Last updated on July 31st, 2025 at 11:03 pm

Introduction

In a landmark move, the National Association of Realtors (NAR) agreed to settle legal action aimed at increasing transparency in real estate transactions, specifically with regard to commissions. While many agents felt they were already being transparent—especially with standard listing agreements that clearly outlined commissions and required seller signatures—the lawsuit challenged the long-standing structure of how commissions were offered and disclosed, particularly through MLS platforms.

It’s important to understand that NAR was in a difficult financial position. The damages sought were so high that the organization lacked the resources to post the bond required to appeal. As a result, the claims were not appealed, and a settlement was reached.

Under the terms of the settlement, MLS organizations are no longer permitted to display buyer-agent commission offers. Instead, new court-approved forms and procedures were introduced.

These changes have significantly impacted how real estate offers are written, how compensation is negotiated, and—unexpectedly—why commissions may actually be increasing in many markets.

---

What Has Changed

The NAR settlement not only removed the ability of MLSs to display offers of compensation—it fundamentally altered how real estate agents secure their commissions.

For decades, the process was relatively simple: the listing agent would post an offer of compensation in the MLS, typically splitting the total commission 50/50 with the buyer’s agent. Agents could rely on that system to ensure they would be paid if they brought a ready, willing, and able buyer.

But after the settlement, agents were effectively cut adrift. NAR and the courts made it clear: agents must now secure their compensation directly—by negotiating with either the buyer or seller. There was no guarantee they would be paid, and no centralized method for offering compensation through the MLS.

Agents were told: get your money the best way you can.

In some states, similar models already existed. But in the vast majority of the country, it was standard practice for the listing agent to explain the full commission to the seller, noting that half would be paid to the buyer’s agent as an incentive to bring offers.

Now, that structure has changed. The new court-approved forms require:

• Buyer agents to enter a specific commission amount (percentage, flat fee, or other structure) into a written buyer representation agreement.
• Sellers’ agents are to do the same through a listing agreement.
• These agreements must be signed before any property is shown.

For Buyer Agents

During the discussion with the buyer, the agent must now explain that if the seller does not pay the commission, the buyer will be responsible for paying it. This is a significant shift.

However, the agent can also clarify that traditionally, sellers have paid both sides and that it is likely the seller will continue to do so. The buyer sees the amount in the offer and, understanding that the seller is being asked to pay, usually does not object.

For Listing Agents

The listing agent’s conversation with the seller is similar but framed differently. The seller knows the listing agent expects compensation and agrees to those terms. The listing agent must now emphasize that the home may not sell unless buyer agents are incentivized.

Offering 2.5% to 3% to the buyer’s agent has long been standard, and that structure still motivates agents to show and sell the home. Most sellers recognize this and manage total commission costs as part of their sales strategy.

---

Why Commissions May Be Rising

1. Buyers’ Agents Are Writing 3% or More Into Offers

With MLSs no longer displaying preset offers of compensation, buyer agents now include their requested commission directly in the offer to purchase—just like any other negotiable term.

Many agents are writing in 3% or greater as their expected compensation, especially in markets where that has long been the norm. This figure is inserted into the contract as a percentage or flat amount to be paid by the seller unless otherwise agreed.

Because sellers want to quickly accept strong offers and avoid unnecessary back-and-forth, they are often agreeing to these terms without hesitation—even if they originally planned to offer less.

It’s far easier to just add a commission to the offer than to call around to determine what the commission might be. When the agent is preparing the offer, they are considering what they are worth and asking for it.

The buyers understand that the seller is being asked to pay for it, so they generally have no issue with the amount. Problem solved.

2. Sellers Don’t Want to Risk Losing a Deal Over Commission

Sellers are under pressure to act quickly on offers. If they counter the buyer’s commission request, they risk delaying acceptance, opening the door to renegotiation, or even losing the deal entirely.

To avoid this, most sellers simply accept the offer—commission and all—especially when the price and terms are strong. This behavior reinforces full commission payments rather than reducing them.

3. New Forms Require a More Direct Conversation About Commissions

In the past, the commission structure was just a line item—rarely questioned, often glossed over. Now, the new court-approved forms require that agents have a real discussion about compensation.

Agents must clarify who is paying, how much, and why. While commissions were never hidden before, the traditional rationale for why sellers paid both sides was not always fully explained. The new process makes that discussion unavoidable—and often results in sellers agreeing to what has long been standard.

4. Agent Confidence Has Increased

Initially, agents were uncertain about how to secure their compensation. But the clarity provided by the new process has empowered agents to advocate for themselves more effectively.

They now confidently request 3% or more and include it in written agreements. Buyers, seeing the fee embedded in the offer, rarely push back as long as the cost is shifted to the seller.

5. Professional Norms Remain Strong

The 5% to 6% total commission model remains ingrained in the industry. Despite regulatory changes, most sellers and agents continue to operate within this familiar framework.

With clearer forms and defined expectations, the system now reinforces old norms through new structures.

---

Something to think about

The NAR settlement has undeniably changed the real estate landscape. But for many agents, the change has been less about disruption and more about adaptation. In many markets, commissions haven’t gone down — they’ve held steady or even gone up.

Transparency is now required. Conversations about compensation are now explicit. And when offers come in clean, with fair commission terms, sellers are saying yes.

The result? A process that is clearer, more professional, and—surprisingly—one that often leads to stronger outcomes for working agents.

Check out this article written for buyers and sellers on this topic: Click here

Don’t forget

Post commissions that your seller is willing to pay the buyer’s agent. No guessing. Sign up as a member on this site, at no cost. Click below: