Buyers and their agents adapt to new commision model

Washington Post

13-04-2025

When Ella Fitzgerald and her husband bought a home in the Alexandria, Virginia, area in January, they considered themselves to be very particular buyers.
'We targeted 30 homes that we wanted to look at in a specific area, and our real estate agent, Elizabeth Lucchesi, wrote letters to all the owners to see if they would sell,' Fitzgerald said. 'That's a lot of work before an offer even gets made, so when Elizabeth explained the buyer's agent paperwork and talked about her fee, we never questioned that we would pay it if it wasn't negotiated in the offer.'
Fitzgerald, a repeat home buyer, believes it's logical for a buyer to pay a fee to their own agent.
'We didn't negotiate with her on the fee, which was a percentage of the sales price, because we knew it was average in this area,' Fitzgerald said. 'If it was double the normal fee we would have negotiated, but 3 percent seemed reasonable.'
In the end, the sellers paid Lucchesi's fee as part of their closing costs, but Fitzgerald said they were prepared to pay her themselves.
These kinds of conversations between buyers and their agents were less common before August 2024, when new rules were instituted by the National Association of Realtors for their members. The changes were part of the aftermath of a string of lawsuits against the association and several real estate brokerages that accused them of forcing sellers to pay commissions to agents who represented their buyers. The new rules require buyers to sign an agreement with their agent that specifies the agent's fee, such as a percentage of the sales price or a fee for services, a practice that was common in the D.C. region before last year. In addition, sellers can no longer advertise offers to pay a buyer's agent on the multiple listing service (MLS), but they can still negotiate to do so as part of the transaction.
The initial expectation was that these new practices would bring about a dramatic change away from the tradition of home sellers paying a commission that was split between the two real estate agents at the closing. Real estate commissions have always been negotiable and typically totaled between 5 percent and 6 percent of the sales price. Instead of the predicted steep decline in agent commissions, the fees have remained relatively steady. A recent study by Redfin found that the average buyer's agent commission was 2.37 percent in the fourth quarter of 2024, essentially unchanged compared with the third quarter of 2024 and down slightly from 2.45 percent one year ago before the changes.
Typical Transaction Practices Still in Place
Before the new rules went into effect, agent commissions were essentially split between two brokerages, said Trey Grooms, a real estate agent with eXp Realty in Alexandria.
'The seller would pay the commission, and the fee would be divided between the two agents,' Grooms said. 'Now, the fee negotiation is between the seller and the buyer.'
Most sellers offer to pay the buyer's agent fee, Grooms said.
'I had one seller who would only pay a smaller amount when I was representing a buyer,' Grooms said. 'In that case, I just took a smaller fee because I felt that was my obligation to my buyer.'
Still, in nearly every transaction, the end result is the same: the fees for both agents are typically negotiated and paid from the seller's contributions to the closing costs.
'So far, no buyers have paid my fee directly, and my sellers have all paid their buyer's agent fees,' said Marin Hagen, a real estate agent with Coldwell Banker Realty in the District. 'Partly it's just that this has been the norm for so long that everyone continues it. But also, as listing agents we educate our sellers why it behooves them to pay.'
Hagen said it's prudent for sellers to pay a buyer's agent to make sure they show their property.
'Sellers want certainty that they will get to the closing and a buyer's agent will help make sure that happens,' Hagen said. 'It's especially important if you're selling to first-time buyers because they often can't afford to pay their agent's commission on top of all the other costs to buy.'
In one transaction in which Lucchesi, a real estate agent with Long & Foster Realtors in Alexandria, represented the buyers, the sellers said they would pay her commission but asked for it to be reduced.
'I told them that they received a large earnest money deposit from my buyers, an 18-day closing and everything else they wanted because I encouraged my buyers to make a strong competitive offer,' Lucchesi said. 'They agreed and paid my full commission because they recognized the value of having a good buyer's agent to get the transaction to closing.'
Transparency for Buyers
Most buyers are already informed about the new rules around real estate commissions, said Kris Paolini, a real estate agent with Redfin in Bethesda, Maryland.
'We go over the main points at our first meeting, which is that the seller can't advertise any buyer's agent fee on the MLS,' Paolini said. 'Our fee is in the written agreement that buyers sign, which they can negotiate if they want. We also tell them that our fee can't change even if the sellers offer something different.'
In practice that means that if the sellers don't negotiate to pay the buyer's agent fee in full, the buyers are responsible for the full fee or at least the part the sellers won't pay.
'If the sellers offer a bigger fee, we refund the difference to our buyers,' Paolini said. 'We're not allowed to accept a fee for more than what's in our written buyer agent agreement.'
Paolini said that buyer's agent fees vary by market, but in the D.C. region 2.5 percent is typical. Redfin offers a 'sign and save' buyer's agent agreement after an agent meets with a buyer and tours a home that typically drops the fee to 2.25 percent.
Grooms brings a sample contract with him when he meets with buyers to demonstrate what the document looks like when an offer is made.
'Buyers always have closing costs such as lender and attorney fees, taxes and escrow start-ups,' Grooms said. 'Now they can see their agent's fee as part of the closing costs, too. Then they can ask the sellers for a contribution to the closing costs and use that to cover their agent's fee.'
Lucchesi asks a lender to prepare several scenarios for her buyers to show them how much cash they need for a transaction depending on how the negotiations with the sellers are finalized, including around agent fees. That way they are prepared if they need to pay her fee.
Buyer Agent Fee Negotiations
While agent fees have always been negotiable, when sellers paid the buyer's agent there was little incentive for buyers to ask about their agent's commission. Yet even now, most agents say that buyers typically don't ask them to reduce their fee. They often assume their agent will negotiate on their behalf to have the seller pay the fee. The instances of a buyer paying an agent directly so far are rare, local agents say.
'In one case, a buyer wanted to be really competitive after having lost out on numerous offers, so they paid me directly and didn't ask for the sellers to contribute at all,' Grooms said.
One of Lucchesi's buyers paid one-third of her commission while the sellers paid the rest, but that is extremely rare.
'In one transaction, I had a 2.5 percent fee agreement with my buyer, but the seller would only pay 2 percent,' Paolini said. 'In that case, the listing agent decided to give up .5 percent of their own commission to make sure I got paid and that the transaction would go through without the buyer needing to come up with extra funds.'
New Home Purchase Practices
One thing that has changed is that most builders no longer pay buyer agents a full commission, Paolini said.
'Builders usually pay a flat fee now, so if we have a signed buyer agent agreement at a specific percentage, the buyers may need to make up the difference,' he said. 'I had one buyer pay me the difference because he said he valued my input and advice during the transaction and the builder wouldn't pay my full fee.'
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