When you sell a house, you pay your own listing agent’s commission out of the sale proceeds at closing, and under rules that took effect in August 2024, the buyer is now responsible for paying their own agent unless you agree to help cover that cost through a concession. So the short answer to who pays the commission when selling a house has shifted: the seller still funds the listing side automatically, but the buyer side is no longer bundled in by default.
The Listing Agent: Paid by the Seller
Nothing changed about how your own agent gets paid. When you sign a listing agreement with your brokerage, you agree to a commission rate or flat fee, and that amount is deducted from the sale price at closing before any remaining equity reaches you. Typical listing-side fees run between 2.5% and 3% of the sale price, though the rate is always negotiable and must now be disclosed as such in writing.1National Association of REALTORS®. Summary of 2024 MLS Changes
You never write a separate check. The escrow officer or title company handling the closing pulls the commission from the sale proceeds along with the mortgage payoff, transfer taxes, and other settlement charges, and disburses everything at the moment the deed transfers.
The Buyer’s Agent: No Longer Automatic
For decades, a seller agreed to a single commission of roughly 5% to 6%, and that amount was split between the listing brokerage and the buyer’s brokerage through an offer advertised on the Multiple Listing Service. On a $400,000 sale at 6%, that meant $24,000 off the top, with $12,000 going to each side. The seller funded both halves of the deal.
On March 15, 2024, the National Association of Realtors reached a settlement that reshaped that arrangement, and the practice changes took effect on August 17, 2024. Two things matter for sellers:
- Listing agents can no longer advertise any buyer-agent commission on the MLS. The field is gone.2National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers
- Buyers working with an agent must sign a written representation agreement before touring a home, spelling out exactly what that agent will be paid. The buyer is contractually on the hook for that fee.3National Association of REALTORS®. Homebuyers: Here’s What the NAR Settlement Means for You
You can still offer buyer concessions on the MLS, such as a credit toward closing costs. What you cannot do is advertise a specific payment to the buyer’s agent as part of your listing.
Should You Offer to Cover the Buyer’s Agent?
Legally, no. Practically, often yes. Buyers must bring cash to closing for any agent fee their mortgage won’t cover, and Fannie Mae, Freddie Mac, and the FHA do not allow buyer-agent commissions to be rolled into the loan balance. A buyer who already has to come up with a down payment and closing costs may struggle to add an agent fee on top of that.
In a competitive market with plenty of inventory, refusing to help with the buyer’s side can shrink your pool of qualified buyers. In a tight seller’s market, it matters less. The decision is a pricing one: a concession reduces your net proceeds just as a bundled commission used to, but now you choose whether to offer it, how much, and how to position it in negotiation.
Concession Caps by Loan Type
If you decide to offer a concession, the buyer’s mortgage program limits how much you can contribute. Anything over the cap gets deducted from the appraised value for underwriting purposes, which can derail the deal. The ceilings:
- Conventional loans through Fannie Mae or Freddie Mac: up to 3% of the sale price if the buyer puts down less than 10%, up to 6% for down payments of 10% to 25%, and up to 9% above 25% down.4Fannie Mae. Interested Party Contributions (IPCs)
- FHA loans: up to 6% of the purchase price or appraised value, whichever is lower.
- VA loans: capped at 4% of the purchase price.
Any concession that covers the buyer’s agent counts toward these caps alongside other closing-cost credits you offer, so budget for the full package.
How It All Shows Up at Closing
Real estate commissions appear in Section H, “Other Costs,” on the buyer’s Closing Disclosure, with each brokerage’s share listed separately. This is the standardized federal form required under the TILA-RESPA Integrated Disclosure rules administered by the Consumer Financial Protection Bureau.6Consumer Financial Protection Bureau. 12 CFR 1026.38 – Content of Disclosures for Certain Mortgage Transactions You will see your own listing commission on your settlement statement, and if you agreed to cover the buyer’s agent through a concession, that amount shows up as a credit from seller to buyer.
Both parties sign the Closing Disclosure to confirm the final numbers. The escrow officer then disburses the commission funds along with everything else, simultaneously with the transfer of the deed. No money moves until every condition is met and title is clear.
How the Commission Affects Your Taxes
The commission you pay as a seller is treated by the IRS as a selling expense, which reduces your “amount realized” on the sale. A lower amount realized means a smaller taxable gain.7Internal Revenue Service. Publication 523, Selling Your Home
For a primary residence, you can exclude up to $250,000 of capital gain from income, or $500,000 if you file jointly with a spouse, provided you owned and lived in the home for at least two of the five years before the sale. The commission comes off the sale price before the exclusion is calculated, so it lowers the gain measured against that threshold.8Internal Revenue Service. Topic No. 701, Sale of Your Home
For a rental or investment property, commissions reduce the amount realized in the same way, factoring into your gain or loss on the sale.9Internal Revenue Service. Publication 527, Residential Rental Property Keep the closing statement in your tax records; the commission figure on it is the number you’ll use.
If you also pay a concession that covers the buyer’s agent fee, that concession is part of your selling costs and factors into the same calculation. Whether you label the payment as a commission or a concession, the money came out of your proceeds, and it reduces your taxable gain accordingly.