Real Estate Commission Changes: What Sellers Need to Know
- Published on
- 8 min read
-
Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
If you’re planning to sell your home, you’ve likely heard about the recent real estate commission changes. Historically, sellers were expected to cover both the listing agent’s commission and the buyer’s agent’s commission, typically totaling 5%-6% of the home’s sale price. However, a landmark court settlement involving the National Association of Realtors (NAR) has reshaped these long-standing practices.
Now, buyers are responsible for paying their own Realtor fees unless they negotiate otherwise. This shift means sellers are no longer automatically on the hook for both agent commissions. But what does this mean for you as a seller?
This brief post will break down these changes, how they affect your bottom line, and what you need to consider when listing your home in today’s real estate market.
The Top 5% of Agents Sell Homes for Up to 10% More
HomeLight analyzes over 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs. Connect with your top agent matches today at no cost.
What are the recent real estate commission changes?
The NAR settlement has fundamentally altered the way real estate commissions are handled. A federal court determined that the NAR’s long-established agent commission structure infringed on antitrust laws. The court found that the association’s policies and mandates pressured home sellers into paying a fee that could be paid by the buyer.
In the settlement, NAR agreed to make changes designed to provide more transparency in real estate transactions and give buyers greater control over their representation costs. Here’s a breakdown of what’s changed:
- Buyers are expected to pay their own agent fees: In the past, sellers typically covered both the listing agent’s and buyer’s agent’s commissions. Under the new rules, buyers are now responsible for negotiating and paying their own agent fees, unless they reach an agreement with the seller to cover some or all of the cost.
- Sellers are only required to pay their listing agent’s commission: Instead of paying a combined 5%-6% commission, sellers are now generally responsible for only the listing agent’s fee, which averages around 2.5%-3%.
- Negotiation remains an option: Sellers and buyers can still negotiate commission payments, meaning sellers might still offer to cover the buyer’s agent fee in certain situations to attract offers.
Another buyer change: In addition to being responsible for their own agent fees, buyers shopping for a home must now sign a buyer-broker agreement before touring homes with an agent who has access to the industry’s multiple listing service (MLS). This requirement ensures that buyers and agents understand their responsibilities in the home purchase.
What do these changes mean for sellers?
For sellers, these commission changes bring both benefits and new considerations. Here’s what you need to know:
- Lower automatic commission expenses: Since you’re only responsible for your listing agent’s fee, you could save thousands compared to the traditional model. Example: If you sell a $500,000 home and only pay your listing agent 3%, you’ll spend $15,000 instead of $30,000 under the previous 6% commission structure.
- More room for negotiation: While you’re not required to cover the buyer’s agent commission, offering to pay this fee could make your home more attractive, especially in a buyer’s market where negotiations are needed to close the sale.
- Impact on buyer affordability: Buyers now need to factor in their agent’s fees when making an offer, which could affect their purchasing power. Some buyers may request concessions from the seller to help offset these costs.
As you plan your home sale, these changes can give you more flexibility, but they also introduce new dynamics that you will want to discuss with your agent. You will also want to consider how the real estate commission changes might impact your selling costs and proceeds.
Real estate commission examples by home price
How you decide to handle the real estate commission changes can play a role in how fast your home sells and how much profit you take home. If you offer a concession to pay the buyer’s agent’s fees, you will likely have a larger buyer pool and a quicker sale.
Below is a table showing roughly what you can expect in either case. To keep it simple, we are providing examples using 6% and 3% commission averages.
| Selling price | Traditional 6% fee | 3% listing agent fee | 3% buyer’s agent fee |
| $200,000 | $12,000 | $6,000 | $6,000 |
| $300,000 | $18,000 | $9,000 | $9,000 |
| $400,000 | $24,000 | $12,000 | $12,000 |
| $500,000 | $30,000 | $15,000 | $15,000 |
| $600,000 | $36,000 | $18,000 | $18,000 |
| $700,000 | $42,000 | $21,000 | $21,000 |
| $800,000 | $48,000 | $24,000 | $24,000 |
| $900,000 | $54,000 | $27,000 | $27,000 |
| $1,000,000 | $60,000 | $30,000 | $30,000 |
| $1,500,000 | $90,000 | $45,000 | $45,000 |
Seller concession limits
As you plan your home sale and negotiations, it’s important to know that mortgage lenders restrict the amount you can contribute to help your home’s buyer. These concession limits vary by loan type and the size of the buyer’s deposit, but they typically range from 3% to 9% of the home’s final selling price
For example, if a buyer offers you $500,000, and the lender’s concession limit is 3%, you can only offer to contribute up to $15,000 toward your buyer’s closing costs. (In this example, that’s about the same expense as a buyer’s agent fee.)
Concession limits help ensure your contributions don’t negatively impact the integrity of the buyer’s loan or the home’s market value.
Start Making Offers Without Waiting to Sell Your Home
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
Should sellers still consider paying the buyer’s agent fee?
While the default expectation has changed, there are still reasons you might consider offering to cover some or all of the buyer’s agent fee:
- To attract more buyers: Some buyers may be reluctant or unable to pay their agent’s commission out of pocket, which could limit your pool of potential buyers.
- Competitive advantage in slower markets: In a buyer’s market, offering to pay the buyer’s agent fee can make your home stand out among competing listings.
- Negotiation flexibility: You may be able to leverage a buyer’s request for commission assistance in exchange for other favorable terms, such as a higher purchase price or a flexible closing date (to accommodate your own move).
How to navigate commission negotiations as a seller
Here are a few strategies to help sellers adapt to these changes:
- Discuss commission structure upfront: Have a conversation with your listing agent about their commission rate and what incentives you might offer to buyers.
- Evaluate local market trends: In a competitive market, sellers may not need to offer commission incentives, but in slower markets, doing so may help attract buyers.
- Consider alternative incentives: If you’re hesitant to cover the buyer’s agent fee directly, you could offer closing cost assistance (seller credit) or price reductions instead.
A top agent will assist with real estate commission changes
With these changes in effect, working with a knowledgeable real estate agent is more important than ever. A top agent will help you navigate the new commission landscape, determine competitive listing strategies, and ensure you’re making informed decisions.
HomeLight’s free Agent Match platform connects you with top-performing agents in your area who understand the latest commission structures and market conditions. Find an experienced agent with a proven sale-to-list ratio — an industry metric that compares the final sale price of a home to its original list price.
Key takeaways for home sellers
- Sellers are no longer automatically required to pay the buyer’s agent commission.
- Buyers are expected to cover their own agent’s fees but may negotiate for seller assistance.
- Understanding local market conditions and working with an experienced real estate agent will help you determine the best commission strategy for your home sale.
If you’d like to learn more about how the NAR settlement changes might impact your selling or future plans, the association has produced both a seller’s guide and a buyer’s guide with more details.
HomeLight is here to help
Selling a home in the current market can feel like a gamble, from finding the right agent and buyer to knowing what to offer in negotiations. Fortunately, you don’t have to tackle the market alone. Stay informed, don’t make hasty decisions, and partner with a professional you can trust.
If you’re curious about your home’s current worth, try our free Home Value Estimator online tool. Tell us about your home, and you’ll receive a ballpark value estimate and learn more about your selling options.
Below are some additional free tools offered by HomeLight to help you plan your sale:
- Find a Top Agent
- Agent Commissions Calculator
- Best Time to Sell Calculator
- Buy Before You Sell program
- Home Affordability Calculator (for your next move)
At HomeLight, we analyze more than 27 million transactions and thousands of reviews to determine which agent is best for you based on your needs.
Header Image Source: (Kampus Production / Pexels)
- "Homebuyers: Here's What the NAR Settlement Means for You," NAR (August 2024)
- "NAR Settlement FAQs," NAR (September 2024)
- "Real Estate Commission Structure Found to Violate Antitrust Law," JD Supra, Miller Nash, LeAnne Bremer & Beatrice Bremer Lucas (November 2023)
- "REALTORS® Confidence Index," National Association of Realtors® (December 2024)
At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.
