What Is a Compensation Agreement in Real Estate?
A compensation agreement is a written contract that explains how a real estate agent will be paid. After the NAR settlement, these agreements are now required between buyers and their agents since MLS listings no longer display preset commission offers.
How Compensation Agreements Work After the NAR Settlement
Before 2024, most MLS systems showed a standard “buyer-agent commission”—often 2.5% to 3%—offered by the seller’s broker. The NAR settlement ended that practice. Now, every payment to a buyer’s agent must be clearly documented through a written compensation agreement.
- Buyers sign a written agreement with their agent outlining compensation terms before touring homes.
- Sellers may still choose to offer buyer-agent compensation, but it must be handled outside the MLS (via addendum or email).
- Brokerages are required to disclose who pays the agent and how much, ensuring transparency for both sides.
These new agreements define expectations early and eliminate automatic commission splits that were once baked into MLS listings.
What It Means for FSBO and Flat Fee MLS Sellers
For FSBO sellers using a Flat Fee MLS service, compensation agreements create new flexibility. You can decide whether to offer buyer-agent pay and under what terms—without publishing the amount in the MLS itself.
Many sellers now include a simple buyer-agent compensation addendum with offers, specifying if payment will come from the seller’s proceeds, the buyer directly, or a negotiated mix of both. This keeps listings compliant while allowing agent cooperation on your terms.
For buyers, the new written agreement confirms exactly how their agent is paid before they begin showings or submit offers—removing confusion and protecting everyone involved.
List on the MLS With Confidence
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