Either side can pay the buyer’s agent fee, and which one actually does comes down to negotiation. Since the National Association of Realtors’ $418 million settlement took effect in August 2024, sellers no longer automatically cover both agents’ commissions. The buyer’s agent fee is now a separate line item set by the buyer’s written agreement with their agent, and the seller pays it only if the two sides agree to that in the purchase contract. The average buyer-agent rate sits around 2.4% of the purchase price as of late 2025.
What Changed in August 2024
For decades, a seller’s listing agreement bundled a total commission that the listing brokerage split with the buyer’s agent, and that split was published on the Multiple Listing Service. A class-action settlement ended that default. Two rules now shape every residential deal.
First, the MLS can no longer display offers of compensation from a seller to a buyer’s agent. Sellers can still offer to pay, but the offer has to travel through flyers, emails, brokerage websites, or other channels outside the MLS.1National Association of REALTORS®. Summary of 2024 MLS Changes Second, buyers must sign a written representation agreement with their agent before touring a home, and that agreement must state the exact compensation the buyer owes. The agent cannot collect more than that amount from any source.2National Association of REALTORS®. NAR Settlement FAQs
The practical effect: commission is no longer a quiet arrangement between brokerages. Both the buyer and the seller now engage with it directly.
What Your Buyer Representation Agreement Locks In
Before touring a property with an agent, you sign a buyer representation agreement that sets the financial terms between you and the agent’s brokerage. The number in that contract is what you owe, period. It can be a specific dollar figure or a percentage of the purchase price, and the amount is fully negotiable; it is not set by law, and your agent is required to disclose that fact.1National Association of REALTORS®. Summary of 2024 MLS Changes
The agreement also has to say your agent cannot receive compensation from any source that exceeds the rate you agreed to.2National Association of REALTORS®. NAR Settlement FAQs If your agreement says 2.5% and the seller offers 3%, your agent still only gets 2.5%. The number works as a ceiling, not a floor.
From here, the question of who writes the check is really the question of how much, if any, of that agreed amount the seller covers.
When You End Up Paying It Yourself
You pay the full fee whenever the seller offers nothing toward it. That happens most often in three situations: for-sale-by-owner transactions with no listing agent in the picture, hot markets where sellers feel no pressure to offer anything, and listings where the seller simply chose not to.
A partial gap works the same way. If your agreement calls for 2.5% and the seller offers 1%, you owe the 1.5% difference out of pocket.
Here is the part that catches first-time buyers: you cannot roll your agent’s commission into your mortgage. Fannie Mae, Freddie Mac, and FHA all prohibit adding the buyer’s agent fee to the loan balance.3Fannie Mae. Selling Notice – Real Estate Commissions and Interested Party Contributions The VA’s temporary policy, in place since August 2024, lets veterans pay their own buyer-broker fees but also bars financing those charges.4Veterans Benefits Administration. Circular 26-24-14 – Temporary Local Variance for Certain Buyer-Broker Charges The money has to come from savings or other liquid assets, and your lender will verify you have enough during underwriting.
On a $400,000 home with a 2.5% buyer-agent fee, that is $10,000 on top of your down payment and closing costs. Budget for it early. If cash is tight, your two levers are negotiating a lower rate in your representation agreement or asking the seller to cover it in your offer.
When the Seller Pays It
Many sellers still pay the buyer’s agent voluntarily because doing so widens the pool of buyers who can afford the deal. A seller who absorbs the cost may get a faster sale or a higher price that offsets the expense.
What changed is how the offer gets communicated. Because the MLS cannot carry it, listing agents share seller-paid compensation through property flyers, direct emails to buyer agents, brokerage websites, and yard signs.5National Association of REALTORS®. Compensation, Commission and Concessions The offer is typically documented in the listing agreement, which authorizes the listing brokerage to pay a cooperating buyer’s agent a set percentage or amount.1National Association of REALTORS®. Summary of 2024 MLS Changes
Even when a seller has not pre-committed, you can request it in your purchase offer. Buyers routinely write in a term asking the seller to pay the buyer’s agent fee as a condition of the deal. Sellers weigh those requests against price, timeline, contingencies, and competing offers. In a slow market, most agree. In a bidding war, you have less leverage.
One boundary to know: the MLS does allow sellers to advertise general concessions, such as help with closing costs, but those concessions cannot be specifically tied to payment of the buyer’s broker.5National Association of REALTORS®. Compensation, Commission and Concessions
How Loan Program Caps Affect a Seller-Paid Fee
When the seller pays the buyer’s agent, that payment counts as a seller contribution, and every major loan program limits how much a seller can contribute. On conventional Fannie Mae loans, caps run from 3% to 9% of the property value depending on your down payment, and investment properties are capped at 2%.
Fannie Mae has issued an important clarification: when a seller or listing agent pays the buyer’s agent commission in keeping with local custom, those amounts do not count toward the contribution limits.3Fannie Mae. Selling Notice – Real Estate Commissions and Interested Party Contributions A seller covering agent fees for a 5%-down buyer is not necessarily blowing through the 3% cap, as long as the payment is still considered customary locally. Your lender decides whether the carve-out applies to your deal.
FHA caps total seller concessions at 6% of the sale price, covering closing costs and prepaid items but never the down payment. VA loans operate under the temporary policy noted above, letting veterans pay their own buyer-broker fees if those fees are reasonable and customary for the local market.4Veterans Benefits Administration. Circular 26-24-14 – Temporary Local Variance for Certain Buyer-Broker Charges A permanent VA rule is still in development, so veterans should confirm current guidelines with their lender before making an offer.
How the Fee Gets Paid at Closing
Whoever pays, the money moves through the closing process, handled by the escrow or title company. The Closing Disclosure shows every charge, and your agent’s fee appears under settlement charges with the source of the funds identified.
If the seller is paying, the commission is subtracted from the seller’s net sale proceeds before the seller sees any money. If you are paying, the amount is added to your total cash due at closing, alongside the down payment, lender fees, and title insurance. The escrow officer will not release the deed or record the transfer until every line item is funded. Once the deed is recorded, the title company sends the commission to the respective brokerages, which satisfies both the listing agreement and your buyer representation agreement.
Keep a copy of your Closing Disclosure. It is the document you will need to substantiate the commission later for tax purposes.
Tax Treatment for Buyers Who Pay
If you pay your own agent’s commission on a primary residence, do not expect a deduction in the year you buy. The IRS does not allow homeowners to deduct most settlement and closing costs.6Internal Revenue Service. Tax Benefits for Homeowners
The benefit shows up when you sell. IRS Publication 551 lists settlement fees, including sales commissions, among the costs that can be added to a property’s cost basis.7Internal Revenue Service. Publication 551 (12/2025), Basis of Assets A higher basis means a smaller taxable gain. If you buy for $400,000 and pay a $10,000 buyer-agent fee, your adjusted basis starts at $410,000. Sell later for $700,000, and that $10,000 reduces your gain dollar for dollar. For sellers, commissions paid at the time of sale reduce net proceeds and are factored into the gain calculation under IRS Publication 523.8Internal Revenue Service. Publication 523 (2025), Selling Your Home
Guidance on these new post-settlement arrangements is still catching up, so if you paid a significant buyer-agent fee out of pocket, running the numbers past a tax professional before filing is worth the cost.
Dual Agency Does Not Change Who Pays
In states that allow it, dual agency occurs when one agent or brokerage represents both sides of the same transaction. It requires written disclosure and consent from both parties because of the conflict of interest.9National Association of REALTORS®. Consumer Guide: Agency and Non-Agency Relationships
Dual agency does not automatically shift who pays the commission. The same negotiation applies: the seller agrees to cover the buyer-side fee, or the buyer pays it per their representation agreement. What changes is that a single brokerage collects from both sides. Some buyers use that as a negotiation point, arguing the total rate should come down because the brokerage is earning both halves. Whether the argument works depends on the brokerage and the market, but it is worth raising. Not every state permits dual agency, so check your local rules before assuming the option exists.