Commission Lawsuit: 6 Ways To Afford A Buyer’s Agent If Sellers Stop Paying

In an October 2023 landmark verdict, a Missouri jury decided that sellers should not have to pay for the buyer’s real estate agent commission.

Then, on March 15, 2024, the National Association of Realtors (NAR) agreed to change a 110-year-old rule that said the listing agent (seller's agent) must split the typical 5-6% commission with the buyer's agent.

It was customary for the seller to pay both agents' commissions. But some believe that could change.

On August 17, 2024, when the rules are set to change. Buyers may have to pay their agent's commission themselves. They simply can't afford it in most cases.

They can't forego the service, either.

Many argue that home buyers – especially first-timers – need an agent at every step of the process.

If sellers stop paying, how will buyers afford their agent?

How Much Does a Buyer’s Agent Cost?

Up until now, first-time buyers have been blissfully unaware of how much their agent costs.

The answer: typically 3% of the home price.

If you buy a $400,000 house, your agent costs $12,000. You just don’t realize it because the seller pays it out of the home sale proceeds.

Now imagine that the bill comes to you. What do you do? Most buyers don’t have an extra $9,000 to $15,000 on top of the down payment and closing costs. Even with 3% down, your bill to buy a $400,000 house could be $35,000 or more under the new paradigm, including agent commissions, down payment, and closing costs.

Hence the predicament many buyers could be in very soon.

Here’s what buyers may do to adjust to the self-pay system and resources that may become available.

1. Negotiate Agent Fees

Perhaps the best tool to pay for your own agent – if it comes to that – is to negotiate their commission.

This is entirely acceptable and will become the norm. Buyer’s agents will be open to negotiation as their commission opportunities dry up.

Check on typical commissions in your market when the time comes to buy. It’s difficult to predict how buyers’ agent commissions will change, but the standard 2.5% to 3% is unlikely to remain. As a buyer, you have decent leverage to offer a much lower fee.

Some agents are proactively cutting fees and building predictability into the process. Philippa Main, a Florida and Virginia Realtor created a site, FlatFeeBuyersRealtor.com, where buyers can pay $3,000 for personal representation, contract prep, negotiations, and more. Main cuts out some services like home showings and all in-person meetings to provide discounted but essentials-only services.

Expect to see more agents coming up with creative solutions like this one to serve buyers under the new guidelines.

2. Save More

Homebuyers should plan on saving an extra 1% to 2% of the home’s price for agent commissions. If you end up not needing it, it will be a nice war chest for homeownerhip emergencies that can and will happen – home repairs, job losses, car breakdowns, medical emergencies, and more.

3. Gift Funds

Gift funds are often used by first-time buyers to cover the down payment and closing costs. Another use for them could emerge: to pay for your agent.

4. Watch for New Loan Programs

If new commission standards sweep the U.S., it’s possible that major lending agencies will respond.

Programs like FHA, VA, and USDA could offer new rules that allow you to roll the cost of your agent into the loan.

These agencies’ primary goal is affordable homeownership. As such, they have allowed flexible guidelines to allow the greatest number of people to buy. For example, the VA loan does not require a down payment, and FHA loans are available to buyers with credit scores down to 500.

It would not be surprising if these, plus Fannie Mae and Freddie Mac, devise options to help buyers finance agent commissions.

5. Hire a Real Estate Attorney

To save money, some buyers may end up hiring a real estate attorney for a flat fee.

Keep in mind that the attorney only prepares the purchase contract and may review title. They can’t advise on issues with the home, market analysis, or negotiation with the seller’s agent. For some buyers, though, this solution may be all they can afford.

6. Find a Seller Who Offers a Buyer’s Agent Commission

How the real estate commission lawsuit plays out in the real world is yet to be seen.

Sellers still have the option to pay both agents' commissions. The NAR settlement only changed rules around requiring agents to offer commission payments to the agent on the buyer side.

In the future, you may still be able to find a home where the seller is offering a buyer’s agent commission. In fact, this could remain the norm for a few reasons.

First, sellers want to sell the home quickly. Paying for the buyer’s agent can attract a buyer faster and help them avoid hiccups caused by inexperienced, self-represented purchasers.

Second, home sellers may not be as eager to ditch buyer’s agent commissions as first assumed. In Washington State, the seller hasn’t been required to offer buyer’s agent commission for four years. Sellers are still offering commissions. “We really haven’t seen a big shake-up in the compensation being offered by sellers,” said Washington State agent Sharon O’Mahony in a recent Seattle Times article.

The net effect of recent commission lawsuits could be zero or close to it. That could be a very good outcome for homebuyers, especially those doing it for the first time.

Start Preparing Now

If you're looking to buy a home in the next few years, the real estate landscape could look quite different at that time.

Follow developments in this important lawsuit. It could have real implications for you as a buyer, especially if it means saving an additional $10,000 or more to get into a home.