Real Estate Fees Explained: The Ultimate Guide to Realtor Compensation Agreements

📘 Quick Summary: What Are Realtor Compensation Agreements?

A Realtor compensation agreement is a written contract that explains how real estate agents are paid — including commission amounts, responsibilities, who pays, and when fees are earned.

• They define how listing agents and buyer agents get paid
• They outline flat fees, commission percentages, or hybrid models
• They are required for buyer agents (post–NAR settlement)
• They ensure transparency for both buyers and sellers

This guide breaks down every type of real estate fee so you can make informed decisions — whether you’re selling FSBO or buying a home.

🏛 Part 1: How Real Estate Commissions Traditionally Worked

Historically, Realtors earned commissions through a percentage of the home’s sale price — most often:

• 6% total commission split between listing agent and buyer agent
• 3% to the listing broker
• 3% to the buyer’s broker

These fees were typically bundled together in the listing agreement, with the seller offering compensation to the buyer’s agent through the MLS.

📌 Why This System Is Changing

Following the 2024 NAR settlement, the rules around buyer agent compensation changed significantly:

• Buyer agents must sign written compensation agreements with buyers
• Compensation cannot be advertised on the MLS
• Sellers are not required to offer buyer agent commission
• Commission amounts are now more negotiable than ever

For sellers — especially FSBO sellers — this means more control and lower fees.

📄 Part 2: Types of Realtor Compensation Agreements

📌 1. Listing Agreement (Seller → Listing Agent)

This agreement outlines how a listing agent is compensated. It typically includes:

• Listing fee or commission percentage
• Term of the agreement
• Duties of the listing broker
• Whether the seller is offering buyer agent compensation

FSBO sellers who use a Flat Fee MLS service avoid the listing commission entirely.

📌 2. Buyer Representation Agreement (Buyer → Buyer Agent)

Post-settlement, buyers must sign a written agreement stating:

• How the buyer’s agent is paid
• Whether the buyer or seller will cover the fee
• The commission amount or hourly rate
• Whether the agreement is exclusive or non-exclusive

📌 3. Flat Fee Agreements

Common for FSBO and investors, flat fee arrangements include:

• Flat Fee MLS listing (one-time cost)
• Flat fee transaction coordinator
• Flat fee negotiation services

📌 4. Hybrid Compensation Models

• Lower commission + flat fee
• Tiered services
• Performance-based fees

📌 5. Seller → Buyer’s Agent Compensation Agreement (FSBO & Flat Fee MLS)

Because most Flat Fee MLS listing agreements do not include buyer-agent compensation, sellers who wish to pay a buyer’s broker often use a separate written compensation agreement. This has become even more common after the NAR settlement.

This agreement outlines how and when a buyer’s agent is compensated and may include:

• The exact compensation amount (percentage or flat fee)
• Whether compensation is paid only upon a successful closing
• The buyer agent’s duties (showings, preparing offers, consultation)
• Whether the agent may claim compensation when the buyer was originally unrepresented

These agreements give FSBO sellers full flexibility. A seller may choose to:

• Offer a traditional 2–3% buyer-agent fee
• Offer a reduced commission
• Offer a flat fee (e.g., $1,500–$3,000)
• Offer $0 when buyers come directly without representation

Because buyer-agent compensation can no longer be displayed or communicated anywhere inside the MLS, any offer of compensation must be shared off-MLS. This includes direct communication with the buyer’s broker, email, phone, text, brokerage websites, printed materials, or a written compensation agreement.

💰 Part 3: Who Pays Realtor Fees?

📌 Seller Pays (Traditional Model)

In most U.S. markets, the seller pays both:

• Listing agent commission
• Buyer agent compensation (optional post–NAR settlement)

📌 Buyer Pays (New Model)

With required compensation agreements, buyers may now directly pay their agent through:

• Flat fee
• Hourly fee
• Percentage-based commission
• Retainer + bonus model

📌 FSBO Sellers Have More Flexibility

FSBO sellers have more control than ever over how commissions are structured. Learn more in our guide on how to sell your house without a Realtor.

You decide whether to offer:

• 2–3% to buyer agents
• A flat fee (e.g., $1,000)
• A reduced commission
• Or 0% — and only work with direct buyers

Learn more about the new rules here: Who Pays the Buyer’s Agent After the NAR Settlement?

📉 Part 4: How Much Do Realtors Charge?

📌 Typical Ranges

• Listing agent: 1%–3%
• Buyer agent: 1%–3% (optional)
• Flat Fee MLS: $99–$499
• Transaction coordinator: $300–$700

📌 Why Commissions Vary

• Market competitiveness
• Home price and type
• Agent experience
• Services provided
• Local norms

To better understand how real estate fees are structured and negotiated, see our guide on real estate compensation agreements.

Many sellers are now choosing flat fee listing services like Brokerless to avoid paying 3% to a listing agent.

📑 Part 5: What’s Included in a Real Estate Agent’s Fee?

• MLS listing + marketing
• Photography coordination
• Open houses & showings
• Offer management
• Contract negotiation
• Timeline management
• Closing coordination

Compare this with FSBO tools: How Brokerless Works

❓ Frequently Asked Questions About Realtor Fees

Are real estate commissions negotiable?

Yes. All Realtor fees are fully negotiable, including listing fees and buyer agent compensation. Sellers can offer any amount — including zero.

Do sellers have to offer buyer agent commission?

No. After the NAR settlement, sellers are no longer required to offer buyer-agent compensation. Learn more in our guide to buyer-agent fees.

How do sellers compensate buyer’s agents?

Sellers who choose to pay a buyer’s agent must do so off-MLS under post-NAR settlement rules. This is typically handled through a separate written Seller-to-Buyer Agent Compensation Agreement, which outlines how much is offered and when the fee is earned. For a full explanation of how these agreements work, see our guide: Seller-to-Buyer Agent Compensation Agreement.

Can I avoid the 3% listing commission?

Yes — list with a Flat Fee MLS service like Brokerless and avoid the listing agent fee entirely.

Why do buyers now sign compensation agreements?

Buyer agents must have a written contract with the buyer stating how they are paid. This ensures transparency before viewing homes. To understand the agreement itself and what it covers, see What Is a Buyer Agent Compensation Agreement?.

Do I need to pay anything if a direct buyer contacts me?

No. Direct buyers mean zero commission. You only pay fees you choose to offer.

Are Buyer Agent Compensation (BAC) forms standard across the U.S.?

No. The National Association of REALTORS® (NAR) does not provide or require a single nationwide Buyer Agent Compensation (BAC) form. BAC forms are created by state REALTOR® associations, local associations, or individual brokerages to comply with state-specific laws.

As of August 17, 2024, the NAR settlement requires written buyer agreements before touring any home. These agreements must clearly define the agent’s services and how compensation is handled. Compensation is fully negotiable — it may be a flat fee, percentage, hourly rate, retainer, or even $0.

New rules also prohibit listing agents from advertising buyer agent compensation in the MLS. Any BAC offered by the seller must be communicated off-MLS.

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