How Real Estate Commissions Work (And Why There's So Much Confusion Right Now)

It’s a Monday morning and my phone lights up: "Wait, do I have to pay my agent now? I thought sellers always handled commissions." Just last week, a client forwarded a breaking headline about a big lawsuit. Confusion is everywhere, from news stories to everyday conversations. If you’ve been following real estate headlines over the past couple of years, you’ve probably heard about lawsuits, changes in industry practices, and conversations about commission.

This has led to many questions and, honestly, quite a few misunderstandings.

Let’s take a moment to go through everything step by step.

What Changed?

In 2023–2024, several major real estate brokerages and industry organizations were involved in lawsuits over how buyer-broker compensation was communicated through the MLS (Multiple Listing Service).

As a result, changes were made to how compensation is discussed and disclosed.

One important update is that compensation to a buyer’s agent is no longer shown in the MLS the way it used to be. This doesn’t mean it’s gone; it just means the way it’s shared and negotiated has changed.

What Is Listing Broker Compensation?

When a seller hires a listing agent, they sign a listing agreement outlining the total commission the seller agrees to pay their brokerage.

That compensation is negotiated up front.

After that, the seller can decide whether to offer compensation to a buyer’s agent and, if so, how much. This should be clearly discussed during the listing consultation. Do note that the buyer may still request buyer broker compensation in their offer and may include it as part of the negotiations.

What Is Buyer Broker Compensation?

A buyer’s agent looks out for the buyer’s interests by negotiating price, managing inspections, reviewing contracts, guiding financing timelines, and protecting their client throughout the process.

Today, buyers are required to have a written buyer representation agreement in place that explains how the buyer’s agent will be compensated. This agreement should be completed before showing homes.

Ask yourself: if the seller offers zero toward your agent’s commission, do you have funds set aside to cover it? Taking a moment to look at your budget now can save you from last-minute surprises at closing.

If a seller decides not to offer compensation to the buyer’s agent, the buyer and their agent need to figure out how that payment will work. Sometimes, it can be included in the offer. Other times, the buyer might agree to pay their agent directly.

Every situation is negotiable.

So… Who Pays?

This is where confusion tends to happen. Just last month, a first-time buyer called me panicked after reading conflicting headlines about commissions. After we sat down and talked through how compensation works, she felt a wave of relief and moved forward with confidence. If you feel lost in all the noise, you’re not alone—clear conversations can make all the difference.

When trying to figure out who pays for what, remember...

Everything in real estate can be negotiated, including commission. Have you and your agent already written down who pays what under three likely scenarios: if the seller offers compensation, if the seller does not, and if it needs to be negotiated in the offer? Having this specific conversation now ensures you and your agent are on the same page, and avoids surprises later. The most important thing is to talk about expectations on both sides before making an offer.

Since buying a home already involves costs like inspections, appraisals, closing costs, and lender fees, it’s important to talk about compensation early so there are no surprises.

Why This Matters

Transparency builds trust.

Sellers should understand what they’re agreeing to in their listing contract.

Buyers should understand how their agent is being paid.

And both sides deserve clarity before negotiations begin.

The laws may have changed how compensation is handled behind the scenes, but the goal is still the same: professional representation, clear communication, and agreements that work for everyone.

If you ever have questions about how commission works in our local market, I’m happy to walk you through it.

No pressure. Just clarity.

Ready to have an open conversation - let's chat!

Amanda Wolf

Fargo Real Estate Agent

701-200-6048

Kelsi Hach

Bismarck Broker/Agent

701-471-6198

Danny Imdieke

South Central ND Real Estate Agent

701-321-0414