Do Sellers Pay the Buyer’s Agent Commission?

You may have seen headlines announcing that a landmark court settlement has changed the way Realtor fees are paid. If you’re planning a home sale, your first question might be, “Do sellers pay the buyer’s agent commission?”

For decades, sellers have traditionally been responsible for paying both their listing agent’s commission and the buyer’s agent commission. Now, these fees have been decoupled — buyers are expected to pay their own agent’s commission.

In this easy-scan post, we’ll explain what these changes mean for sellers, the pros and cons of covering a buyer’s agent commission, and strategies for navigating this evolving market.

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Do sellers pay the buyer’s agent commission?

The short answer is: it depends. A recent court settlement by the National Association of Realtors (NAR) has shifted this expectation to buyers, but sellers can still choose to pay the buyer’s agent commission as part of the negotiation process. In many markets, this remains a common practice to attract buyers, especially those who might struggle to cover their agent’s fees upfront.

If the seller decides to pay, this commission is typically deducted from the proceeds of the sale at closing. However, under the new structure, it is not an automatic requirement. Sellers now have the flexibility to decide whether offering this incentive aligns with their goals and the market conditions.

What is a buyer’s agent commission?

A buyer’s agent commission is the fee paid to the real estate agent representing the buyer in a home sale. This commission is typically calculated as a percentage of the home’s final sale price, often ranging between 2.5% and 3%.

For instance, if a home sells for $425,000:

• A 3% commission would amount to $12,750.
• A 2.5% commission would total $10,625.

Later in this post, we’ll provide a table with more examples of buyer’s agent commission costs based on varying home prices and percentages.

How did commissions work in the past?

Traditionally, sellers paid both the listing agent’s fee and the buyer’s agent’s commission as part of the overall transaction costs. This longtime model was designed to make it easier for buyers to afford professional representation without incurring significant out-of-pocket expenses.

For example, on a $425,000 home with a 6% total combined commission, the seller would need to pay $25,500. At closing, the commissions would be split up, generally like this:

• $12,750 would go to the listing agent.
• $12,750 would go to the buyer’s agent.

Following the split, both agents would typically share a portion of their earnings with their respective brokerages. This default equation is no longer the expected standard.

What changed with the NAR settlement?

Following a series of lawsuits, a federal court determined that the NAR’s long-established agent commission structure and policies infringed on antitrust laws. The court found that NAR mandates pressured home sellers into paying a fee that could be paid by the buyer.

The NAR settlement changed the rules and shifted the responsibility for paying the buyer’s agent commission to buyers. Sellers are no longer automatically expected to cover this fee. This adjustment provides sellers with greater flexibility in managing their costs but also creates new considerations when pricing and marketing their homes.

Sellers may still choose to pay the buyer’s agent commission in certain scenarios, especially as a strategic tool to attract more buyers.