Federal guide · Buying

Real estate commission: how agents are paid now

Commissions are negotiable and not set by law. Since August 17, 2024, offers of compensation are banned from the MLS and buyers sign a written agreement first.

Checked on against the official sources listed at the bottom of the page.

In short

No law sets a real estate commission. NAR says agent compensation “continues to be fully negotiable and is not set by law,” and no official source gives a standard percentage, so this guide gives none. Under the National Association of REALTORS (NAR) settlement, in effect since August 17, 2024, offers of compensation can no longer be posted on a multiple listing service (MLS), and an agent working with a buyer must sign a written agreement stating the pay before touring a home.

What changed on August 17, 2024

NAR’s practice changes (NAR publishes these rules itself) are:

  • No offers of compensation on the MLS. Agents can no longer post, on an MLS, an offer to pay the buyer’s agent. Offers can still be made off the MLS through negotiation.
  • Seller concessions are still allowed on the MLS, for example help with the buyer’s closing costs.
  • Written agreements with buyers. MLS participants working with a buyer must sign a written agreement before touring a home (see buyer agreements).
  • Disclosure to sellers. NAR says the settlement requires agents for sellers to conspicuously disclose that broker commissions are not set by law and are fully negotiable, and an agent must disclose to the seller and get approval for any offer of compensation to a buyer’s agent.

Because offers of compensation are off the MLS, buyers and sellers need to ask for the terms. Ask each agent for the amount in writing, what services it covers and who pays it.

Who pays whom

NAR’s FAQ describes three ways your agent can be paid: the listing agent can compensate the buyer’s agent, the seller can compensate the buyer’s agent, or the buyer can pay directly. All three remain allowed. What the settlement removed is the public offer on the MLS.

QuestionWhat the rules say
Is there a standard rate?No. Compensation is negotiable and not set by law
Can a buyer’s agent be paid more than the buyer’s agreement says?No. The agreement must prohibit the agent from receiving more than the agreed amount or rate from any source
May a seller still pay the buyer’s agent?Yes, but the offer cannot be shared on an MLS
Can a commission be added to the mortgage?NAR says Fannie Mae, Freddie Mac and the FHA do not allow it. VA says buyer-broker charges are not part of the loan amount
Can a buyer pay the agent on a VA loan?Yes, under VA Circular 26-24-14 (see below)

How the buyer’s agent fee gets handled with a mortgage

Fannie Mae’s Selling Guide caps financing concessions from interested parties as a percentage of the lower of sales price or appraised value. Its limits are 3 percent when the loan-to-value ratio is above 90 percent, 6 percent from 75.01 to 90 percent, and 9 percent at or below 75 percent for principal residences and second homes. Its text says “typical fees and/or closing costs paid by a seller in accordance with local custom” are not subject to those limits, but it does not specifically name agent commissions. NAR states that Fannie Mae and Freddie Mac confirmed in 2024 that seller-paid buyer agent commissions would not count against the buyer. Ask your lender how your loan treats the fee. See FHA loans and conventional loans.

VA loans

VA Circular 26-24-14, effective August 10, 2024, lets Veterans pay reasonable and customary buyer-broker charges, including commissions, in areas where listing brokers cannot set buyer-broker pay through MLS postings or that pay cannot flow through the listing broker. The charges cannot be rolled into the loan, they count when VA decides whether the Veteran has enough liquid assets, and they are recorded in section H (“Other”) of the Closing Disclosure. VA does not treat a seller’s payment of the fee as a seller concession, and it encourages Veterans to negotiate the amount. The circular says it is valid until rescinded; check VA’s circular page for its current status. See VA loans.

What it costs

No official source gives a typical commission rate, and this guide does not repeat figures from blogs. Your cost is the amount or rate written in your own agreements. Compare it as an example: on a $400,000 sale, each 1 percentage point is $4,000 (arithmetic, not a market rate). Ask for offers in writing from more than one agent, and get the rate, the services and the payer in each. Also ask who pays it and when. See closing costs explained.

Where states differ

State law adds its own rules on agency, disclosures, written agreements and license duties. Local MLS rules vary in how they enforce the NAR changes. Your state real estate commission can tell you what applies. To check an agent’s license, see Texas or California.

Frequently asked questions

Are real estate commissions set by law?

No. NAR states that agent compensation is fully negotiable and not set by law, and the NAR rules require that statement in agreements with buyers and sellers.

Is the commission always 6 percent?

No official source sets a rate, so there is no legal “standard.” The rate is whatever you agree to in writing. Ask each agent to state the amount or rate.

Who pays the buyer’s agent now?

The listing agent, the seller or the buyer, as the parties negotiate (NAR). The offer cannot be posted on the MLS.

Can sellers still help with the buyer’s closing costs?

Yes. NAR says sellers can still offer buyer concessions on the MLS, such as help with closing costs.

Are these rules still in force?

NAR’s FAQ was last updated on September 5, 2024, and the practice changes took effect on August 17, 2024. Court proceedings or rule changes may have followed, so confirm the current rules with your state real estate commission, your MLS and your agent.

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Sources

All federal guides · All states