In a typical home sale, the seller pays their own listing agent out of the sale proceeds at closing, and the buyer pays their own agent under a written agreement signed before touring homes — though buyers and sellers often negotiate for the seller to cover some or all of the buyer’s agent fee as part of the deal. That is the short answer to who pays realtor fees today. The total commission on a residential sale generally runs 5% to 6% of the sale price, split between the two sides’ brokerages, and every piece of it is negotiable.
The arrangement looks different than it did before August 17, 2024. A class-action settlement involving the National Association of Realtors changed how buyer-agent compensation is offered and disclosed, and the practical result is that buyers now negotiate and often pay their agents more directly than before.1NAR.realtor. What the NAR Settlement Means for Home Buyers and Sellers
How the Seller Pays the Listing Agent
When a homeowner hires a brokerage to sell, they sign a listing agreement — usually an Exclusive Right to Sell contract. That document commits the seller to paying a negotiated commission when the home closes. The fee covers marketing, showings, offer review, and seeing the deal through to the closing table.
The seller does not write a separate check. The commission is subtracted from the gross sale proceeds at closing, alongside the mortgage payoff, title fees, and transfer taxes. On a $400,000 sale with a 5% total commission, $20,000 is carved out before the seller walks away with the balance. Every charge appears on the Closing Disclosure, which the lender must deliver to the buyer at least three business days before closing.2Consumer Financial Protection Bureau. Closing Disclosure Explainer
The rate itself is not fixed by law. Under the NAR Code of Ethics, agents must tell sellers before signing that broker compensation is fully negotiable, and listing agreements now have to include that disclosure in writing.3NAR.realtor. 2026 Code of Ethics and Standards of Practice There is no legally mandated “standard” rate. What a seller pays depends on local market conditions, the home’s price, and the services the brokerage is offering.
How the Buyer Pays Their Own Agent
Since August 2024, a buyer working with a Realtor must sign a written buyer-broker agreement before touring homes, including live virtual tours. That agreement locks in the agent’s fee as a specific flat amount or set percentage. It cannot be left open-ended or stated as a range.4NAR.realtor. Written Buyer Agreements 101
Under that agreement, the buyer is the one on the hook for the fee. If the seller agrees to contribute toward the buyer’s agent — through a concession or a direct payment — that amount reduces what the buyer owes. The buyer covers any shortfall. If the buyer-broker agreement sets the fee at 2.5% and the seller only contributes 1.5%, the buyer pays the remaining 1% at closing.5NAR.realtor. Consumer Guide to Written Buyer Agreements
One practical constraint matters a lot here: buyers generally cannot roll the agent’s commission into the mortgage. Fannie Mae, Freddie Mac, and FHA do not allow commissions to be financed as part of the loan balance. The buyer’s share has to come from cash on hand or from seller concessions, not from borrowing more.
When the Seller Still Pays the Buyer’s Agent
Sellers can still offer to pay the buyer’s agent — they just can’t advertise that offer through the Multiple Listing Service anymore. Those offers now move through the brokerage’s own website, direct communication between agents, or the purchase offer itself. A buyer can write a request for seller-paid buyer-agent compensation directly into their offer, and the two sides negotiate it like any other term.6NAR.realtor. Summary of 2024 MLS Changes
If you are counting on the seller to cover your agent’s fee, loan rules cap how much the seller can contribute. These “interested party contribution” limits apply to the total of all seller-paid closing costs combined — not just the commission — and they are calculated as a percentage of the sale price or appraised value, whichever is lower.
- Conventional loans (Fannie Mae/Freddie Mac): up to 3% with less than 10% down, up to 6% with 10% to 25% down, and up to 9% with more than 25% down.7Fannie Mae. Interested Party Contributions (IPCs)
- FHA loans: up to 6% of the sale price toward closing costs, prepaids, and discount points. Contributions above 6% trigger a dollar-for-dollar reduction in the property’s value for loan calculation purposes.8HUD. FHA Single Family Housing Policy Handbook
- VA loans: no cap on credits toward closing costs, but seller concessions beyond normal closing costs are limited to 4% of the home’s reasonable value.9U.S. Department of Veterans Affairs. VA Funding Fee and Loan Closing Costs
If the seller is also covering title insurance, transfer taxes, or prepaids, those count against the same cap. A buyer leaning on seller contributions to pay their agent should run the numbers before writing the offer.
What Happens in a For-Sale-by-Owner Deal
When a homeowner sells without a listing agent, there is no listing agreement and no built-in commission obligation on the seller’s side. The listing-agent share simply does not exist. But if the buyer is working with an agent, that agent still expects to be paid.
In a typical FSBO transaction, the buyer’s agent approaches the seller directly and negotiates a one-off compensation agreement before an offer is submitted. If the seller refuses, the buyer owes the fee under their own buyer-broker agreement. Buyers touring FSBO homes should confirm with their agent, in advance, how the fee will be handled if the seller won’t contribute.
Dual Agency Changes the Math
When one agent or brokerage represents both the buyer and the seller, the firm collects the entire commission instead of splitting it with a cooperating brokerage. Roughly eight states prohibit dual agency outright. Where it is allowed, the agent must get written consent from both parties and disclose how the firm will be paid. Because a single brokerage controls the whole fee, there is often less room to negotiate the pieces.
How Commissions Affect Your Taxes
For the seller, the IRS treats commissions as a selling expense. You subtract them from the sale price when calculating gain, which lowers any taxable amount.10Internal Revenue Service. Publication 523, Selling Your Home Many sellers owe no capital gains tax at all because the home sale exclusion lets single filers exclude up to $250,000 of gain, and joint filers up to $500,000, if they meet the ownership and residency requirements.11Internal Revenue Service. Topic No. 701, Sale of Your Home
For the buyer, a commission you pay yourself gets added to the property’s cost basis. If you buy for $400,000 and pay your agent $10,000, your basis starts at $410,000, plus other qualifying settlement costs. A higher basis means a smaller taxable gain when you eventually sell.12Internal Revenue Service. Publication 551, Basis of Assets Keep the closing paperwork; you will want it years from now.