In a typical U.S. home sale today, the seller pays their listing agent and the buyer pays their own agent, with each commission negotiated separately. That split is the default after an August 2024 nationwide settlement involving the National Association of Realtors changed how buyer’s agents get paid. Sellers can still agree to cover some or all of the buyer’s agent fee as a concession, but it is no longer automatic, and the question of who pays realtor fees now gets answered deal by deal rather than by industry custom.
Why the Old Answer No Longer Fits
For decades, sellers effectively paid both sides. The listing agreement set a total commission of roughly 5% to 6% of the sale price, and the listing brokerage shared a portion with the buyer’s brokerage through the Multiple Listing Service. Buyers rarely wrote a check to their own agent because the money was already baked into the seller’s cost.
That model ended on August 17, 2024, following the settlement in Burnett v. National Association of Realtors.1Real Estate Commission Litigation. Burnett et al. v. The National Association of Realtors et al. Two rule changes matter for the “who pays” question:
- Offers of compensation from listing agents to buyer’s agents can no longer appear on MLS platforms.2National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers
- Buyers must sign a written buyer broker agreement before an agent can show them properties, in person or virtually.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
Sellers can still offer buyer concessions on the MLS (for example, help with closing costs), and they can offer to pay a buyer’s agent fee off the MLS. What changed is the default: nothing requires a seller to cover the buyer’s side anymore, and buyers now have their own written contract spelling out what they owe their agent if the seller doesn’t.
What the Seller Pays
The seller pays the listing agent under a listing agreement, which is the contract between the homeowner and the brokerage. Listing-side commissions commonly fall in the 2.5% to 3% range, though no federal or state law sets the rate and everything is negotiable. The fee can be a percentage of the sale price, a flat dollar amount, or an hourly rate.
Two clauses in the listing agreement decide whether the seller might owe a commission even when no sale closes:
A “ready, willing, and able buyer” clause can trigger payment if the agent produces a buyer who meets every listed term (price, timeline, contingencies) and the seller then backs out. Read it before signing.
A protection period, sometimes called a holdover or tail clause, typically runs 30 to 45 days after the listing expires. If the home sells during that window to a buyer the agent introduced during the listing term, the commission is still owed. The agent generally provides a written list of those buyers when the listing ends.
Some listing agreements also carry a cancellation fee covering the agent’s out-of-pocket costs — photography, MLS fees, marketing — if the seller walks away early. Others allow cancellation without penalty by mutual written agreement.
What the Buyer Pays
Buyers now sign a written buyer broker agreement before touring homes. The agreement must state the agent’s compensation in specific terms — a flat fee, a percentage, an hourly rate, or $0. It cannot be left open-ended or expressed as a range.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements Buyer’s agent fees commonly run 2% to 3%, and that amount is negotiable.
If the seller agrees to cover the buyer’s agent fee (fully or partly) through a concession, that reduces what the buyer owes at closing. If the seller contributes nothing, the buyer is contractually responsible for paying their agent out of pocket at closing.
One contract trap worth checking: some buyer broker agreements let the agent keep anything extra if the seller offers more than the rate you agreed to. Before signing, confirm the agreement caps your agent’s total compensation at the amount you negotiated, no matter where the money comes from.
Signing an agreement is required only before an agent shows you properties. Attending an open house on your own, or simply asking an agent about their services, does not trigger the requirement.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
How Much the Seller Can Chip In Toward the Buyer’s Agent
Whether a seller can agree to pay the buyer’s agent fee as a concession depends on the buyer’s loan type. Federal mortgage guidelines cap what sellers (and other “interested parties”) can contribute.
Conventional Loans
Fannie Mae ties the cap on interested-party contributions to the buyer’s down payment:4Fannie Mae. Interested Party Contributions (IPCs)
- Down payment under 10%: concessions cannot exceed 3% of the sale price or appraised value, whichever is lower.
- Down payment of 10% to 25%: cap rises to 6%.
- Down payment above 25%: cap is 9%.
- Investment property: cap is 2% regardless of down payment.
Anything above the cap gets deducted from the sale price for underwriting purposes, which can affect loan approval.
FHA Loans
FHA allows seller concessions of up to 6% of the sale price or appraised value, whichever is lower. These concessions can cover closing costs, prepaid expenses, discount points, and buyer’s agent commissions.5National Association of REALTORS®. Navigating FHA Loan Requirements: Crafting Home Purchase Agreements With Ease
VA Loans
VA rules have historically prohibited veterans from paying real estate brokerage fees directly. After the NAR settlement, the VA issued a temporary variance (Circular 26-24-14) allowing veterans to pay reasonable buyer-broker charges out of pocket. As of early 2026, the variance remains in effect.6Department of Veterans Affairs. Circular 26-24-14 Temporary Local Variance for Certain Buyer-Broker Charges Those fees cannot be rolled into the loan amount; they must come from the buyer’s own funds. On the seller side, concessions on a VA purchase can go up to 4% of the sale price toward the buyer’s closing costs, plus reasonable loan-related charges.7Department of Veterans Affairs. VA State Fees and Charges Deviations List Veterans should confirm the current status of the variance with their lender before making an offer.
For Sale By Owner
When a homeowner lists without an agent, there is no listing commission. The buyer’s side is still a live question. If the buyer has an agent, the buyer’s agent will usually ask the FSBO seller to agree to pay the buyer’s agent fee as part of the purchase negotiations. If the seller agrees, the fee comes out of sale proceeds at closing. If the seller refuses, the buyer owes the fee directly under the buyer broker agreement, which can add several thousand dollars to out-of-pocket costs on top of the down payment and closing fees.
FSBO sellers should expect this to come up early. A clear position — agree, split, or decline — avoids surprises at the closing table.
Dual Agency
Dual agency means one agent (or one brokerage) represents both sides. Roughly eight states prohibit it entirely; most others allow it with informed written consent from both parties. Because the agent is not exclusively advocating for either side, dual agency can create conflicts of interest.
Total commission in a dual agency deal is often lower because only one brokerage is paid. Some listing agreements include a variable rate clause spelling this out — for example, 3% if an outside brokerage brings the buyer, 2% if the listing broker’s own agent does. If your listing agreement has one, know both rates before you sign.
How the Money Actually Moves at Closing
A neutral settlement agent — a title company, escrow company, or closing attorney depending on the state — collects funds from the buyer’s lender and the buyer, then distributes payments according to the purchase contract.8Consumer Financial Protection Bureau. What Can I Expect in the Mortgage Closing Process? You receive a Closing Disclosure at least three business days before closing with a line-by-line breakdown of every charge, including agent commissions.
Commissions come out of the sale proceeds when the seller is paying, or out of the buyer’s funds when the buyer is paying. The settlement agent sends payment to each brokerage, and the brokerage then pays the individual agent under their internal agreement. The seller receives whatever is left after commissions, liens, and other closing costs.
How Commissions Affect the Seller’s Taxes
The IRS treats commissions a seller pays as a selling expense. When you calculate the capital gain on your home, selling expenses (including agent commissions) are subtracted from the sale price to produce the “amount realized.” A lower amount realized means a smaller taxable gain.9Internal Revenue Service. Publication 523 (2024), Selling Your Home
For a primary residence, you can exclude up to $250,000 of capital gain if you are single, or up to $500,000 if married filing jointly, provided you owned and lived in the home for at least two of the five years before the sale. After subtracting commissions and other selling costs, many homeowners find their gain falls below these thresholds entirely.9Internal Revenue Service. Publication 523 (2024), Selling Your Home
For investment property, commissions paid at sale reduce the amount realized and therefore the capital gain. Commissions and advertising costs tied to finding tenants on a rental are deductible as rental expenses.10Internal Revenue Service. Topic No. 415, Renting Residential and Vacation Property