--- title: Buyer Commissions Demystified - Everything You Need to Know description: Real estate commissions just changed in a major way. Learn everything you need to know about the new real estate commission laws to stay up to date. image: https://www.undividedre.com/hubfs/WiresPluggedIn-1.jpg --- [Skip to main content](https://www.undividedre.com/blog/buyer-commissions-demystified-everything-you-need-to-know#main-content) [![Logo](https://44624939.fs1.hubspotusercontent-na1.net/hubfs/44624939/raw_assets/public/undivided-theme-by-tam/images/modules/undivided.png)](https://www.undividedre.com/) - [Home](https://www.undividedre.com/) - [About Us](https://www.undividedre.com/about-us) - Advisory Buying Selling - [Neighborhoods](https://www.undividedre.com/neighborhood) - [Value Index](https://www.undividedre.com/value-index) Contacts 175 Greenwich St, 38th Flr New York, NY 10007 [hello@undividedre.com](mailto:hello@undividedre.com) [+1.646.631.2220](tel:+16466312220) ![Youtube](//44624939.fs1.hubspotusercontent-na1.net/hubfs/44624939/raw_assets/public/undivided-theme-by-tam/images/modules/hero/youtube.png) ![Instagram](//44624939.fs1.hubspotusercontent-na1.net/hubfs/44624939/raw_assets/public/undivided-theme-by-tam/images/modules/hero/instagram.png) ![Linkedin](//44624939.fs1.hubspotusercontent-na1.net/hubfs/44624939/raw_assets/public/undivided-theme-by-tam/images/modules/hero/linkedin.png) [Book a strategy call](https://www.undividedre.com/schedule-an-appointment) [Book a strategy call](https://www.undividedre.com/schedule-an-appointment) [All posts](https://www.undividedre.com/blog/all) February 4, 2025 # Buyer Commissions Demystified - Everything You Need to Know   Admin  ·  6 minute read Real estate commissions just changed in a major way, and there's a lot of confusion in the market right now. It's true that we're in the midst of a major change-up that will likely have long-term impacts on the market. However, just because things are changing doesn't mean you have to miss out. With the proper guidance, you can navigate the new buyer's agent rules with confidence and still get a great deal on the home of your dreams. In this guide, we'll be unpacking everything you need to know about the new law on real estate commissions and explain how it may impact the future of the market.   #### What Is the New Real Estate Commission Law? In the past, unless otherwise negotiated, it was traditionally the seller's responsibility to pay the commission for both the buyer's agent and their own. It would be deducted from the sale's profits at closing, and most sellers simply accepted the arrangement as a normal cost of doing business. This made it a no-brainer for buyers to seek representation because they would receive the guidance of an expert without having to pay anything out of pocket. But, a landmark lawsuit against the National Association of Realtors recently changed everything.   ![A gavel and a book with hundred dollar bills, symbolizing the new buyer commission laws ](https://lh7-rt.googleusercontent.com/docsz/AD_4nXcQ1IDpD0ujRVi_P1pUIkwwyGVPyyMXnslRcPxYhI1k0-NeXzk4bLwg1roApsyf5rDm7SuD3zqVrPkWJTCgHI5VGpy8l3c-I75ezLv9QlN3k9hWKq4rLW-bzVY5rlHxl6C8Tgixzw?key=kIvlzS32F9564mnRMx65e-ir)   In May 2023,[a federal judge found the NAR guilty](https://www.nytimes.com/2023/10/31/realestate/nar-antitrust-lawsuit.html) of conspiring with several large brokerages to artificially inflate real estate commissions. The NAR eventually reached a settlement, agreeing to pay $418 million in damages and institute new realtor commission rules. According to the new rules, home buyers now need to pay a commission if they wish to be represented by an agent. The seller will still be responsible for paying their own agent, but it's no longer the norm for them to foot the bill for both commissions. However, that doesn't mean you can't negotiate to have the buyer's real estate commission included in the overall package, which will be discussed later on.   #### What Are a Real Estate Broker's Fiduciary Responsibilities? While these new real estate rules will mean an added cost for buyers, it's important to understand how broker relationships work and why it's wise to seek representation, even if it means paying out of pocket. Ultimately, agents have a fiduciary responsibility to act in their client's best interest. If the seller is the one who hired the agent, that agent has a duty to work toward satisfying the needs of the seller. As a buyer, if you go directly to the listing agent without seeking your own representation, you could easily get the short end of the stick because the broker isn't required to look out for your needs the same way they are for the seller. Even if they seem friendly and helpful, their goal is to get the best outcome for their client, which may not align with what's best for you. #### ![A buyer holding the keys to their new home](https://lh7-rt.googleusercontent.com/docsz/AD_4nXc6ocrgY3IZZsO8NPSx1GckdNdjAA_myC-v2u0BgnbvI1J9ksxwe3NcRkC_7fGjc9j1lkCqfmvA3GWGSucT9Zga7zhBp-twN22MpZbme6ClK_d-soIM8JmJ3SWiJC8Yho4QNXZGSQ?key=kIvlzS32F9564mnRMx65e-ir) #### Pros and Cons of the New Real Estate Commission Rules While many buyers may not like the idea of paying a commission out of pocket, the new model has many advantages that could have positive impacts. That being said, there are disadvantages as well, especially for buyers at the lower end of the market. Here are some of the major pros and cons of the new real estate agent commission law. ##### Pros of the New Model - More transparency: Buyers will know exactly how much they need to pay out of pocket and have the ability to negotiate fees. - Greater control for sellers: Sellers get to [keep more profits](https://www.undividedre.com/blog/selling-above-list-price-with-our-proven-strategy) from the sale because they don't have to compensate the buyer's agent, giving them more control over their expenses. In a slow market, they can offer to pay the fee to incentivize qualified buyers, although they won't be forced to if it's a hot market. - Developers will still pay the fee: Experienced developers understand the value of having an agent who knows what they're doing and can help them get their properties sold as soon as possible. So they'll still be willing to cover the fee, and that's unlikely to change any time soon. ##### Cons of the New Model - Some buyers may go unrepresented: Buyers who can't afford to pay the fee out of pocket will be forced to proceed without representation, which can lead to costly mistakes, especially in markets like NYC, which are complex and require an experienced professional to navigate successfully. - You get what you pay for: While buyers will have the ability to negotiate, those who aren't willing to pay the full fee may not get optimal representation. Experienced agents will be less inclined to negotiate, while newer, inexperienced agents may take whatever they can get. As a result, buyers who can't afford the standard fee may not be able to work with the most qualified candidates. - Low fees lead to low offers: Some sellers may attempt to save money by offering low commissions, even in a [slow market](https://www.undividedre.com/blog/why-do-some-homes-sell-within-hours-and-others-take-months). However, that could backfire and result in less interest from buyers, resulting in offers that are significantly lower than what they would have gotten if they simply offered the full commission. #### Ramifications of the New Real Estate Commission Law Explained The new commission law for realtors could have serious impacts on both buyers and sellers. Here are a few real-world examples of how the impacts may affect those without the proper guidance to make informed decisions.  According to Mukul Lalchandani, founder of Undivided, "I saw one case where an agent was only offering 1% in commission. The place was initially priced at around $4M and continued to sit on the market for an extended amount of time before eventually dropping to $3.2M, last I checked. To save about $80,000 in commission, they dropped their price by $800,000. The math does not add up. Don't focus on the small details, focus on the bigger picture." The new rules on real estate commissions could also be detrimental to inexperienced buyers who lack the knowledge and expertise needed to make informed buying decisions on their own. Mukul says, "I cannot tell you how often I get buyers who send me listings that are too good to be true. A 3-bed in the heart of Manhattan for $350k. And it's been on and off the market for 24 months. They love it, and I tell them to stay away. They don't realize that it may be that the building isn't being operated correctly, or it's an unreasonable co-op board, or they have severe financial problems. The list can go on and on, but if you don't have an expert by your side who knows the lay of the land, you may end up making a really costly mistake, more expensive than the 2 or 3% or whatever fee your agent would charge you. It's a fraction of what you will be spending.  Are you willing to risk hundreds of thousands or millions of dollars and gamble that you hope you are making the right decision? I wouldn't. I'm an agent, and I hire agents when I want to buy a property, because I may not know the local area, and I want to make sure my best interests are being met." #### ![A new homeowner signing a purchase contract](https://lh7-rt.googleusercontent.com/docsz/AD_4nXdWjSMuRSSp0TWGrHcrRDfFDhcJuBEHr27uvm9M3jfSfel1AUgT_Ea827QXydBzkJhBo7dXalPAfN16EM8ar8NeU2EJdH5O4LO01IP0OFn7JHhj_Xr5ajHNs7kFUJBfscE6JK46?key=kIvlzS32F9564mnRMx65e-ir) #### Long-Term Implications of the New Realtor Commission Law Whether you agree or disagree with the real estate agent commission fee law change, it will undoubtedly have long-term impacts on the industry for years to come. Here are a few of the most likely outcomes. - Buyers will have a greater upfront financial burden when [purchasing a home.](https://www.undividedre.com/blog/how-undivided-will-help-you-find-your-dream-home) - Many buyers at the lower end of the market, where consumers are price-sensitive, will forgo representation, leading to costly mistakes. - Wealthier buyers at the upper end of the market won't hesitate to pay the fee because the potential risk they're taking by not hiring a professional far outweighs the cost of the commission. - Experienced agents with an existing book of business will likely thrive, while the lower end of the market may gravitate toward DIY solutions and tech products that enable agent-less transactions. - New business models, such as flat fee or à la carte services, may begin popping up. - Brokers will need to educate clients about the services they'll receive when working with a particular agent. - Buyers will need to get better at negotiating fees.   #### How Buyers Can Avoid Paying Out of Pocket Even though the new real estate commission law change means that it's no longer the seller's responsibility to compensate the buyer's agent, that doesn't mean it can't be negotiated.  It's still possible to convince the seller to package the buyer's commission into the entire deal if you have some leverage. That's where having an experienced agent with keen negotiating skills and market knowledge can come in handy and potentially pay for itself. In situations where this isn't possible, you can ask the seller to increase the property's purchase price by an amount equal to the buyer's agent commission, so you can lump it into your mortgage. However, for this to work, the property will need to appraise for at least that amount to qualify. An experienced agent can help you negotiate the right price to get the most value.  Understanding the new buyer commission rule changes is one thing, but actually buying a home in NYC is a whole different story. But don’t worry, the experienced agents at Undivided are here to help. ## Ready to Get Started? [Schedule Your Free Consultation](https://www.undividedre.com/schedule-an-appointment) ### Here's what you'll get: ✓ Curated Listings We handpick properties that fit you, saving you time by showing homes that match what you want. ✓ Luxury Amenities We highlight top-tier amenities so your new home delivers the prestige and quality you expect. ✓ Market insights We provide detailed market comps and insights to guide your decision-making with confidence and clarity. 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