Yes, the seller can still pay the buyer’s agent commission, but it is no longer automatic. Since the National Association of Realtors settlement took effect on August 17, 2024, sellers no longer advertise a preset commission to the buyer’s agent through the Multiple Listing Service. Whether the seller pays the buyer’s agent commission is now negotiated deal by deal, and if the seller declines, the buyer owes the fee under a written agreement with their own agent.
What Changed on August 17, 2024
On March 15, 2024, NAR announced a $418 million settlement resolving nationwide claims from home sellers over commission practices. Two rule changes took effect the following August.1National Association of REALTORS®. National Association of REALTORS Reaches Agreement to Resolve Nationwide Claims Brought by Home Sellers
First, listing agents can no longer use the MLS to advertise what a seller will pay a buyer’s agent. Sellers may still offer that compensation, but the offer has to be communicated outside the MLS. Second, an agent who participates in an MLS must sign a written agreement with a buyer before touring any home together, in person or virtually.2National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers
The result: commission conversations happen earlier and more openly. Nothing is assumed. Each transaction starts from scratch.
How Sellers Still Pay the Buyer’s Agent
The settlement did not end seller-paid buyer-agent commissions. It ended the MLS as the vehicle for offering them. In practice, sellers still cover the buyer’s agent in a large share of transactions.
Listing agents can signal a seller’s willingness to pay through marketing materials like flyers, signs, and emails, through a broker’s own website (as long as the data doesn’t come from an MLS feed), through seller concessions written into a listing, and through direct negotiation during the offer process.3National Association of REALTORS®. Communicating Offers of Compensation
The most common route is a request built into the purchase offer. A buyer might offer $400,000 and ask the seller to pay 2.5% (or a specific dollar amount) toward the buyer’s agent fee. The seller can accept, reject, or counter that request like any other contract term. For sellers, agreeing to pay can widen the pool of interested buyers, particularly first-time buyers already stretching for down payments and closing costs. The listing agreement between the seller and their listing agent is where that authorization gets set, ideally before the home goes on the market.
When the Buyer Has to Pay
If the seller refuses to contribute, the buyer owes the buyer’s agent fee under the terms of their written buyer broker agreement. This comes up most in for-sale-by-owner transactions where there’s no listing agent and the seller declines to pay any agent fees, and in competitive markets where sellers have enough offers to skip concessions.
Partial payment splits the difference. If your buyer broker agreement sets your agent’s fee at 2.5% and the seller agrees to contribute 1%, you owe the remaining 1.5%. These amounts are settled at closing as part of your total closing costs.4National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
If paying out of pocket isn’t realistic, you have a few options. You can negotiate a lower commission rate in your buyer broker agreement before signing it. You can limit your home search to sellers willing to cover the buyer’s agent fee. Or you can attend open houses on your own, since no written agreement is required until you tour a home with an agent representing you.4National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
What the Written Buyer Agreement Locks In
Because the buyer agreement now sets the ceiling on what your agent can be paid from any source, its terms directly shape what happens if the seller doesn’t cover the full fee.
The agreement must state compensation in a clear, specific way: a flat dollar amount, a set percentage, or an hourly rate. It cannot be left open-ended or expressed as a range. Whatever figure is listed becomes the maximum the agent can receive from any source for that representation.4National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
So if the agreement sets your agent’s fee at 2.5% and the seller offers 3%, your agent still only collects 2.5%. If the seller offers 1%, you owe 1.5%. Read the fee number carefully before signing, because that number governs the rest of the deal.
How Mortgage Programs Treat Seller-Paid Commissions
A common misconception is that buyers can roll their agent’s commission into the mortgage. No current mortgage program — conventional, FHA, VA, or USDA — lets you add a buyer-agent commission to your loan balance. Lenders finance the property, not brokerage services.
The seller can still pay the buyer’s agent out of sale proceeds, and in most cases that payment does not count against the seller’s contribution limits. How it works depends on the loan.
Conventional Loans
Fannie Mae treats real estate commissions paid by the seller in accordance with local custom as separate from its interested party contribution limits. As long as the seller’s payment of the buyer’s agent commission is customary in your market, which it remains in most areas, it does not count toward the financing concession caps.5Fannie Mae. Interested Party Contributions (IPCs)
If the payment is not considered customary in a particular market, it is classified as a financing concession and subject to Fannie Mae’s caps, which vary by loan-to-value ratio:
- Down payment below 10% (LTV above 90%): 3% of the sale price or appraised value, whichever is lower
- Down payment between 10% and 25% (LTV 75.01%–90%): 6%
- Down payment above 25% (LTV 75% or less): 9%
- Investment property (any LTV): 2%
FHA Loans
HUD has stated that payment of real estate agent commissions typically paid by the seller under local law or custom is not considered an interested party contribution.6U.S. Department of Housing and Urban Development. What Costs Can a Seller or Other Interested Party Pay on Behalf of the Borrower FHA’s general limit on interested party contributions is 6% of the sale price, but the seller’s payment of the buyer’s agent commission does not count toward that cap when it follows local custom.
VA Loans
VA loans historically prohibited veterans from paying real estate brokerage charges. After the NAR settlement, the VA issued a temporary variance (Circular 26-24-14) allowing veterans to pay reasonable buyer-broker charges. It took effect on August 10, 2024, and remains valid until the VA rescinds it or issues a permanent rule.7Veterans Benefits Administration. Circular 26-24-14 Temporary Local Variance for Certain Buyer-Broker Charges
Under this policy, buyer-broker charges cannot be added to the loan amount and are paid out of the veteran’s own funds at closing. When a seller voluntarily pays the veteran’s buyer-agent fee, that payment is not treated as a seller concession and does not count against VA’s concession limits.7Veterans Benefits Administration. Circular 26-24-14 Temporary Local Variance for Certain Buyer-Broker Charges
USDA Loans
USDA Rural Development loans cap seller contributions at 6% of the sale price, but real estate commissions and other fees typically paid by the seller are not included in that 6% calculation.8USDA Rural Development. Loan Purposes and Restrictions A seller can pay the buyer’s agent commission on a USDA-financed transaction without eating into the amount available for other concessions.
Tax Treatment for Each Side
Who pays the buyer’s agent commission changes how each side reports the transaction.
Sellers
If you pay the buyer’s agent commission as part of the sale, you can count it as a selling expense when calculating capital gains. The IRS treats all sales commissions, including those paid to the buyer’s agent, as costs that reduce your “amount realized” on the sale. A lower amount realized means a smaller taxable gain (or a larger loss).9Internal Revenue Service. Publication 523, Selling Your Home
Most homeowners selling a primary residence can exclude up to $250,000 in capital gains ($500,000 for married couples filing jointly) from federal income tax. Even inside the exclusion, tracking commissions as selling expenses matters if you’re close to the threshold or if the exclusion won’t fully cover your gain.
Buyers
If you pay your own agent’s commission directly, that amount gets added to the cost basis of the property. The IRS treats sales commissions paid by the buyer as part of the home’s purchase cost.10Internal Revenue Service. Publication 551, Basis of Assets A higher cost basis reduces your taxable capital gain when you eventually sell.
If you buy a home for $400,000 and pay a $10,000 buyer-agent commission, your cost basis is $410,000. When you sell, your gain is calculated from $410,000 rather than $400,000 — $10,000 less in potential taxable profit.