In Texas, the seller usually pays the real estate commission for both agents out of the sale proceeds at closing, and that remains the most common arrangement. What changed after the 2024 National Association of Realtors settlement is that buyers can no longer assume it. Buyers now have to sign a written agreement with their own agent spelling out that agent’s fee, and if the seller’s contribution falls short, the buyer owes the difference.
What the Seller Agrees to Pay
The seller’s obligation begins with the residential listing agreement signed with the listing brokerage. Inside that contract, the seller writes in a total commission, either as a percentage of the final sale price or as a flat dollar figure. Average total commissions in Texas run close to 6%, though every rate is negotiable. The agreement also lets the seller decide whether to authorize the listing broker to share a portion of that fee with the buyer’s agent.
Once a qualifying buyer is found, the commission is earned. The seller pays it from sale proceeds at closing rather than out of pocket beforehand. Texas law requires any commission agreement to be in writing and signed before a broker can enforce it, so the specifics in that listing agreement, the property, the dates, and the triggering conditions, do real work later.1State of Texas. Texas Occupations Code 1101.806 – Liability for Payment of Compensation or Commission
Sellers can still choose to cover the buyer’s agent fee as a way to attract offers. After the NAR settlement, though, offers of compensation to buyer agents can no longer appear on any MLS platform.2National Association of REALTORS®. What the NAR Settlement Means for Home Buyers and Sellers A seller who wants to pay the buyer’s side has to do it as a general concession or negotiate it directly, usually agent to agent or as a term written into the purchase contract.
What the Buyer Now Owes
Since August 17, 2024, any agent who tours a home with a buyer, in person or virtually, must already have a signed written agreement in place with that buyer.3National Association of REALTORS®. Consumer Guide to Written Buyer Agreements Attending an open house on your own doesn’t trigger it. The moment an agent accompanies you, the agreement has to exist.
Texas built its own version into state law. Effective January 1, 2026, Texas Occupations Code Section 1101.563 requires any licensed agent performing brokerage services for a prospective residential buyer to enter a written agreement before showing a single home or submitting an offer.4State of Texas. Texas Occupations Code Chapter 1101 – Real Estate Brokers and Sales Agents An agent who skips this is violating state law.
The agreement has to spell out several things:
- The compensation amount or rate and how it’s calculated.
- The services the agent will provide.
- Whether the arrangement is exclusive or non-exclusive. For non-exclusive showing-only agreements, the maximum term is 14 days.
- A termination date.
- A conspicuous statement that broker compensation is not set by law and is fully negotiable.
The compensation line is where buyers feel the change. If your agreement says your agent earns 2.5% of the purchase price and the seller only agrees to cover 2%, the remaining 0.5% is on you. The Texas Real Estate Commission has been direct about it: the buyer is responsible for making sure the agent gets paid the agreed amount if other sources don’t fully cover it.5Texas Real Estate Commission. What Changes in 2026 About Buyer/Tenant Representation in Texas On a $350,000 home, that 0.5% gap is $1,750 the buyer brings to closing.
Most buyer representation agreements also carry a protection period after the contract ends. If you toured a home with your agent during the agreement and then buy it shortly after the agreement expires, your former agent can still claim the fee. The length of that period is negotiable, so read it before signing.
How the Money Moves at Closing
The title company is the neutral party that actually pays the commissions. The settlement agent prepares a Closing Disclosure that itemizes every charge for both sides, including the exact amount owed to each brokerage.6Consumer Financial Protection Bureau. 12 CFR 1026.38 – Content of Disclosures for Certain Mortgage Transactions (Closing Disclosure) Federal rules require the total paid to each brokerage to appear as its own line, with any additional brokerage charges itemized separately.
When the seller covers both sides, the full commission comes out of the seller’s proceeds. The title company deducts it before wiring the seller the net, then sends separate payments to the listing and buyer brokerages. When the buyer owes part of their agent’s fee, that amount shows up on the buyer’s side of the settlement statement and folds into their closing costs. Neither party writes a check to an agent at the table.
Some brokerages add flat administrative or transaction fees on top of the percentage. Those appear as separate line items. They’re negotiable and should be disclosed in your written agreement before closing day, not sprung on you at it.
How the Buyer’s Loan Type Affects Who Can Pay
If the buyer is financing with a government-backed loan, the mortgage rules shape what the seller can and can’t cover.
With an FHA loan, interested party contributions are capped at 6% of the sale price. If the seller pays the buyer’s agent commission as a matter of local custom and the amount is reasonable, FHA does not count that payment against the 6% cap.7Federal Housing Administration (FHA INFO 2024-12). FAQ on Seller-Paid Commissions Related to NAR Settlement A seller can pay a 3% buyer agent fee and still offer up to 6% in other concessions without the mortgage amount being reduced.
With a VA loan, the picture shifted in August 2024. Under a temporary VA variance, veterans are now permitted to pay reasonable buyer-broker fees directly, which they generally couldn’t before. If the seller pays the buyer-broker fee instead, VA guidelines don’t treat it as a seller concession, so it doesn’t count against the VA’s 4% seller concession limit.8Veterans Benefits Administration. Circular 26-24-14 – Temporary Local Variance for Certain Buyer-Broker Charges The VA has signaled a permanent rule is coming, so confirm the current guidance before you build a deal around it.
With a conventional loan, Fannie Mae and Freddie Mac generally allow seller concessions of 3% to 9% depending on down payment and occupancy. Seller-paid buyer agent commissions have traditionally not counted against those limits, though lender overlays vary. Confirm with the specific lender before structuring the deal.
Why a Written Commission Agreement Matters
Texas Occupations Code Section 1101.806 sets a hard rule: no one can sue to collect a real estate commission in Texas unless the agreement is in writing and signed by the party being asked to pay.1State of Texas. Texas Occupations Code 1101.806 – Liability for Payment of Compensation or Commission An oral promise is unenforceable. A court will dismiss a claim built on a handshake, regardless of how clear the understanding was.
For sellers, that means the listing agreement is the document that binds you to pay. For buyers, starting January 1, 2026, the representation agreement is the document that binds you to pay. Both sides should know exactly what their signed agreement says about commission before showings begin, offers go out, or closing paperwork lands in front of them.
One more thing worth knowing: all commission rates in Texas are negotiable. No brokerage, trade group, or MLS can set a standard or minimum rate. If an agent tells you their rate is fixed or set by the industry, that claim has no basis in Texas law.5Texas Real Estate Commission. What Changes in 2026 About Buyer/Tenant Representation in Texas