If you’re looking for a new home, you may have noticed a big shift in how buyers’ real estate agents get paid, and it could cost you thousands of dollars. We asked Orange County, California, real estate agent Josh Alexander to break down what has changed:
Before August 2024, buyers didn’t pay their real estate agent directly, he reveals. “Instead, the seller typically covered the 5 percent to 6 percent commission, which their listing agent split with the buyer’s agent. MLS [Multiple Listing Service] websites like Redfin.com and Zillow.com even showed how much of that commission would go to the buyer’s agent.” While sellers always had the option to pay only for their listing agent’s commission, it was also generally expected that sellers would pay the buyer’s agent, so most of them did just that.
But after August 2024, a legal settlement changed the rules. “MLS listings no longer reveal how much commission the seller’s agent is offering to share. And buyers can no longer assume sellers will cover their agent’s fee,” he explains. “Now, the buyer signs a contract with their real estate agent that spells out how much they’re paying them.” On a $350,000 home with a 2 percent commission, for example, this translates to paying $7,000 in cash at closing—in addition to all your other costs. And there’s one more important change: You can’t tour most homes with an agent until you’ve signed this agreement.
The good news: There are smart workarounds to help you decrease the agent’s fee or roll it into your mortgage, so you won’t have to pay it up front. Keep reading for Alexander’s top tips:
To avoid the fee: Ask for a hand
“When you make an offer on a house, you can ask the seller to give you a credit,” says Alexander. “You’re essentially requesting money back at closing to help cover your home-buying costs like agent fees.” Just because the rules have changed doesn’t mean sellers won’t pitch in—but now you must ask.
One approach: “Have your agent include language in the offer that says something like, I’m working with an agent but don’t have funds for the fee, so I’m asking for a credit of X amount to help cover it.” The seller may agree to all of your request or some of it, especially if you’re in an area where sales are sluggish.
To shrink the fee: Seek out a ‘discount agent’
In hot markets where sellers are unlikely to pitch in for your agent’s fee, there’s another way to cut costs: Consider an agent who offers a flat fee (typically $3,000 to $5,000) or provides tiered pricing, where you can opt for fewer services for a lower commission, he recommends.
“Premium agents usually invest more time, like taking you to open houses or reaching out to owners of under-the-radar listings that match your criteria,” he says. “But if you feel confident with the process because you’ve bought and sold homes before—and mainly need help with contracts, negotiations and assisting with legal details—this route could save you thousands of dollars.”
Find an agent by searching online for “flat-fee real estate agent” or “tiered commission real estate agent” along with the city you’re moving to. Or search online forums for the town on social media—like on Facebook and Reddit—and ask locals for their top real estate agent recommendations.
To defer the fee: Increase your offer
When the seller isn’t open to handing over a credit and you don’t have extra cash to cover your agent’s fee, you’ve got another option: “You can raise your offer to include the fee, then ask for that amount to be credited at closing,” reveals Alexander.
Say, for example, the seller lists the home for $350,000 and your agent is charging $7,000. You could offer $357,000. The seller would then credit you that $7,000 and still walk away with the same profit. “This option works best for a home that’s listed below market value,” he says, “since your lender has to agree the property is worth the higher amount.”
While this doesn’t reduce the cost, it can spare you from having to come up with the cash up front—so that nothing stands between you and the house you love.
