is financing, their loan program may cap how much the seller can contribute toward the buyer’s costs. The good news for sellers: most major programs treat the buyer’s agent commission as a customary transaction cost rather than a capped concession.
FHA
FHA caps “interested party contributions” at 6% of the sale price. That bucket covers things like discount points, prepaid interest, and mortgage insurance premiums. Commissions paid by the seller that are customary in the local market do not count toward the 6% cap.6U.S. Department of Housing and Urban Development. What Costs Can a Seller or Other Interested Party Pay on Behalf of the Borrower
VA
VA loans historically barred veterans from paying their own agent’s commission. After the settlement, the VA issued Circular 26-24-14, a temporary variance letting veterans pay reasonable and customary buyer-broker charges when needed. The variance does not stop a seller from paying the veteran buyer’s agent commission, and the VA is drafting a permanent rule. Buyer-broker charges cannot be rolled into the loan amount, and the lender must confirm the veteran has enough cash to cover any portion they take on.7Veterans Benefits Administration. Circular 26-24-14 Temporary Local Variance for Certain Buyer-Broker Charges
Conventional (Fannie Mae and Freddie Mac)
Fannie Mae’s interested-party contribution limits are 3% of the sale price at loan-to-value ratios above 90%, 6% between 75.01% and 90%, and 9% at 75% or below. Investment properties face a flat 2%.8Fannie Mae. Interested Party Contributions (IPCs) A seller-paid buyer’s agent commission consistent with local common and customary practice is excluded from those limits.9Fannie Mae. Selling Notice – Fannie Mae Single Family Freddie Mac takes the same position.10Freddie Mac Single-Family. Buyer Agent Commissions Paid by Property Sellers FAQ
So paying the buyer’s agent fee generally does not use up the concession room your buyer is counting on for other closing costs.
Tax Treatment
Commissions you pay as the seller — for the listing agent, the buyer’s agent, or both — count as selling expenses when you figure the gain or loss on the sale. The IRS treats them as a direct cost of selling that reduces the amount realized on the transaction.11Internal Revenue Service. Selling Your Home
The math: subtract selling expenses, including commissions, from the sale price to get the amount realized. Subtract your adjusted basis (generally what you paid plus qualifying improvements) to get the gain. A larger commission payment lowers the amount realized and, by extension, the taxable gain.11Internal Revenue Service. Selling Your Home Most sellers of a primary residence can already exclude up to $250,000 of gain, or $500,000 if married filing jointly, so whether the commission affects your tax bill depends on whether your gain exceeds those thresholds.
Watch Out for Overpaying
If you offer a very large commission or concession to attract buyers, it can come back on the appraisal. Appraisers are required to identify financing terms or concessions in comparable sales and adjust the comparable’s sale price to reflect what the property would have sold for without them.12Freddie Mac Single-Family. Considering Financing and Sales Concessions – A Practical Guide for Appraisers The adjustment reflects the market’s reaction, not a straight dollar-for-dollar reduction.
If the appraisal on your own sale comes in below the contract price, the buyer’s lender may reduce the loan amount, and the deal can fall apart. Keeping any offer within the range typical for your local market avoids that problem.
What Your Listing Agreement Locks In
Your commission obligations really start with the listing agreement, not with the buyer’s offer. Before signing an Exclusive Right to Sell contract, look closely at a few provisions:
- The total commission rate or amount owed to the listing brokerage, whether as a percentage or a flat fee.
- A separate clause on whether the listing agent may offer part of that commission to a cooperating buyer’s agent. You control this decision and set the amount.
- The listing period and expiration date.
- A protection or carryover period after expiration, commonly 30 to 180 days, during which the agent is still owed a commission if a buyer introduced to the property during the listing period later buys it. The length and conditions are negotiable.
All legal owners of the property must sign. Nailing down the commission structure before marketing begins keeps the terms clear once offers start arriving, and it prevents surprises about what you owe your own agent if a buyer shows up without one.