Who pays transaction broker fees now depends on what the buyer and seller agree to in writing before the deal moves forward. Since August 17, 2024, buyer-side broker compensation is a separate negotiation rather than something automatically bundled into the seller’s listing agreement, so the buyer is contractually responsible for paying their broker under a written buyer agreement, but the seller can still agree to cover that fee through concessions or direct negotiation in the purchase contract.1National Association of REALTORS®. National Association of Realtors Provides Final Reminder of August 17 NAR Practice Change Implementation
A transaction broker, for context, is a neutral facilitator rather than an advocate for either side. They handle paperwork, coordinate communication, and keep the deal moving without representing the buyer’s or seller’s financial interests. About 17 states formally recognize some version of the role under names like facilitator, transaction licensee, intermediary, or neutral coordinator. Who pays them follows the same rules that now govern any buyer-side or cooperating broker fee.
What the 2024 NAR Settlement Changed About Payment
Before August 2024, the answer was simple: the seller paid everyone. A seller signed a listing agreement promising a total commission of roughly 5 to 6 percent, and the listing broker offered about half of that to any cooperating broker who brought a buyer, including a transaction broker. The buyer never wrote a check for broker services. The seller’s commission covered the entire deal.
The NAR settlement broke that structure in two ways. Offers of compensation to buyer-side brokers can no longer appear on the Multiple Listing Service, and any agent working with a buyer must have a written agreement in place before showing the buyer a home, even virtually.1National Association of REALTORS®. National Association of Realtors Provides Final Reminder of August 17 NAR Practice Change Implementation
The practical result: buyer-side broker compensation is no longer automatically funded by the listing. A seller can still agree to pay the buyer’s broker or transaction broker, but that offer has to happen off the MLS, through direct communication, marketing, or the offer-and-negotiation process.2National Association of REALTORS®. Compensation, Commission and Concessions
Sellers can also offer concessions on the MLS to help buyers cover their broker fee, but those concessions cannot be conditioned on or tied to payment to a specific buyer’s broker.2National Association of REALTORS®. Compensation, Commission and Concessions A seller can offer $10,000 in closing cost help and let the buyer apply it however they want, but the seller can’t earmark it on the listing specifically for the buyer’s broker.
The Buyer’s Written Agreement and How the Cost Can Shift
Buyers now have to sign a written agreement with their broker before touring properties. That agreement must spell out exactly what services the broker will provide and what they’ll be paid, stated as a specific dollar amount, flat fee, percentage, or hourly rate. Open-ended ranges are not allowed.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
Everything in that agreement is negotiable: the compensation amount, the length of the agreement, and the scope of services. And while the agreement makes the buyer responsible for paying the broker, the money doesn’t have to come out of the buyer’s pocket. Buyers can request, negotiate for, and receive seller contributions toward their broker’s fee as part of the purchase contract.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
This is where most of the confusion lands. The buyer agreement creates the buyer’s obligation; the purchase contract can shift the cost back to the seller through concessions or negotiated terms. Leverage decides the outcome. In competitive markets, sellers may refuse to contribute. In buyer-friendly markets, sellers may offer to cover the fee to attract more offers.
What the Seller Still Pays Under the Listing Agreement
The listing agreement remains the document that controls the seller’s side. The seller agrees to a total commission, as a percentage or flat fee, and authorizes the listing broker to distribute portions of that amount. What changed is that the listing commission no longer automatically funds the buyer’s side.
Some sellers still choose to offer buyer-side compensation to make their property more attractive, but that decision gets made during the listing negotiation and is not imposed by MLS rules. If a seller agrees to offer buyer-side compensation, the listing agreement should state the amount and the conditions. Every dollar of commission reduces net proceeds, so read the terms carefully before signing.
Who Pays in a FSBO Sale
When a property is sold by the owner without a listing agent, the standard commission structure doesn’t exist. There’s no listing agreement, no cooperating commission, and no built-in mechanism for paying a transaction broker. If either party wants professional help managing paperwork and closing logistics, they need a separate written agreement.
In FSBO transactions, the party requesting the service typically pays for it. A buyer who wants help navigating contracts and inspections may hire a transaction broker directly and pay a flat fee or small percentage. An unrepresented seller who wants help coordinating the closing can sign a one-time agreement for the same purpose. Transaction coordination services generally range from a few hundred dollars to $1,000 or more, depending on complexity and local market.
Without a written fee agreement, a transaction broker has no legal basis to collect payment after closing. Get the fee arrangement in writing before any work begins, and make sure it states the exact dollar amount or percentage, when payment is due, and what services are included.
Brokerage Administrative Fees Are Separate
On top of the broker’s commission or flat fee, many brokerages charge a separate administrative or transaction fee covering document management, compliance, and technology. These flat charges typically run from $200 to nearly $2,000, with amounts varying widely by brokerage.
No law requires you to pay administrative fees. They’re set by individual brokerages and are fully negotiable, though many buyers and sellers don’t realize this until the fee shows up on their closing disclosure. These fees go to the brokerage, not the individual agent, and sit separately from the agent’s commission. Ask about them upfront and negotiate them down or out before you sign.
Where These Fees Appear at Closing
Every broker fee in the transaction shows up as a line item on the Closing Disclosure. Federal regulations require real estate commissions to be itemized under the “Other Costs” section, with the name of the person or firm ultimately receiving each payment.4Consumer Financial Protection Bureau. 12 CFR 1026.38 Content of Disclosures for Certain Mortgage Transactions (Closing Disclosure)
The form has separate columns showing whether each charge is borrower-paid or seller-paid, and whether payment occurred at closing or before. The listing broker’s commission, any buyer-side broker compensation, administrative fees, and any seller concessions applied toward the buyer’s costs all appear here. The settlement agent follows these instructions to distribute funds from the proceeds.5Consumer Financial Protection Bureau. Closing Disclosure Explainer
Your lender is required to deliver the Closing Disclosure at least three days before closing. Compare every line item to what you agreed to in your listing agreement, buyer agreement, or purchase contract. If something doesn’t match, ask your lender or settlement agent to explain the discrepancy before you sign.
When the Broker Actually Earns the Fee
A common and expensive misunderstanding: many people assume the commission is only owed if the sale actually closes. In most states, a broker earns the commission when they produce a ready, willing, and able buyer, or when the purchase agreement is signed. The closing date typically determines when the commission is paid, not whether it was earned.
If a deal falls apart after the purchase contract is signed, the broker may still have a legal claim to the fee. The listing agreement or buyer agreement controls. Some agreements explicitly state that no commission is owed unless the transaction closes. Others tie the commission to the signing of the purchase contract. Read the termination and default provisions before signing, and look for language specifying when the commission is “earned” versus when it’s “payable.” If those are not the same event, ask your broker to clarify what happens if the buyer defaults, the seller backs out, or a contingency kills the deal.