If you’ve sold a home in the past 30 years, you likely paid a commission not only for the agent you hired (the listing agent) but also for the agent representing the buyer. And if you’ve purchased a home during this time, your agent’s commission was likely paid by the seller. While it was never required for the seller to pay both agents’ commissions, it became the convention in most U.S. markets.
Although these long-standing conventions still hold in many cases, recent changes that took effect in August 2024 may alter the landscape. These updates have sparked widespread discussion and, in some cases, confusion about what has actually changed. In this article, I’ll break down what’s new, what remains the same, and how these changes might affect you if you plan to sell your home.
What Hasn’t Changed
There has always been a misconception that sellers must pay a commission to the buyer’s agent. This was never a rule or mandate. Over time, however, it became the convention. While this practice was common, it was never legally required.
What Has Changed
When agents list a home for sale, they input it into the MLS (Multiple Listing Service). The MLS is the primary database agents use to search for homes for their clients, and it’s also where information is syndicated to popular sites like Zillow, Realtor.com, and many others.
Until August of this year, the MLS displayed the commission the seller offered to pay the buyer’s agent. This is no longer the case. Now, when an agent working with a buyer views a listing, they cannot see whether or how much the seller is willing to pay.
Additionally, agents working with buyers must now establish a formal agreement with their clients before showing them homes. This agreement specifies how much the agent will earn—a detail not previously required.
How These Changes Affect Sellers
It will take time for the real estate market to adjust to these changes, but here’s what we’re seeing so far:
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- Buyer Expectations Remain: Sellers have traditionally covered the buyer’s agent commission, and most buyers still expect this to be the case. Consequently, many sellers continue to pay this expense.
- Negotiation Dynamics: Buyers must now negotiate directly with their agent to determine compensation. However, many buyers instruct their agents to request this payment from the seller in the purchase contract. If the seller declines, they can counter by removing the buyer’s agent commission. If the buyer cannot cover the commission themselves, they may reject the counterproposal and look elsewhere.
- Pre-Offer Conversations: In some cases, buyer’s agents contact the listing agent before submitting an offer to discuss commission expectations. Whether or not the seller is willing to pay this commission can significantly influence whether the buyer decides to submit an offer.
Our Advice to Sellers
Market conditions play a significant role in determining how to handle the buyer’s agent’s commission. If your property is attracting multiple buyers or has limited competition, we might recommend negotiating a lower—or even no—buyer’s agent commission. On the other hand, if your property has little interest or faces strong competition, offering to pay the buyer’s agent’s commission may incentivize the buyer and their agent to prioritize your listing.
One way or another, we will determine how much the buyer expects you to pay their agent before deciding how to proceed with an offer. Buyer’s agents often reach out in advance to discuss commission expectations, allowing us to clarify how much the buyer is obligated to pay. If the buyer’s agent doesn’t contact us beforehand, the purchase offer will outline the requested commission. Either way, we should have a clear understanding of their expectations. If the buyer’s agent requests a lower commission than you were willing to pay, you can agree to the lower amount, and we’ll amend the listing contract to reflect the change.
Final Thoughts
The recent changes in the real estate industry may shape new norms and conventions, and the transition may feel uncertain at first. Our role is to guide you through these shifts, providing the information and support you need to make confident, informed decisions that maximize your returns and ensure a successful sale. If you’ve worked with us before, you know our commitment to thorough communication. We’ll always share what we know, what we don’t know, and what we think, ensuring you have a clear understanding to make the best choices for your situation.