Understanding the Latest Real Estate Commission Changes: What Buyers and Sellers Need to Know

The real estate market is continually evolving, and one of the latest significant changes pertains to real estate commissions. Whether you’re buying or selling a home, these updates could have a direct impact on your experience and costs. In this blog post, we’ll delve into what these commission changes entail, why they’re happening, and how they might affect you. Additionally, we’ll explore how these changes impact buyers and sellers using VA, FHA, and Conventional loans.

What Are Real Estate Commissions?

Real estate commissions are fees paid to real estate agents for their services in buying or selling a property. Traditionally, these commissions are a percentage of the property’s selling price and are typically split between the buyer’s agent and the seller’s agent. The standard commission rate has historically been around 5-6% of the home’s sale price and this amount has traditionally been paid entirely by the seller of the property.

What’s Changing in Real Estate Commissions?

Recent changes in real estate commissions stem from a mix of legal actions, market pressures, and shifts in consumer expectations. Here’s a breakdown of the key changes:

  1. Increased Transparency

One of the significant changes is a move toward greater transparency in commission fees. In many areas, buyers and sellers can now see exactly how much each agent involved in the transaction will earn. This transparency helps consumers understand what they’re paying for and encourages competition among agents.

  1. Flexibility and Negotiation

Traditionally, commission rates were relatively standard and often not open to negotiation. However, there’s now a growing trend towards flexibility. Specifically, sellers are finding they have more room to negotiate the commission rates they pay. This can result in lower overall costs for sellers, especially in competitive markets.

  1. Legal Developments

Several high-profile lawsuits in the United States have challenged the way commissions are structured and disclosed. These legal challenges argue that the current system may inflate costs for consumers and lack sufficient transparency. In response, some real estate markets are adopting new rules and guidelines to address these concerns, which may lead to more competitive and consumer-friendly commission structures.

  1. Alternative Business Models

New business models are emerging in the real estate industry that challenge traditional commission structures. For instance, flat-fee services and discount brokers offer lower-cost alternatives to full-service agents. These models can significantly reduce the commission fees paid by sellers and buyers, although they may also offer fewer services.

  1. Impact on Financing for Conventional, FHA, and VA Loans

At this point with the recent update from VA it appears that all loan types will allow the buyers to pay Real Estate Commissions if it’s negotiated in the Purchase Contract. Additionally, if the Seller agrees to pay the Real Estate Commissions that will not count against the current Maximum Interested Party Contributions. These rules however are not entirely finalized for all programs and could change in the future.

Why Are These Changes Happening?

Several factors are driving these changes in real estate commissions:

  • Consumer Demand: Buyers and sellers are more informed and cost-conscious than ever before. They demand transparency and better value for their money.
  • Technology: Online real estate platforms and tools have made it easier for consumers to buy and sell homes with less reliance on traditional agents.
  • Legal Pressure: Ongoing legal challenges and regulatory scrutiny are pushing the industry toward more consumer-friendly practices.
  • Market Competition: As the real estate market becomes more competitive, agents and brokers are adapting by offering more flexible and appealing commission structures.

How Will These Changes Affect Buyers and Sellers?

For Sellers

  • Potential Savings: With more negotiable commission rates and alternative models available, sellers may save money on agent fees.
  • Increased Options: Sellers can choose from a variety of service levels and pricing structures to find what best fits their needs and budget.

For Buyers

  • Transparency: Buyers will benefit from knowing exactly what commissions are being paid and to whom, allowing for more informed decisions.
  • Possibly Lower Costs: As commission structures become more competitive, buyers might see some reduction in the overall cost of purchasing a home.

What Should You Do?

  • Stay Informed: Keep up with the latest changes in your local real estate market. Knowledge is power, and understanding the new commission structures can help you make better decisions.
  • Shop Around: Don’t be afraid to compare different agents and brokers. Look for those who offer competitive rates and transparent practices.
  • Negotiate: Remember that commission rates are increasingly negotiable. Don’t hesitate to discuss and negotiate terms that work best for you.


The real estate commission landscape is changing, and these changes can benefit both buyers and sellers. By understanding these updates, staying informed, and being proactive in your approach, you can navigate the real estate market more effectively and potentially save money in the process. Whether you’re using VA, FHA, or Conventional loans, the evolving commission structures are designed to create a more transparent, competitive, and consumer-friendly environment.

Further Reading