Who Pays the Real Estate Agent Commission?

Key takeaways

• Both buyers and sellers can negotiate who pays the real estate agent fees; previously, sellers typically made the decision.
• Other costs, like closing costs and HOA fees, can also be negotiated. 
• Commissions and fees vary by house price, loan type, and closing costs negotiations.

Are you buying or selling a home? Then you might be wondering: “Who pays the real estate agent?” Traditionally, this cost has been shouldered by the seller, but recent changes have shifted the industry. 

Last year, the National Association of Realtors (NAR) and Multiple Listing Service (MLS) implemented new rules about how real estate agents communicate about real estate fees. These changes went into effect in August 2024 and are intended to provide greater transparency and competition around fees. 

In this Redfin article, you’ll learn everything you need to know about who pays the real estate agent, agent commissions, agent fees, and how the changes affect buyers and sellers.

What is a real estate commission?

A real estate commission (or fee) is a payment the homebuyer or seller makes to their agent(s) for their services in helping them purchase or sell a home. The commission is often a percentage of the final home sale price and is exchanged during the final transaction at closing.

Who pays the real estate agent fees?

Buyers and sellers can negotiate who pays the real estate agent commission fees. Prior to the NAR settlement in 2024, sellers typically paid both the buyer and seller’s agent fees from the proceeds of the sale. But now, buyers agree to their agent’s fee in writing before touring. Buyers can still ask the seller to cover the buyer’s agent fee when they make an offer. 

Because of this change, the amount the seller has to pay a buyer’s agent varies from buyer to buyer. Redfin expects that sellers will continue to cover the buyer’s agent commission fee in many transactions, but increasingly, these fees will be negotiated as part of the offer. 

Here are two options for how a seller might navigate the new commission process: 

• The seller can leave it open-ended and ask buyers to make their best offers, which may include buyer agent compensation, and then negotiate from there.
• Sellers can proactively offer a commission or a concession that the buyer could use to pay their agent as part of their home’s marketing strategy. They can still communicate this to buyers and agents when a buyer’s agent contacts the listing agent to schedule a showing.

Can you negotiate real estate agent commissions?

Yes, you can negotiate real estate agent commissions. Commissions are not set by law and are fully negotiable. The commission rates many brokerages charge often vary from area to area, and there are no laws or industry rules that set commission rates.

Why would a seller pay the buyer’s agent commission?

Sellers have offered to cover the buyer’s agent commission as a way to attract more buyers and help facilitate the sale. While sellers can no longer advertise this “selling office commission” on the MLS in most markets (called the selling office commission), commissions can still be negotiated. Plus, sellers may choose to offer some form of financial incentive to buyers.

Instead of directly offering a commission, a seller might provide a concession that the buyer can use as they see fit – whether for closing costs, their agent’s fee, or something else. Alternatively, a seller can tell their agent that they’re open to negotiation, leaving it up to the buyer to request concessions or cover their agent’s fee themselves.

Ultimately, whether and how a seller contributes to the buyer’s costs is now a negotiable part of the deal.

Who pays the closing costs? 

Commissions are usually just one of the expenses that comes with buying a home. The other fees are bundled together in the closing costs. 

Buyers and sellers can freely negotiate closing costs, but on average, sellers usually pay 6%-10% of the sale price in closing costs, while buyers typically pay 2%-5% of the sale price. These costs vary significantly depending on the loan type, though. Here are some typical closing costs. 

• Title and escrow fees: These cover the legal aspects of transferring the property and the escrow services that hold funds until conditions are met.
• Loan expenses: These include origination, underwriting, and other lender fees that come with your mortgage.
• Home inspections and appraisals: Typically paid by the buyer, these costs confirm the property’s condition and market value.
• Transfer taxes: State or local governments generally charge an excise tax for transferring ownership, with exceptions.

Homeowners association fees: Properties in an HOA may require prorated dues plus any transfer or initiation fees at closing.

How the NAR settlement affected agent commissions and fees

Before the NAR settlement, sellers typically advertised the commission they were willing to offer buyers’ agents in the MLS, allowing agents to see this amount upfront. This often influenced buyers agents’ decision making. Some MLSs required that the listing make an offer of commission to buyers’ agents. Commissions were always negotiable, but were rarely negotiated in practice. Following the settlement, more buyers and sellers are negotiating commission fees. 

The NAR settlement also established rules designed to help make real estate fees more transparent and competitive. For example, agents must now provide a written agreement to homebuyers that explains their fees before touring. These agreements must also include a statement that all commissions are fully negotiable. 

Some brokerages require a full buyer’s agency agreement that commits the customer to that agent exclusively before touring. Redfin does not. Redfin believes that we should earn a customer’s business. This is why Redfin discloses our fee upfront, but does not require a customer to exclusively commit to us in order to tour a home. 

Unless otherwise specified by state law, a buyer doesn’t need to sign an exclusive, binding agency agreement to tour a home.

How is Redfin different when it comes to commissions? 

At Redfin, we’ve always believed that consumers should get the best deal. That’s why we charge sellers a listing fee as low as 1%.* 

Our fees when serving buyers vary by market, but are competitive because we know they could make the difference in your winning or losing an offer. All things equal, a seller will prioritize the offer that is asking them to pay a lower buyer agent fee. 

We also offer additional savings for buyers who make a commitment to hire us after the first tour. With our Sign & Save program, if you commit to hiring your Redfin agent before the second tour, we’ll reduce our fee by 0.25%. We earn customers’ business by providing the best service and value.

Final thoughts

Commissions and fees have always been negotiable, but prior to the NAR commission lawsuit, sellers and their agents largely determined commission rates. Now, both buyers and sellers must sign listing agreements with their agents that explains their commission rates, which may encourage more buyers to negotiate fees. This shift offers more transparency and flexibility for buyers and sellers – goals that Redfin has always supported. 

Whether you’re searching for your dream home or looking to relocate, understanding who pays the real estate agent and how the new policies affect you can help you make smarter decisions and potentially save money. 

You can learn more about the NAR settlement here, and how Redfin has embraced this change and always championed better deals for the customer here. You can also connect with a Redfin agent to learn everything you need to know – regardless if you’re buying or selling. 

The NAR settlement primarily applies to listings on an MLS, and MLS rules may vary. Rules regarding listings not on an MLS vary widely from state to state. Talk to your agent to learn more. 

*Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.

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