Does It Cost Anything to Have a Real Estate Agent Help You Buy a House?

If you are diving into the process of buying your first home, you have likely already figured out that there's a lot to learn: real estate terminology, how to make an offer, what you're agreeing to when you sign a purchase contract, and what you can afford to pay or borrow. A good real estate agent can serve as a guide, pointing you in the right direction, giving you a heads-up when bumps are on the road ahead, and, if something comes up that is beyond the agent's scope of knowledge, helping you find a specialized guide to solve that problem.

However, when you're already saving up for the biggest purchase of your life, it makes sense to ask one major question before hiring an agent: How is this person going to get paid?

The answer to this question used to be straightforward. But now, because of the settlement of a lawsuit brought by homeowners against the National Association of Realtors (NAR), the structure of how real estate agents are paid might change.

NAR Settlement and Realtor Pay

In 2024, NAR settled a lawsuit brought by home sellers who alleged that NAR's business practices—such as requiring sellers' agents to disclose in the MLS the commission being offered to buyers' agents—violated antitrust laws. To appreciate how the settlement is affecting the homebuying process, it's helpful to understand how buyers' agents were paid before the settlement.

Pre-NAR Settlement Practices

Before the settlement, it was fairly simple—and risk-free—for buyers to work with an agent. Most of the time, the buyer and agent never discussed compensation because, as a matter of course, the agent would be paid part of the sellers' agent commission at closing; the buyers paid nothing out-of-pocket. In many states, the buyers and their agent wouldn't even have a written representation agreement in place until it came time to make an offer on the property.

Many Buyers Didn't Sign a Buyer Representation Agreement Until Closing

Before the settlement, whether and when a buyer agreement was signed depended on state law, local practice, or the parties' comfort level with working for someone without a formal agreement.

Often, because it was assumed that the buyer's agent would be paid by the seller's agent at closing (as discussed below), many buyers didn't enter into a written representation agreement with their agent until it came time to make an offer. (In some states, though, buyers' agents were required to enter into a written agreement with their buyer before showing houses.)

The MLS Disclosed What the Buyer's Agent Would Be Paid

Traditionally, before listing a house for sale, a seller and their agent would discuss and agree upon how the agents involved in the transaction would be paid. Most commonly, sellers would agree to pay a total commission (based on the sales price of the house) to be split between the seller's agent and the buyer's agent at closing. The goal of offering the commission was to encourage buyers' agents to show the house and to pay buyers' agents for the work they performed to get the house sold.

For example, a seller might agree to pay a total commission of 5.5%. The percentage was negotiable and could be divvied up between the agents in any number of ways (such as 2.5% to the seller's agent and 3.0% to the buyer's agent). The seller's agent would then note in the MLS listing that a 3.0% commission would be paid to the buyer's agent at closing.

Usually, the two agents never discussed the commission further, and most buyers weren't aware of what their agent would be paid until it was disclosed in the offer to purchase the property.

Post-NAR Settlement Practices

After the plaintiffs in the lawsuit were awarded an enormous jury verdict, the parties reached a settlement to avoid appeals of the decision. Among other topics, the settlement addresses the timing of written buyers' agreements and how agents' commissions can be advertised.

It's important to note that the terms of the settlement agreement are not law. Instead, they are trade association rules that members of NAR must follow.

The Buyers Must Sign an Agreement Before Touring Houses

The settlement requires Realtors to have buyers sign a written agreement before showing a house. The agreement must specifically lay out how the buyer's agent will be paid.

Supposedly, this requirement is designed to provide more transparency about how agents are paid. Although commissions have always been negotiable, because commissions were listed on the MLS in relative secrecy from buyers, there wasn't much communication between buyers and their agents about compensation. Now, though, buyers and their agents must settle on a compensation amount before even seeing a property—and possibly before even knowing whether the seller is offering a commission to the buyer's agent.

The Commission Can't Be Posted on the MLS

NAR also agreed in the settlement to disallow offers of commission to buyers' agents via the MLS. Sellers' agents can still offer buyers' agents a commission—they just can't use the MLS to let other agents know they're offering it.

What this means is that if a seller wants to offer to pay the buyers' agent a commission, their agent will have to find a way other than the MLS to advertise the incentive. For example, a seller's agent might note the commission on a website created for the listing.

Negotiating Your Agent's Pay

Because of the changes resulting from the NAR settlement, how your agent will be paid is a bit of an unknown. The simple answer is that it's negotiable. However, given the sudden changes, both buyers and agents are uncertain about what to expect.

As a buyer navigating the process post-NAR settlement, it's more important than ever to interview agents and start compensation discussions right away.

Two other key bits of advice:

1. Don't sign anything unless you have read and fully understand it. This is standard advice for any contract, but it's even more important now that agents are trying to get their heads around the new rules. Ask questions—and make sure the agent is confident with their answers.
2. Remember that you are in the driver's seat, whether working with a Realtor or non-Realtor. Everything, including how much the agent is paid, who will pay the agent and the length of your arrangement with the agent, is negotiable. You are in a place of power to negotiate terms that you're comfortable with.

Hiring the Seller's Agent Probably Won't Save You Any Money

One of the biggest misconceptions that buyers have is that they'll save on agent commissions by having the seller's agent—commonly, the one you meet at an open house, or talk to if you call the number on the "For Sale" sign—handle the entire transaction.

This is called "dual agency." And while the agent might offer to bring the home price down a tad to compensate you for not bringing your own agent, that supposed savings might be offset by not having someone who will put your interests first and negotiate accordingly.

Dual agency is not allowed in many places, as it can create a conflict (either perceived or real) when you have the same person attempting to advocate for both the seller and the buyer. In some parts of the United States, the same agent can represent both sides as a "transaction broker"—an agent who simply mediates the transaction. This arrangement can also be tricky, as the agent might find it difficult to transition from being the seller's advocate to working for (but not advocating for) both sides.

Regardless, it is often the case that the agent will simply take the full commission offered to both sides, which leaves the buyer and the seller in the same position. If you decide to work with the home seller's agent, tread very carefully, ask a lot of questions, and don't sign anything until you know exactly how the agent will be paid.