In most home sales, the seller still pays the real estate commission out of their sale proceeds, covering both their listing agent and, usually, the buyer’s agent. What changed in 2024 is that buyers now sign their own written fee agreements with their agents before touring homes, and if the seller declines to cover that fee, the buyer pays the difference at closing. So the short answer to who pays real estate commission is: the seller by default, the buyer by contract when the seller won’t.
How the Seller’s Side Gets Paid
A seller’s obligation starts the moment they sign a listing agreement. That contract sets exactly what the brokerage earns when the home sells, either as a percentage of the sale price or a flat fee. Percentage rates have historically fallen between 5% and 6%, though averages have drifted lower since late 2024. On a $400,000 home, a 5% commission is $20,000.
Every listing agreement must include a conspicuous disclosure that the commission rate is not set by law and is fully negotiable.1National Association of REALTORS®. NAR Settlement FAQs Brokerages set their own rates. The commission comes out of the seller’s gross proceeds at the closing table, so the seller never writes a separate check. The escrow or title company handles the math and sends the seller whatever is left.
What Changed in August 2024
New MLS policies took effect on August 17, 2024, as part of the settlement of a class-action lawsuit commonly called Burnett v. NAR. Two changes matter for the question of who pays.2National Association of REALTORS®. Summary of 2024 MLS Changes
Listing agents can no longer advertise offers of compensation to buyer agents through the MLS.3National Association of REALTORS®. No Compensation Offers in MLS, Section 1 Before this change, a listing might say “2.5% offered to buyer’s agent,” which effectively guaranteed the seller would pay the other side. Now, if a seller wants to offer compensation to the buyer’s agent, that has to be communicated outside the MLS — through direct conversations, emails, or brokerage websites.
And every agent working with a buyer must enter into a written agreement with that buyer before touring a home. The agreement must state the amount or rate of compensation the agent will receive, and it cannot leave that figure open-ended based on whatever the seller happens to offer. Buyers now know their agent’s fee before stepping inside a house, and they are personally on the hook for it if no one else pays.
When the Buyer Ends Up Paying
The written buyer representation agreement creates a direct financial obligation between the buyer and their agent. Agree to a 2.5% fee on a $500,000 purchase and you have promised your agent $12,500. Where that money comes from depends on what you negotiate with the seller.
Many sellers still agree to cover the buyer’s agent fee because offering to pay attracts more potential buyers. If the seller refuses, or offers less than the rate the buyer agreed to, the buyer covers the gap. That money lands on top of the down payment and other closing costs.
Walking away from a signed representation agreement without paying can expose a buyer to a breach-of-contract claim. The agent’s brokerage can pursue the fee through litigation, and some agreements let the brokerage recover attorney’s fees as well. This is where most buyer problems start: the agreement gets signed early in the house hunt, before the buyer has thought through what happens if the seller contributes less than the full amount.
Seller Concessions as the Common Bridge
The most common way sellers help cover a buyer’s agent fee without paying that agent directly is a seller concession. A concession is a credit the seller gives at closing, and the buyer can apply it to various transaction costs, including their agent’s fee.4National Association of REALTORS®. Compensation, Commission and Concessions It can also go toward loan origination fees, appraisal costs, and repairs.
Concessions can still be advertised on the MLS, but they cannot be conditioned on or tied to payment of a buyer’s agent.4National Association of REALTORS®. Compensation, Commission and Concessions A listing might say “seller offering $15,000 toward buyer closing costs” without specifying that the money should pay the agent. The buyer then decides how to allocate it. Concessions get negotiated into the purchase agreement and must appear on the settlement statement to be processed at closing.5National Association of REALTORS®. Seller Concessions: A Guide for REALTORS
Loan Caps That Limit What a Concession Can Cover
Lenders cap how much a seller can contribute, and the caps vary by loan type. If you are counting on a concession to cover your agent’s fee, check the limit for your loan before you make an offer.
- Conventional loans (Fannie Mae): the cap depends on the down payment. With less than 10% down, seller contributions max out at 3% of the sale price or appraised value, whichever is lower. At 10% to 25% down, the cap rises to 6%. Above 25% down, it reaches 9%.6Fannie Mae. Interested Party Contributions (IPCs)
- FHA loans: concessions are capped at 6% of the sale price. Anything above that gets subtracted from the sale price before the loan amount is calculated.
- VA loans: concessions are limited to 4% of the appraised value. A separate temporary VA policy also allows veterans to pay buyer-broker fees directly, but those fees cannot be rolled into the loan and must appear on the Closing Disclosure.7U.S. Department of Veterans Affairs. Circular 26-24-14
The math matters. A buyer putting 5% down on a $400,000 home with a conventional loan can receive at most $12,000 in seller concessions (3% of $400,000). If the buyer’s agent fee is $10,000 and other closing costs add another $8,000, the concession covers the agent but leaves the rest to the buyer. Low-down-payment buyers should run those numbers before assuming a concession will handle everything.
Two Transactions Where the Usual Answer Changes
For Sale By Owner
When a homeowner sells without a listing agent, there is no listing agreement and no automatic commission owed. That is the point of selling FSBO — eliminating the listing-side fee saves the seller several percentage points.
The complication is that many buyers still have their own agents, and those agents expect to be paid. A FSBO seller can voluntarily offer to pay the buyer’s agent to attract represented buyers. Without that offer, the buyer owes the fee under their representation agreement, and that cost often pushes buyers to negotiate a lower purchase price.
Some buyer representation agreements raise the buyer’s agent fee when the seller is unrepresented, on the theory that the agent takes on work a listing agent would normally do. Buyers looking at FSBO properties should check their agreement for that provision before writing an offer.
Dual Agency
When one agent or brokerage represents both sides, the brokerage collects the full commission rather than splitting it with a cooperating firm. On a 5% deal, that whole amount stays in-house.
Some agents voluntarily reduce the total commission in dual-agency situations, usually by a percentage point or so, since there is no second firm to coordinate with. There is no requirement to do so. Several states restrict or prohibit dual agency, and where it is allowed, both the buyer and seller must give informed written consent.
Negotiating the Rate
Every commission rate is negotiable. That is not a platitude — it is the foundation of the antitrust rules that govern the industry. No trade association, MLS, or brokerage can set a standard rate.
Sellers have the most leverage when the property is desirable enough that agents compete for the listing. In active markets, some brokerages offer reduced listing-side fees to win the business. A seller can also lower the listing fee while leaving the buyer-side fee to be handled separately through a concession.
Buyers have leverage too, especially on higher-priced homes where a percentage fee produces a large dollar figure for roughly similar work. A buyer purchasing a $900,000 home at 2.5% would owe their agent $22,500; cutting the rate to 2% saves $4,500 at closing. Some buyers negotiate flat fees or hourly rates, though percentage-based fees remain the norm.