The rules changed with the new industry settlement. Here's what you're actually agreeing to pay, and to whom.
If you sold a home before the recent industry wide settlement changed the rules, you might assume commission still works the same way.
It doesn't, at least not on paper, and understanding the new structure will help you negotiate with more confidence.
How it used to work
In the old model, a seller would agree to a single commission number with their listing agent, commonly somewhere between 1% and 7% of the sale price.
That total was then typically split between the listing agent and the buyer's agent, often weighted more toward the listing side since listing agents generally carry more marketing expenses such as advertising, signage, photography, and media.
How it works now
Today, the listing agreement you sign only covers what you're paying your listing agent. That's it.
Separately, when a buyer's agent brings an offer, their commission is negotiated as part of that offer, and it's disclosed directly rather than baked into a single number from the start.
Buyer's agents are also now required to sign a buyer broker agreement that spells out exactly what they're charging their client, and importantly, an agent can't pocket more than that agreed amount even if the seller offers to contribute more.
Any excess has to be credited back to the buyer, often toward closing costs, a rate buy down, or a home warranty.
What actually changes in practice
Here's the part that surprises people. When you add it all up, the total dollars moving through a transaction rarely changes much.
What's different is transparency. Buyers and sellers now see commission negotiated openly as part of the offer process, rather than it being baked invisibly into one number from the start.
In practice, sellers agree to cover the buyer's agent commission in the vast majority of deals, largely because competitive offers make that a smart move, and because a commission disagreement can be enough to sink a deal over what amounts to a relatively small dollar figure.
What you should actually be evaluating
Here's the mistake to avoid. Don't justify an agent's commission based on your home being listed in the MLS.
Virtually every agent does that as a baseline, it costs them nothing beyond their standard dues. Instead, ask about their actual marketing plan.
There are four types of buyers out there: active buyers your agent already knows, active buyers they don't know yet, and passive buyers in both of those same categories.
A strong agent should have a specific plan for reaching all four, and that plan, not simply "your home will be on the MLS," is what should justify their fee.
At the end of the day, a great agent is worth every penny of a full commission. A mediocre one isn't. Your job as a seller is to interview enough agents to tell the difference.
