The rules for commission after the NAR settlement changed how agents talk about pay, but not the basic truth: compensation is negotiable and has always been. What changed is where it's offered and when it has to be in writing. Agents who explain it clearly and early earn trust. Agents who mumble lose clients. Here are the facts and the words I use.
The short answer
NAR's settlement practice changes took effect August 17, 2024. Two big changes for agents who are MLS participants: offers of compensation to buyer brokers can't be made through the MLS, and agents working with buyers must have a written agreement with the buyer before touring a home (in person or live virtual). That agreement must state the agent's compensation in a clear, objective amount or rate (not open-ended), and the agent can't receive more than that amount from any source. Sellers can still choose to offer compensation or concessions outside the MLS. Commissions are negotiable and not set by law.
Step by step
- Know the facts. Read NAR's consumer guide and facts.realtor. Check your MLS and brokerage policies. Colorado brokerage forms were updated after the settlement. Use current forms.
- Buyer side: talk pay at the consult. Before the first tour, explain your services, your fee and how it might be paid. Sign the written agreement. See buyer agreements in Colorado.
- Explain the payment paths. The seller may offer compensation or a concession. The buyer can ask for it in the offer. Whatever isn't covered, the buyer owes under the agreement, up to the agreed amount.
- Listing side: explain the choice. Sellers decide whether to offer buyer-broker compensation or concessions, and how much. Explain the pros and cons. Never say it's required or standard.
- Put it in the offer. On the buyer side, the offer can request the seller pay some or all of the buyer agent's fee. Use current Colorado contract language.
- Keep it consistent. Same explanation to every client. Write down what you discussed.
- Don't steer. Never show or skip homes based on what compensation the seller offers.
Payment paths (illustration only)
| Scenario | Who pays the buyer's agent |
|---|---|
| Seller offers compensation off-MLS | Seller, up to the buyer agreement amount |
| Buyer asks for a seller concession in the offer | Seller via the deal, if agreed |
| Seller offers nothing | Buyer, per the buyer agreement |
| HUD home | HUD may pay a buyer broker fee if requested on the bid |
Illustration only. Your agreements and the contract control. Compensation is negotiable.
How to explain it to your client
Say it like this (to a buyer): "Before we tour, we sign an agreement that says what I do for you and what I'm paid. My fee is negotiable, and we'll write the exact number. Often the seller pays some or all of it, either because they offered or because we ask for it in your offer. If they don't, you'd cover the difference, and you'll always know that number before we write. I'll never steer you toward or away from a house because of what a seller offers."
Say it like this (to a seller): "You decide whether to offer anything toward a buyer's agent. Some sellers do because it can widen the pool of buyers. Some don't. Let's talk about what makes sense for your home."
Watch-outs
- Never say "standard" or "set" commission. It's negotiable.
- No open-ended fees. "Whatever the seller pays" doesn't meet the settlement's requirements.
- No steering. Showing homes based on compensation is a serious ethics and legal problem.
- Use current forms. Colorado forms and MLS rules changed. Use your brokerage's current versions.
- Not legal advice. Ask your managing broker how your office handles it.
Further reading
This is training for real estate agents. It isn't legal advice. Check with your managing broker.
Questions
When did the NAR settlement changes start?
August 17, 2024.
Can sellers still pay buyer agents?
Yes. Sellers can offer compensation or concessions outside the MLS, or agree to it in a contract.
Do buyers need a written agreement before touring?
Under NAR's practice changes, agents who are MLS participants need one before touring a home with a buyer. Check your state and MLS rules too.
Is commission set by law?
No. It's negotiable.
Where can I read the official facts?
At facts.realtor and nar.realtor.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.