How do 2025 commission rules affect seller-paid vs buyer-paid fees?
Executive summary
The 2024–25 settlement and ensuing NAR rule changes decoupled buyer‑agent offers of compensation from MLS listings and require buyers to sign buyer‑broker agreements and negotiate fees up front — but in practice sellers have largely continued to cover buyer‑agent commissions and aggregate commission rates remain near historical levels (Redfin; Urban Institute) [1] [2]. Studies and reporting show mixed early effects: academic work and the Federal Reserve note predict large potential drops in commissions under full market adjustment, while multiple surveys and news outlets report only modest change so far [3] [4] [5].
1. What the new rules actually did: decoupling and mandatory buyer agreements
The settlement required that offers of compensation to buyers’ brokers not be posted on MLS and that buyers and their agents sign written agreements about compensation before touring homes — shifting the bargaining over buyer‑agent pay from default seller payment to explicit negotiation between buyer and agent (NAR description summarized in Redfin; Urban Institute) [1] [2].
2. The intended policy goal: price competition and transparency
Advocates framed the change as correcting an anticompetitive default that hid buyer‑side costs and inflated commissions; the settlement was meant to spur competition among agents, produce more service‑based pricing (flat fees, hourly, performance pay) and lower aggregate broker costs over time (Urban Institute; Fed note) [2] [3].
3. Early market reality: sellers still often pay — so effects are muted
Multiple data sources and reporting through mid‑2025 show buyer agents are earning roughly the same overall commission dollars and that many sellers continue to offer buyer‑agent fees or concessions to keep listings marketable. Redfin and other outlets report that buyer‑agent commissions hovered around historical averages and sellers continue to fund many buyer‑agent payments (Redfin; CNBC; Axios) [1] [4] [5].
4. Why sellers still pay: market incentives and financing mechanics
Analysts and industry observers explain sellers have incentives to keep covering buyer fees because buyer payment can reduce a buyer’s purchasing power, complicate mortgage financing (commissions rolled outside sale price may not be financeable under current GSE/FHA rules), and reduce offer competitiveness in markets where comparable listings include a seller‑paid buyer fee (Urban Institute; Investopedia) [2] [6].
5. Workarounds and industry resistance: off‑MLS and private deals
Journalists documented that brokerages and agents found ways to communicate and arrange buyer‑agent compensation outside MLS fields (phone, email, contract addenda), and sellers often document buyer‑agent fees off‑MLS or as seller concessions — practices that preserve much of the old economics despite the rule language (Investopedia; US Realty Training; NBC/NY coverage) [6] [7] [8].
6. Who wins and who loses under different scenarios
If sellers continue to pay buyer‑agent fees, buyers retain access and first‑time buyers are protected from extra cash‑at‑closing burdens, while sellers absorb the cost (Redfin; Axios) [1] [5]. If markets shift and buyers must pay their agents directly, buyers — especially first‑time and low‑cash buyers — would face higher upfront costs and possibly reduced bidding power (Redfin; Urban Institute) [1] [2]. Academic work suggests long‑run gains from competition could cut commissions substantially if decoupling is fully realized (Federal Reserve note) [3].
7. Practical takeaways for sellers and buyers in 2025
- Sellers: Decide explicitly whether to offer a buyer‑agent commission and document it in the contract or off‑MLS addenda; understand offering a buyer fee still often helps get more offers (US Realty Training; Homelight) [7] [9].
- Buyers: Expect to sign a buyer‑broker agreement spelling out fees before home tours and be prepared to negotiate fee structure — percentage, flat fee, or hourly — and to ask sellers for concessions if you can’t cover your agent’s pay (NPR; Homelight) [10] [11].
8. Limits of current reporting and what to watch next
Available sources show divergent signals: survey‑based and market reports through mid‑2025 find only modest change in commission shares, while economic and academic models foresee larger shifts if competitive pressures unfold (Redfin; Fed note) [1] [3]. Watch for: changes to GSE/FHA financing rules (noted as unlikely and slow by Urban Institute) [2]; broader adoption of flat‑fee or capped pricing (NPR; Investopedia); and updated national surveys of closed sales that would reveal whether decoupling lowers total commission percentages [10] [6] [3].
9. Bottom line: rules changed the contract language — the market is deciding the economics
The settlement altered who must negotiate and disclose buyer‑agent pay, creating opportunities for lower fees and new pricing models — but entrenched market incentives, mortgage rules, and industry workarounds mean sellers have largely kept footing buyer‑agent bills so far. The ultimate impact will depend on lender rules, buyer cash constraints, and whether brokers compete aggressively on price and service (Redfin; Urban Institute; Federal Reserve note) [1] [2] [3].