In Volume 1, we explored the Sitzer-Burnett lawsuit and the landmark NAR settlement that reshaped the real estate industry. Now, in Volume 2, we turn to the practical side: what these changes mean for you as a buyer or seller. From new rules on agent compensation to how negotiations work today, here’s what you need to know to navigate this evolving landscape with confidence.
Key Changes to Real Estate Compensation Rules
- The term “commission” is no longer recognized as the correct term for payments earned by Realtors and was replaced with “compensation”. Offers of compensation are no longer permitted on the MLS. NAR established a new rule which clearly prohibits any offers of compensation and carries penalties for any MLS that allows such postings.
- Consumers have the right to pursue compensation for the agent representing them through negotiations. This change went into effect on August 17, 2024.
- Realtors working with buyers must have a written agreement for the payment of compensation prior to showing a property to a prospective buyer or at minimum prior to submitting an offer to purchase. As of January 1, 2025, this rule became law in California. The California Association of Realtors updated the Buyer Representation and Broker Compensation Agreement to conform with the rules and new law.
- Listing agents cannot advertise on the multiple listing service the amount of compensation that a seller is willing to offer the buyer’s agent
- Buyer’s agents are required to have a written Buyer Representation and Broker Compensation Agreement when showing properties to their buyers
- Sellers do not have to pay buyer’s agent compensation
- Buyers can request, when making an offer, that the seller pay the buyer’s agent compensation
While the new rules and practices are beneficial to the consumer, the real estate market has not significantly changed because mortgage rates have remained elevated near 6–7% through 2025. The result is that buyers are hesitant to enter the real estate marketplace and sellers are staying in their homes. This in turn keeps inventory low and maintains home prices at a higher level.
Despite all the predictions that consumers will demand lower compensation to real estate agents, this has not really occurred. The average buyer’s agent compensation was 2.43% for homes sold in the second quarter of 2025, that’s actually up from 2.38% a year earlier. The average combined buyer’s and seller’s agent compensation increased from 5.32% to 5.44% in 2025. Real estate agents have embraced compensation negotiations with their clients by establishing their value in assisting their clients in real estate transactions.
Impact on Buyers and Sellers
These changes have evened the playing field for the buyers and sellers. While compensation to real estate brokers has always been negotiable the custom and practice in the real estate industry was that the seller was paying 100% of the compensation with little if any negotiations.
Sellers still have the choice of offering compensation to buyer agents. A seller may consider doing this as a way of marketing the home or making your listing more attractive to buyers. The listing agent must clearly disclose and obtain approval from the seller for any payment or offer of payment that a listing agent will make to another agent acting for buyers. This disclosure must be made to the seller in writing in advance of any payment or agreement to pay another agent acting for buyers and must specify the payment amount or rate. If a seller chooses to approve an offer of compensation, there are changes to how it can be communicated as it cannot be advertised in the MLS. In today’s market the offer of compensation is not advertised and generally comes in the form of an offer from a buyer with a request that the seller pay the buyer’s agent’s compensation. The seller then can negotiate through a seller counter offer.
Buyers must sign a compensation agreement with the agent acting on their behalf and can advise that agent that any offer that they make must include that the seller will pay their agent’s compensation. Buyers can still request that their agent be compensated by the Seller as part of their offer to purchase the property.
Now the brokers are truly negotiating and discussing their compensation with their respective clients. Buyers and sellers are fully aware of who is paying the compensation and the total amount of compensation being paid. This has led to greater transparency and has not significantly diminished the amount of compensation being paid.
The new compensation rules have introduced clarity and negotiation into the real estate process without drastically reducing agent earnings. Buyers and sellers now have more control and visibility, which is a win for transparency. While market conditions like interest rates still drive overall activity, these changes empower consumers to make informed decisions.
If you’re preparing to buy or sell, now is the time to understand your options and work with a professional who can guide you through this evolving landscape. Contact us today to learn more.










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