How Commissions Worked Historically

For many decades, residential real estate transactions in the United States followed a fairly consistent commission structure.

Traditionally, the total real estate commission averaged around 6% of the sales price, though this amount sometimes varied by market. In some areas commissions were closer to 5%, while in others they reached 7%, but 6% was the most common benchmark.

In most transactions:

The commission was paid by the seller at closing

That commission was typically split between two brokerages:

The listing brokerage (representing the seller)

The buyer’s brokerage (representing the buyer)

A 50/50 split between brokerages was common, but not guaranteed, as commissions have always been negotiable

What Changed After the NAR Lawsuit

Following a federal jury verdict in Missouri in late 2023, the National Association of Realtors (NAR) agreed to significant rule changes affecting how buyer-broker compensation is handled nationwide. These changes officially took effect in 2024 and now govern how commissions are disclosed and negotiated.

Key Rule Changes Buyers and Sellers Should Know

1. Sellers Are No Longer Required to Pay the Buyer’s Broker
Sellers are not obligated to offer compensation to a buyer’s broker. While they may choose to do so, it is no longer assumed or automatic.

2. Buyer-Broker Agreements Are Now Required
Before a buyer’s agent can show homes, the buyer must sign a Buyer Brokerage Agreement that clearly states:

The services the agent will provide

How the agent will be compensated

Whether compensation will come from the buyer, the seller, or a combination of both

Exception:
This written agreement is not required for open houses, where the agent is typically representing the seller only.

3. MLS Advertising of Buyer-Broker Compensation Is Prohibited
Any offer of compensation to a buyer’s broker:

Cannot be advertised or displayed in the MLS

Must be handled outside the MLS, such as through direct negotiation or within the purchase contract

4. Buyer-Broker Compensation Is Now Negotiated in the Offer
Buyers may request that the seller contribute toward their agent’s compensation as part of their purchase offer. The seller then has the right to:

Accept the request

Reject it

Or negotiate the amount as part of the overall deal

What This Means for Consumers

These changes are designed to increase transparency, clarity, and consumer choice. Buyers and sellers now have:

Clearer conversations about representation and compensation

Greater flexibility in structuring transactions

More direct negotiation over costs that were once largely assumed

As always, commissions are negotiable, and the best approach is one that aligns with your goals, the market conditions, and the level of service you expect.