Buying your first home is exciting, but recent changes in real estate commissions have added new things to learn. A landmark Realtor commission lawsuit settlement in 2024 is reshaping who pays your agent and how much.
Traditionally, buyers didn’t directly pay their agents; the seller’s proceeds covered both the seller’s and buyer’s agent fees. Now, a new real estate law (effectively a rule change from the National Association of Realtors) means first-time buyers may take on more of that cost themselves.
This doesn’t mean you automatically write a big check to your agent on day one, but you will want to understand the new real estate commission law explained in plain terms. We’ll break down what’s changing, why it’s happening, and how it could affect you as a first-time homebuyer.
After multiple class-action lawsuits, the National Association of Realtors settled allegations that its commission structure violated antitrust laws.
Traditionally, sellers paid a total commission of 5%-6% of the sale price, split between the listing and buyer’s agent. If the total commission was 5%, the listing agent might keep ~2.5% and offer ~2.5% to the buyer’s agent. The buyer effectively got their agent’s help “for free” (at least up front) because the seller paid out of the sale proceeds.
The biggest change under the settlement is that buyers are now responsible for negotiating and paying their own agent’s commission, unless they arrange for the seller to cover it.
The immediate concern is who pays for the buyer’s agent now.
Removing the built-in seller-paid commission from listings adds a layer of negotiation that didn’t exist before. Buyers, sellers, and agents now have to hash out the buyer’s agent fee in each deal, which can create confusion for those new to the process.
You might also have to negotiate with multiple sellers before finding one willing to meet your needs on price and agent fees.
House-hunting could take longer as a result, and first-timers may feel uncertainty about what’s normal.
If a seller doesn’t cover your agent’s commission, you’ll need to cover the fee yourself, which is usually around 2%-3% of the home’s price.
Assuming the commission fee is 2.5%, that means:
That’s a massive amount of money for first-time buyers already scraping together their savings for a down payment and closing costs.
It’s to be expected that if buyers must shoulder that cost, some may try to go without a buyer’s agent altogether to save money, which is unfortunate because the people who need expert guidance the most (new buyers) might forgo having an agent because they simply can’t afford the fee.
That said, we haven’t seen a mass exodus of buyers’ agents from transactions. The average buyer’s agent commission was still around 2.37% in 2024, only slightly lower than the previous year (2.45%).
FHA borrowers (often first-timers) typically have limited funds for upfront costs.
Even if you wanted, under the current rules, you generally cannot roll an agent’s commission into your mortgage loan.
In other words, you can’t add the agent fee on top of your home loan amount like you might finance other costs, at least not yet.
The FHA has no regulation forbidding a buyer from paying their own real estate agent, so you can pay your agent out-of-pocket if needed. FHA loans limit how much sellers can contribute to a buyer’s costs, capped at 6% of the purchase price. The good news: when a seller pays a buyer-agent commission, it is not treated as part of that 6% limit. A seller can agree to pay your agent’s commission and still give you other closing cost assistance up to the FHA 6% limit.
FHA loans already allow the seller to chip in up to 6% toward closing costs, such as origination fees, title insurance, or buying down the rate. As an FHA buyer, you’ll want to strategize with your agent and lender. One approach is to offer a slightly higher purchase price in exchange for the seller covering closing costs and the agent's fee.
If you’re a first-time homebuyer entering the market under these new commission rules, it’s normal to feel a bit uneasy. The silver lining is that you can take steps now to avoid surprises and set yourself up for success.
When interviewing real estate agents, discuss how they handle commissions in light of the new rules.
Ask what fees they charge and what services they provide for those fees.
Essentially, you want an agent who is upfront and willing to work within your budget and comfort level. If an agent is evasive or won’t discuss fees, that’s a massive red flag.
Remember, as the buyer, you now have more say in your agent’s pay, so choose someone who respects that and explains your options clearly.
Not all real estate professionals are equally prepared for these changes. Try to work with an agent and a mortgage lender who have experience with first-time buyers and FHA loans. They’ll be more familiar with seller credits, down payment assistance, and the nuances of FHA rules.
Ask prospective agents if they’ve closed deals since the new commission rules took effect and how those deals were handled.
Before falling in love with a house, talk to your loan officer about how to handle closing costs and agent fees. Let them know you’re aware that the buyer’s agent commission might become your responsibility and ask about your options.
Can you afford to pay it out of pocket if needed? If not, what’s the maximum seller credit you can use?
For FHA loans, the cap on seller-paid costs is 6%, but that might not include the agent fee. Still, get clarity on the total concessions your loan allows and how that interacts with your down payment and mortgage insurance. Your lender might suggest solutions like increasing your loan amount (if regulations change to allow it in the future) or adjusting your offer price and loan-to-value ratio to incorporate a credit.
With possibly more costs on your plate, it’s wise to be conservative about how much house you can afford.
Take into account that you may have to allocate some funds for your agent’s commission. This doesn’t necessarily mean you’ll end up paying it; many sellers might still cover the fee to make the deal work, but budgeting as if you might pay a portion is still important.
Alternatively, plan to negotiate other costs; you could forego a rate buydown or a portion of seller-paid closing costs to prioritize paying the agent.
Also, build an emergency fund beyond your home-buying budget. In case you must pay something extra at closing, you won’t be completely tapped out.
The overarching advice here is to stay flexible and informed about your actual all-in costs.
It’s not all doom and gloom. One reason these changes were pushed forward was to benefit consumers. Here are some potential upsides for first-time buyers.
The new rules could demystify what you pay for in a real estate transaction. Now, everything is on the table for discussion, and you can see exactly what your agent’s services cost. You’ll have a line-item understanding of your expenses, and agents might compete more on price and service.
With buyers now in charge of negotiating agent pay, we may also see more creative approaches to how agents charge for their services. We could see flat fees, hourly rates, and even retainers, similar to how attorneys charge. All this could be a win for buyers who only need limited help or who prefer a set fee instead of a percentage. Increased competition among agents for your business could also drive down commission rates overall.
In theory, when you directly pay (or negotiate) your agent’s compensation, agents become even more incentivized to deliver good service. The hope is that these changes create better alignment between the service you receive and the agent's pay. In the past, buyer’s agents were almost guaranteed a standard commission split, whether they spent 5 or 50 hours helping you. Under the new model, you might agree to a smaller fee if you find a house on day one, but perhaps a higher fee if your agent shows you 30 homes and writes 10 offers. Everything is negotiable and can be performance-based.
Will most homebuyers continue using buyer’s agents as they do now, or will some decide to go it alone (or rely on listing agents) to avoid fees? It’s too early to tell. So far, buyer’s agents remain integral to most transactions, but going forward, if more buyers hesitate to pay or negotiate for an agent, we might see fewer buyer’s agents or different ways of providing buyer services.
Additionally, the removal of commission info from public listings is a major change, and we will continue to see how it plays out in practice. Home search websites (like Zillow, Redfin, Realtor.com, etc.) have stopped displaying the buyer-agent commission offer. This might not drastically change your home search as a consumer, but it does affect agents. It means agents have to discuss fees with clients rather than rely on the MLS default. It’s unclear if, in the long run, buyer-broker agreements will become a mere formality or a significant negotiation point each time you want to see a house.
Will agents start charging small fees for tours or retainers now that everything must be in writing? Possibly, but we don’t know yet what model will dominate.
On the seller’s side, will sellers broadly embrace that they only have to pay their listing agent now, and leave buyers’ agents to fend for themselves? Or will competitive pressure in the market force many sellers to offer incentives (like paying the buyer’s agent commission) to attract buyers? This will likely depend on market conditions.
Real estate commissions are changing due to the realtor commission lawsuit. Sellers will no longer automatically cover both agents, and buyers may now need to negotiate or pay their agent’s fee.
For first-time buyers, especially those using FHA loans, this can add significant financial pressure. Fortunately, FHA guidelines still allow sellers to cover buyer-agent commissions without affecting the 6% cap on closing cost contributions.
No matter what you do, the smartest move is always to work with FHA-informed agents and lenders who know how to structure offers and stay informed as these rules evolve. Preparation today could protect your budget tomorrow.
