Who pays the real estate agent depends on which side of the deal you are on and what each party negotiated. The seller pays the listing agent through the listing agreement, and since the August 17, 2024 National Association of Realtors settlement, the buyer is directly responsible for their own agent’s fee unless the seller agrees to cover it as a concession in the purchase contract.1National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers Nationally, total commissions average about 5.70% of the sale price, roughly 2.9% to the listing agent and 2.8% to the buyer’s agent.
What the Seller Pays
When you hire an agent to sell your home, you sign a listing agreement that spells out the services the agent will provide and the commission you owe if the home sells. The commission is almost always a percentage of the final sale price. There is no legally mandated rate, and the listing side typically falls between 2.5% and 3%.2National Association of REALTORS®. Compensation, Commission and Concessions On a $400,000 sale at 3%, the seller owes the listing brokerage $12,000.
Your obligation to pay usually kicks in when the agent produces a buyer who is ready, willing, and financially able to purchase the property under the listing terms. In most agreements, the money changes hands at closing. Some contracts, though, make the commission payable even if the sale falls through because the seller refused a full-price offer or breached the purchase contract. Read the fine print before signing.
If a seller refuses to pay after the commission is earned, the brokerage can sue to collect, and in several states, commercial brokers can place a lien on the property for unpaid fees. Every rate is individually negotiable: federal antitrust law bars competing brokerages from agreeing on a common commission.3Legal Information Institute. Sherman Antitrust Act
What the Buyer Now Pays
Before the 2024 NAR settlement, buyers rarely thought about who paid their agent, because the seller’s listing typically bundled both commissions together. That system is gone. Under rules that took effect August 17, 2024, any agent who participates in an MLS must sign a written agreement with a buyer before touring a home together.1National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers
That written agreement must state a specific dollar amount or percentage the buyer will pay for representation. It cannot be left open-ended.4National Association of REALTORS®. Summary of 2024 MLS Changes If you agree to pay your agent 2.5% on a $350,000 purchase, you have committed to $8,750. You can ask the seller to pick up that cost through a concession written into your offer, but if the seller declines, the obligation stays with you.
A few related changes from the same settlement shape how the conversation happens:
- Listing agents can no longer advertise a cooperating broker commission on the MLS itself. Compensation discussions happen off-platform.
- Agents cannot filter or hide listings based on the level of compensation offered.
- Every listing agreement and buyer representation agreement must include a conspicuous statement that broker compensation is not set by law and is fully negotiable.
Canceling a Buyer Representation Agreement
If you sign a buyer representation agreement and later want out, your options depend on the termination clause. Some agreements allow cancellation with written notice. Others require you to reimburse the agent’s documented out-of-pocket costs, such as inspection reports you requested. Nearly all include a protection or “tail” period: if you buy a property the agent already showed you during that window, you may still owe the commission. Before signing, ask about cancellation terms, any reimbursement obligations, and the length of the protection period.
When the Seller Still Pays the Buyer’s Agent
In practice, many sellers still agree to cover the buyer’s agent fee because it makes their home more attractive to buyers who are already stretching to afford a down payment. When a seller concession pays the buyer’s agent, the money comes out of the seller’s proceeds at closing. The buyer never writes a separate check. But concessions are capped by the buyer’s loan type.
- VA loans. The Department of Veterans Affairs caps total seller concessions at 4% of the home’s reasonable value. Anything that benefits the buyer at no additional cost, including credits toward the VA funding fee, prepaid insurance, or agent commissions, counts toward that cap.5U.S. Department of Veterans Affairs. VA Funding Fee And Loan Closing Costs
- FHA loans. FHA caps seller concessions at 6% of the purchase price, covering items like discount points, prepaid expenses, and closing costs.
- Conventional loans. Fannie Mae and Freddie Mac set interested party contribution limits ranging from 2% to 9% depending on the buyer’s down payment. However, if a seller pays the buyer’s agent commission in accordance with local common and customary practices, Fannie Mae has clarified that this payment does not count toward the IPC limit.6Fannie Mae. Selling Notice – Real Estate Commissions and Interested Party Contributions
Why Buyers May Need Cash on Hand
Buyer agent commissions generally cannot be rolled into the mortgage loan. Fannie Mae, Freddie Mac, and FHA all prohibit adding the commission to the loan balance. If the seller won’t offer a concession, you need cash on hand for the commission on top of your down payment and other closing costs. That math is now part of what buyers should figure out before they start touring homes, not after.
Protection Periods That Can Make Either Side Owe
Both listing agreements and buyer representation agreements almost always include a protection clause, sometimes called a holdover or tail clause. If the agreement expires but the property later sells to someone the agent introduced during the active period, the agent may still be owed a commission. Protection periods commonly run 30 to 90 days after the agreement ends.
For sellers, that means you could owe your former listing agent if you wait out the agreement and then sell to a buyer that agent had already brought to the table. For buyers, a similar clause can require you to pay your former agent if you purchase a home that agent showed you during the window. Negotiate the length of the protection period before signing, and if you switch agents, ask for a written release that specifies which properties remain covered.
Alternatives That Change What Each Side Pays
The traditional percentage commission is not the only option, and alternatives can shift what the seller or buyer actually spends.
- Flat-fee MLS listings. For roughly $100 to $1,000, a flat-fee service places your home on the MLS without charging a percentage. You handle showings, negotiations, and paperwork yourself, or pay extra for add-on services. This works best for experienced sellers.
- Low-commission listing agents. Some brokerages charge sellers a reduced listing fee, often 1% to 1.5%, while still providing many traditional services like professional photography and contract management.
- Hourly or flat-fee buyer representation. A small but growing number of buyer’s agents will work for a flat fee or hourly rate instead of a percentage. Under the new rules, these arrangements must still be disclosed in the written buyer representation agreement.
Whichever model you pick, a seller may still need to offer a buyer-agent concession to attract represented buyers, and the buyer must still have a written representation agreement in place before touring homes.
Dual Agency and Its Effect on Fees
Dual agency occurs when one agent, or two agents at the same brokerage, represents both the buyer and the seller in the same transaction. Because the firm earns both sides of the commission, consumers sometimes negotiate a reduced total fee compared with hiring two separate firms. Where dual agency is permitted, the agent must disclose the arrangement and get written consent from both parties before proceeding.
Roughly eight states prohibit dual agency entirely, requiring each party to have independent representation. Even in states that allow it, dual agency limits the agent’s ability to advocate fully for either side, since the agent owes duties to both. If you find yourself in a dual-agency situation, asking for a lower combined commission is reasonable given that the firm is keeping the entire fee.