How Your Realtor® Gets Paid When You Buy a House

In August 2024, the National Association of Realtors reached a settlement in their landmark lawsuit. This changed the way agents in many states did business, but not all Realtors®. Some have been doing this all along. The goal of the settlement was clarity for everyone involved in a house sale to know who was getting paid what, by whom and when. Let’s talk about it.

How It Used to Work

Before August 2024, the seller traditionally came to an agreement with their listing agent on how much their firm would be paid. That listing firm then split a portion of that fee with the buyer’s agent at settlement. Typically the fee is 5-6% of the purchase price, split between the listing agent and the buyer's agent however the listing agent saw fit. Buyers didn't write a check for their agent. It came from the seller.

The practical effect was that buyer representation felt 'free' to buyers even though it was built into the transaction price. The transparency issue was that buyers didn't always know what their agent was earning or that it came from the sale.

What Changed After August 2024

The National Association of Realtors settlement changed how buyer's agent compensation is handled, or at the very least how it’s talked about. The main change: buyers must now sign a Buyer Agency Agreement before touring homes with an agent. This agreement outlines how the agent will be compensated and for how much. This is to prevent any miscommunication or misunderstanding as to how that agent is paid.

Sellers can still offer to pay the buyer's agent commission, and most do. To be fair, this was always negotiable. Its just talked about more, which is the goal…transparency. Now, the offer of compensation has to be explicitly negotiated rather than automatically included. The process is now:

• Buyer signs a Buyer Agency Agreement that specifies the agent's compensation. This is the buyer officially hiring their representative.

• When an offer is made, the buyer asks the seller to pay the buyer's agent compensation.

• If the seller agrees, it works much like before. If the seller doesn't or doesn’t fully cover the fee, then that’s where the buyer will be responsible for their Realtor’s® fees.

In Practice: What This Means for Most Buyers

In Charlotte and most markets, most sellers are still offering compensation to buyer's agents. The listing will never specify this up front (another stipulation of the settlement) but it’s part of your offer to the seller that it needs to be included.

In situations where the seller isn't offering to pay, your options are: negotiate seller payment as part of your offer, pay the agent directly, or ask the agent to accept a lower amount. Or some combination or middle ground of these three options.

This negotiation should be thought of as no different than any other negotiable part of the contract: just like the offer price or the concessions you ask for, this is negotiable.

The key point: buyer representation is not free. Just like you expect a paycheck after putting in your 40 hours, Realtors do this as a job, a career; they are not volunteers. They are professionals and bring value to your home buying process. Have an explicit conversation with your agent upfront about how they're compensated and what happens in the different scenarios. A good agent will welcome this conversation and give you a clear, direct answer.

What You Typically Sign: The Buyer Agency Agreement

This is the document that formalizes your relationship with your agent. It typically includes:

• The agent's compensation amount (usually a percentage of the purchase price, occasionally a flat fee)

• The term of the agreement (how long you're working with this agent)

• The geographic area it covers

• The general terms or type of property you’re looking for

• How termination works

Read it before you sign it. Ask questions about anything that's unclear. Understand what you're committing to and for how long.

What Buyer's Agent Compensation Typically Looks Like

Buyer's agent commissions have typically ranged from 2-3% of the purchase price. On a $325,000 home, that's $6,500-$9,750. Whether the seller or buyer is paying, it's reasonable to understand what you're getting for it.

What you're getting: market expertise, offer strategy, negotiation, coordination of inspections and appraisals, problem-solving during due diligence, and the knowledge that someone with experience is advocating for your interests through every phase of a complex transaction. For a first-time buyer, that has significant financial value.

Also remember that if you do not end up buying a home, your Realtor® doesn’t get paid. Realtors® are not salaried employees of their brokerages, they’re independent contractors who are only paid when a home sells. So that $7,000 may sound like a lot, and it is. But it also can represent months (or even years!) of work.

The Listing Agent Commission

Separate from buyer's agent compensation, the listing agent is paid by the seller. Sellers typically pay the listing agent 2-3% of the purchase price as well. This is entirely the seller's negotiation with their agent and doesn't involve you as a buyer.

What About Discount Agents and Flat-Fee Services?

Discount brokerages and flat-fee services offer reduced representation at reduced cost. For buyers who are very experienced and need minimal guidance, this might make sense. For first-time buyers who need full-service representation through a complex process, the savings don’t justify the reduced support. What you save in commissions could be lost in other ways, such as sales price or repair negotiations. Know what you're trading before choosing based solely on cost.

I tell every buyer I work with: have the compensation conversation at the beginning. Don't let it be awkward. A Realtor® who does good work for you deserves fair compensation. And you deserve to understand exactly what you're paying and what you're getting. Both of those things are true at the same time.

FAQ

Do I have to pay my agent if the deal falls through?

It depends on your Buyer Agency Agreement. Most agreements don't require payment if you don't close. Review the terms carefully before signing.

Can I negotiate my agent's commission?

Yes. Commission is negotiable. The negotiation happens when you sign the Buyer Agency Agreement. Be aware that lower compensation may affect the service level you receive, though not always.

Is it true that buyer's agents are now charging buyers directly?

In some cases, yes. But to be honest, buyers in some states were always responsible for making sure their agent gets paid. The August 2024 rule change means this is now more transparent. In most transactions, sellers are still covering it. In some, buyers are contributing. The specifics depend on the individual negotiations.

What if I find a seller who isn't offering agent compensation?

You can ask the seller to include it as a concession in your offer. This is now a standard negotiating point. Your agent can advise on how to structure this.

I'm Laura Shinkle, a first-time homebuyer specialist in Charlotte, NC. I'm always transparent about compensation and happy to have this conversation upfront. 828.575.6067 or [email protected].

Laura Shinkle

Charlotte's First-Time Homebuyer Specialist | Realtor®

Coldwell Banker Realty | Licensed in NC & SC

CREN | PSA | CLHMS Certified

📲 828.575.6067 | 📧 [email protected]