Introduction

In 2023, a major legal case reshaped how real estate transactions work in the United States. A group of home sellers filed a class-action lawsuit against the National Association of Realtors (NAR), claiming they were not fully informed about how commissions were paid when selling their homes. A jury agreed and awarded the plaintiffs such a large amount in damages that NAR could not afford to appeal the decision.

As a result, NAR entered into a landmark settlement agreement that made significant changes to how homes are bought and sold. The most important change? The amount of commission offered to the buyer’s agent can no longer be displayed in the Multiple Listing Service (MLS). This change in MLS listings has triggered a ripple effect across the real estate industry.

What Does This Mean for Sellers?

Under the new rules, when a seller lists their home, they are asked to complete updated legal forms. These forms look similar to older versions, but there are key differences:

  • The forms now include clear options for how much the seller wants to pay their own listing agent.
  • They also include a section for whether the seller wants to offer any payment to the buyer’s agent.

In the past, it was typical for the seller to pay a total real estate commission (often around 5% to 6%), which was split between the listing agent and the buyer’s agent. That information was posted in the MLS and is visible to other real estate professionals.

Now, the MLS cannot show offers of compensation or agent commissions at all. Sellers can still offer to pay both sides, but they must write it into the listing services and contracts directly.

The rule change created confusion

This rule change has created confusion, especially for sellers who may not realize how important it is to motivate buyers’ agents. If a seller offers little or no buyer agent commission, there is a real risk that:

  • Fewer agents will bring prospective homebuyers to view the home
  • The home may sit on the market longer
  • Offers may be fewer and lower

Sellers still have full control over what they pay, but they must now make these decisions more intentionally and without insight into what others are offering. This evolving market requires a deeper understanding of compensation structures, listing services, and the agent’s fee.

It has taken some time for real estate brokers and listing agents to digest the changes and find ways to work with home buyers and sellers, especially considering that the traditional commission structure has been a long-term practice.

What the settlement did not take into account was the actual opinion of buyers and sellers. Based on recent experiences, it seems that the traditional practice is slowly reappearing—although with updated documentation to meet new regulations.

real estate agent signing listing agreement commissions

This is what we are seeing

This is what we’re seeing: A typical listing agreement years ago would be signed by a seller in the presence of a real estate agent. The listing agent would go over the entire agreement, pause at the commission fees, and explain them. There might be some discussion about the percent or flat fees, and then the agreement would be signed—including compensation for both the seller’s agent and the buyer’s agent.

What’s emerging now is similar in spirit. The listing agent explains the changes to the seller. Most sellers remember the old system; they bought their home under it. These home sellers expect to pay a commission and generally believe they are paying the full cost of the transaction.

Even when the new forms divide the commission into separate sections, sellers understand that someone needs to bring a buyer. If they don’t initially understand that, the listing agent reminds them that buyer broker compensation is necessary for exposure in the housing market.

Here’s how that’s playing out in real time:

  • The buyer’s agent submits an offer, and in that offer is a requirement that the seller pay a buyer agent commission.
  • Home buyers understand the seller is covering this additional cost, so the exact amount—2%, 3%, or more—isn’t as important to them.
  • If the offer is strong and meets the seller’s specific needs, the commission rarely comes up in negotiation.

Even during price negotiations, the sale price and terms are the focus—not agent commissions. In fact, what often happens is that the commission negotiated with the listing agent can be changed by the final purchase agreement. For example, a listing may initially specify 2.5% to both sides, but the accepted offer includes 3%. This is the new landscape of real estate services and the most significant shift in decades.

What Does This Mean for Buyers?

Buyers are now asked to sign new buyer agreements when they begin working with an agent. These agreements explain:

  • The buyer has hired an agent to represent them during the homebuying process
  • That this agent must be paid—by either the seller or the buyer

In most transactions, the buyer agent includes their expected fee as part of the offer. The seller can accept it or counter it. Most buyers are comfortable with this structure because the cost is built into the overall offer.

In rare cases where the seller declines to pay the commission, the buyer may be responsible for the fee, which could pose a financial burden—particularly for first-time buyers or those in markets with rising mortgage rates and housing prices.

Why This Matters

The recent NAR settlement ushered in a series of class-action lawsuits and forced the industry into major changes. While the goal was greater transparency and lower commissions, the reality has been more complex.

Here’s why this matters:

  • There is no longer a standard commission rate.
  • Real estate professionals and consumers alike are navigating big changes in compensation structures.
  • NAR and MLS organizations can no longer publish or discuss commission standards due to antitrust laws.

This has created present challenges in how agent commissions are disclosed and paid. Despite the intention to foster greater flexibility, the rule changes have led many back toward traditional commission structures. Industry professionals are adapting, but every deal now relies on a written agreement and a full understanding of the agent’s role.

The Bottom Line

The world of real estate is in the middle of a major shift. What was once routine—a seller offering 6% split evenly—is now the subject of legal caution and negotiated documentation.

Real estate experts agree: understanding the changes, reading the fine print, and working closely with your agent are more important than ever.

If you’re buying or selling a home, ask your agent how commissions will be handled. Know what’s in your agreement. Ask whether the seller is offering to cover the buyer’s agent fees. These are powerful tools to help you get the best deal in a more competitive market.

Despite all the new norms, one thing remains true: great agents still help clients succeed. Whether you’re a seasoned homeowner or a first-time buyer, clarity and communication are key.

As always, there is no fixed commission. Buyers and sellers have always had the opportunity to negotiate the commission paid to their agent. Any professional from a dentist to a plumber requires income comensurate to the value of the transaction.

Behind every professional you employ are often years of experience, training, education and other costs to bring your professional to the point where they can provide excellent service to you.

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