Buyer’s agents are paid a commission at closing, typically 2% to 3% of the purchase price, and that money can come from the seller, from you, or from a mix of both. Since August 2024, you have to sign a written agreement with your agent before touring homes that lays out exactly what they’ll be paid. If the seller covers the full amount, you pay nothing extra. If the seller offers less than your agreed rate, you owe the difference out of pocket at closing.
How Much a Buyer’s Agent Charges
The standard structure is a percentage of the final sale price. Federal Reserve data shows buyer-agent commissions have historically clustered between 2% and 3%, with 3% the long-standing benchmark and 2.5% increasingly common over the past two decades.1Board of Governors of the Federal Reserve System. Commissions and Omissions: Trends in Real Estate Broker Compensation On a $400,000 home, that’s $8,000 to $12,000.
Two alternatives exist but are uncommon in residential deals. A flat fee (often $5,000 to $7,500) works for buyers who know the neighborhood and need less hand-holding. An hourly rate, billed like an attorney’s time, shows up mostly in commercial transactions.
Whatever the model, the number is negotiable. The National Association of Realtors has confirmed that commissions are not set by law and never have been.2National Association of REALTORS®. Compensation, Commission and Concessions If an agent tells you their rate is fixed, that’s their policy, not the law.
Where the Money Actually Comes From
The commission can be funded by the seller, by you, or split. What determines which one applies is the interaction between the seller’s willingness to pay and the fee you locked in with your agent.
Seller-Paid
The traditional route still works. A seller can pay your agent’s commission out of their sale proceeds at closing, either through an arrangement with their listing agent or as a concession negotiated during the deal. When this happens, the money comes out of the seller’s side of the settlement and you don’t write a separate check.
What changed after the NAR settlement is visibility. Listing agents can no longer advertise buyer-agent compensation on the MLS.3National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers Your agent now has to contact the listing office directly to ask what, if anything, is being offered. Sellers still commonly offer compensation because it widens the buyer pool.
Buyer-Paid
If the seller offers less than your agreed rate, or nothing, you pay the gap at closing. On a $350,000 home with a 2.5% agreement and a seller offering zero, that’s $8,750 on top of your down payment and other closing costs. Buyers routinely negotiate a closing-cost credit from the seller to offset this expense.2National Association of REALTORS®. Compensation, Commission and Concessions
For-Sale-By-Owner
Buying directly from an owner with no listing agent makes the commission a negotiation point between you and the seller. Some FSBO sellers agree to pay your agent to keep the transaction smooth. Others refuse, and the full cost falls to you under your buyer broker agreement. Work through this scenario with your agent before making an offer so the math is clear.
The Written Agreement That Sets Your Cost
Before an agent can show you a home listed on an MLS, you have to sign a written buyer broker agreement. The requirement came out of the NAR settlement, which received final court approval on November 27, 2024, and it applies to both in-person and live virtual tours.3National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers You don’t need one to attend an open house on your own or to call an agent and ask about their services.4National Association of REALTORS®. Consumer Guide to Open Houses and Written Agreements
The agreement covers three things: how long the agent represents you, what services they’ll provide, and what they’ll be paid. The compensation figure is the one that determines your financial exposure. If you agree to 2.5% and the seller only offers 2%, you owe the remaining 0.5% at closing. If the seller offers nothing, you owe the full amount.5National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
Read it before you sign. Look at the duration, the compensation amount, and any exclusivity clause that would prevent you from working with another agent during the term. Shorter agreements (30 to 90 days) give you more flexibility to switch if the relationship isn’t working. Many agreements also include a holdover clause, meaning if you buy a property your agent showed you within a set window after the contract ends, you still owe the commission. That window is negotiable too.
What You Can and Can’t Finance
You cannot roll the buyer-agent commission into your mortgage. Fannie Mae, Freddie Mac, and FHA all prohibit adding real estate commissions to the loan balance.
You can, however, ask the seller for a concession to help cover it, subject to caps. Fannie Mae limits total seller contributions based on loan-to-value:6Fannie Mae. Interested Party Contributions (IPCs)
- LTV 75% or less (down payment above 25%): up to 9% of sale price.
- LTV 75.01%–90% (down payment 10% to 24.99%): up to 6%.
- LTV above 90% (down payment below 10%): up to 3%.
Fannie Mae’s guidelines note that fees the seller pays “in accordance with local custom” are not subject to these caps, so how a concession is structured matters.
One boundary worth knowing: VA loans have historically prohibited veterans from paying real estate brokerage charges. A temporary variance issued in August 2024 now allows veterans to pay buyer-broker fees under conditions, including that the fees are not financed into the loan and that the local market has eliminated MLS-based cooperative compensation.7Veterans Benefits Administration. Temporary Local Variance for Certain Buyer-Broker Charges The variance stays in place until the VA issues a permanent rule. Sellers can still pay the veteran’s buyer-agent fee, so negotiating seller-paid compensation remains the cleanest route for VA borrowers.
When Payment Happens
The agent gets paid at closing, not before. A neutral party (usually an escrow officer or title company attorney) distributes funds according to the closing documents. The Closing Disclosure itemizes every cost, including the exact commission going to each brokerage.8Consumer Financial Protection Bureau. 12 CFR 1026.38 Content of Disclosures for Certain Mortgage Transactions (Closing Disclosure) Review it carefully. Closing day is your last chance to catch errors.
The title company sends the commission to the agent’s brokerage, not the agent personally. The brokerage then pays the agent under their internal split. If the deal collapses before closing, no commission is owed. Payment is contingent on the property actually changing hands.
Rebates and Tax Basis
In roughly 40 states, an agent can rebate part of their commission back to you at closing, functioning as a discount on the fee you agreed to. About 10 states prohibit the practice. If a rebate is part of your math, confirm your state allows it before signing.
The commission itself is not deductible in the year you buy. You can, however, add it to your home’s cost basis. IRS Publication 551 lists settlement fees, including commissions, among the costs that go into the basis of real property you purchase.9Internal Revenue Service. Publication 551 (12/2025), Basis of Assets A higher basis reduces taxable gain when you eventually sell. On a primary residence, most homeowners qualify for the capital gains exclusion (up to $250,000 single, $500,000 joint), so it may not matter.10Internal Revenue Service. Publication 523, Selling Your Home On an investment property, where the full gain is taxable, the added basis can save real money later.