The short answer is no: Sellers usually must pay the real estate commission of a buyer's agent, which averages 2.66% nationwide. This common practice is often detailed in real estate contracts.
The National Association of Realtors (NAR) plays a significant role in mandating these norms. NAR rules state that brokers on Realtor-affiliated MLS platforms must offer compensation to buyer's agents.[1] Since over 86% of homes sell via the MLS, it's a widespread practice.[2]
However, there are some exceptions. For instance, if a seller finds an unrepresented buyer or the buyer agrees to pay the fee through negotiations, the seller might not owe this cost.
While paying the buyer's agent fee is standard, sellers can find savings in other areas.
Clever Real Estate offers an innovative solution by providing reduced commission rates for sellers. At a rate of 1.5% — significantly lower than the nationwide average of 2.83% — Clever helps sellers save without compromising on the quality of service.
💰 Ready to save? Get a 1.5% listing fee today
Can a seller refuse to pay commissions?
In most cases, sellers can't refuse to pay a buyer's agent if it's agreed upon in a contract.
You're legally bound to fulfill this obligation if you've committed to paying the buyer's agent fee in a document like a signed purchase and sale agreement. Refusing to do so could lead to contract breaches and potential lawsuits.
For example, in South Carolina, sellers indicate the compensation for the buyer's agency in the contract under "3. Compensation to Other Brokerages." This section outlines the seller's obligation to pay the buyer's agent.
If your contract doesn't specify a commitment to paying the buyer's agent commission — for instance, if the "Buyer Agency" field above is left blank or marked as 0% — you might avoid paying.
However, this can affect your sale prospects, as this commission detail is visible on your MLS listing and noticed by buyer's agents. Consulting a local real estate agent or attorney is recommended to understand the specific commission rules in your area.
⚡ Get local advice from a top real estate agent near you
Realtor commission changes may be coming!
Recent legal actions are set to shake up real estate commission practices. Historically, sellers have paid the commissions for both listing and buyer's agents. A lawsuit against NAR in November 2023 challenged this, suggesting changes that could shift some financial responsibilities.
NAR has now settled, agreeing to pay $418 million over four years, without admitting any wrongdoing. This settlement aims to keep cooperative compensation flexible for buyers and sellers.
While the full impact of the settlement is yet to be determined, experts believe that the change will eventually lead to lower buyer’s agent commissions and give buyers the ability to negotiate those commissions based on the services they need.
The terms of the settlement are scheduled to take effect in mid-July 2024. But, the settlement hasn’t been officially approved yet, and it could be delayed or changed by objections. Stay tuned for updates on how this could impact your next home sale or purchase.
We will monitor these developments and update our content as they unfold.
» NAR Reaches Agreement to Resolve Nationwide Claims Brought by Home Sellers
Do I have to pay buyer agent commission on a FSBO sale?
If you sell your house without a realtor, you won't need to pay a listing agent commission. But, if your buyer has an agent (which is highly likely), you're probably responsible for the buyer's agent commission.
This fee is for the buyer's agent's service in bringing the buyer to your property, effectively aiding both the buyer and seller. The commission typically ranges from 2-3% of the home's sale price, with a national average of 2.66%.[3]
Some exceptions do exist. If the buyer is unrepresented, you might bypass agent fees, working directly with real estate attorneys and title companies.
Another rare scenario is where the buyer opts to pay their agent's commission to make their offer more attractive. This could happen in a strong seller's market with limited inventory and numerous buyers.
Yes, most do. In 2023, 89% of home buyers employed a real estate agent or broker for their purchase, up from 86% in the previous year. Meanwhile, only 6% of home buyers acquired their homes directly from the previous owner.[4]
Who pays realtor commissions?
The seller typically pays real estate agent's commissions, a standard practice for many years.
For instance, on a $500,000 home sale with a 6% total commission, the seller pays $30,000, usually divided equally between the listing and buyer's agents.
This practice stems from NAR's Participation Agreement, mandating listing brokers to compensate buyer's brokers as a condition for listing on the MLS.
Should sellers pay for it?
It's often beneficial for sellers to pay the buyer's agent fee in a real estate transaction.
Offering a competitive fee to the buyer's agent can attract more realtors to show your property to potential buyers. This not only increases visibility for your listing but could also lead to more showings.
A competitive fee motivates buyer's agents to present your property to clients, potentially speeding up the sale. Offering low compensation (like 0.5-1% commission) or none at all might significantly reduce the chances of getting home showings and receiving offers for your home.
Do buyers ever pay?
Buyers rarely have to pay their agents out of pocket. Typically, the seller pays the agent's fee, deducted from the home's sale price. However, exceptions exist.
Most buyer's agency agreements include a clause to ensure the agent gets paid, even if the seller doesn't pay. For example, in North Carolina, a buyer's agency agreement may state that the buyer must pay the difference if the seller's compensation is lower than the agent's standard fee or if no compensation is offered.
While buyers are usually not directly responsible for these payments, they might be asked to cover the fee if the agent can't obtain it from the seller. This scenario is more of an exception than a rule in real estate transactions.
