The way real estate commissions operate is shifting dramatically in 2025. These changes are designed to bring more transparency, flexibility, and fairness to buyers and sellers alike. Under the updated rules driven by recent legal settlements and evolving industry standards, consumers now have more power to negotiate.
If you’re wondering “how do the commissions work now?” or how recent reforms affect your sale or purchase, this breakdown will help you understand the new landscape under the new real estate commission law.
The Old Model: How Commissions Used to Work
Traditionally, sellers paid a commission, often about 5 % of the home’s sale price. That commission was shared – split between the listing agent and the buyer’s agent. For example, on a $400,000 home, each agent would receive $10,000, deducted from the seller’s proceeds.
Though it seemed like the seller paid, that cost was often baked into the home’s price. In effect, buyers helped finance the commissions. The issue was that buyers had little visibility into or control over those agent fees.
What Has Changed in 2025 Under the New Real Estate Commission Law
The new real estate commission law changes several fundamental practices:
- Buyers Pay Their Agents Directly
Instead of having seller-paid compensation automatically included in a listing, buyers now directly negotiate and pay their agents for representation. - No Mandatory Buyer-Agent Commission Listings on MLS
Listings no longer have to indicate a commission for a buyer’s agent. Compensation agreements occur privately between buyer and agent, outside of the MLS listing. - Written Buyer-Agent Agreements Required
Buyers must sign a contract outlining the fee structure and services provided by their agent. This ensures clarity and accountability. - More Competition and Fee Options from Agents
Agents now must compete more actively. You may see lower commission rates, service-based pricing ( à la carte), or alternative commission structures.
These changes are intended to make the process clearer and more client-focused.
How the New System Benefits Buyers and Sellers
For Buyers
- More control over the agent relationship. You can compare services and fees, not pay for something you might not need.
- Greater transparency – you know exactly what you’re paying your agent and what you’re getting in return.
- Potential for lower fees, especially in less competitive markets, as agents compete for your business under the new real estate commission law.
For Sellers
- Sellers gain flexibility. You don’t have to automatically include a buyer-agent commission.
- You can choose whether or not to offer compensation to the buyer’s agent, which may affect buyer interest or offers.
- Some sellers may see cost savings or better control over negotiations.
What It Looks Like for First-Time Homebuyers
First-time buyers are especially sensitive to costs. Under the new system:
- You still receive buyer representation, but you shoulder that cost directly.
- Some industry experts are pushing for mortgage qualification rules to allow agent fees to be included in lending calculations, easing upfront burden.
- You’ll need to assess agent qualifications and costs carefully – because comparison now matters more than ever.
Things to Keep in Mind Under the New Rules
- Just because you now pay your agent directly doesn’t mean you have unlimited bargaining power – some markets are highly competitive, and experienced agents may still command premium fees.
- Always read and understand your buyer-agent agreement. What services are included? What happens if the sale falls through?
- Sellers making offers might still include buyer compensation to make listings more attractive, depending on local practices.
- Don’t assume commission is fixed – ask agents about discounts, flat fees, or service-based pricing models.
Final Thoughts
The new real estate commission law in 2025 shifts power and transparency toward consumers. Buyers now negotiate agent fees directly, MLS listings no longer mandate commission terms, and agents must compete for attention. Sellers also gain more flexibility in how they attract buyers.
If you’re preparing to buy or sell under these changes, take time to understand and negotiate agent agreements carefully. The era of hidden or fixed commissions is giving way to more clarity – and that’s good for everyone who enters the real estate journey.