Who Pays Realtor Fees in Indiana: Seller, Buyer, and 2024 Rules

In Indiana, the seller usually pays the real estate commission for both agents out of the sale proceeds, and that remains the most common arrangement. Since August 2024, though, sellers are no longer expected to cover the buyer’s agent by default. If a seller declines, the buyer owes their own agent whatever amount is written into the buyer representation agreement they signed before touring homes. So the short answer to who pays Realtor fees in Indiana is: typically the seller, but it is now a point of negotiation on every deal rather than a given.

What Changed in August 2024

Before last summer, a listing agent could post the buyer-agent commission on the Multiple Listing Service, which effectively guaranteed the buyer’s side a payout and locked sellers into funding both halves of the fee. The National Association of Realtors settlement ended that in two concrete ways.¹

Agents can no longer advertise buyer-agent compensation on any MLS. A seller who wants to help cover that fee can still do so, but the offer has to be made outside the listing, usually through agent-to-agent negotiation or in the purchase agreement itself. And every buyer must now sign a written agreement with their agent before touring a single home. That document states how much the buyer’s agent will be paid and who is expected to pay it. If the seller’s contribution falls short of that figure, the buyer owes the difference.¹

Most Indiana sellers still offer to pay the buyer’s agent, because doing so keeps the listing competitive with others on the market. But it is now a choice. If you are buying, the compensation figure in your signed buyer agreement is what you have agreed to pay, regardless of what the seller eventually contributes. Read it before you sign.

What Commissions Cost in Indiana

Total commissions in Indiana generally run between 5% and 6% of the sale price, with the national average around 5.4% as of 2025. Indiana law does not set or cap the rate. Under IC 25-34.1-3-2, anyone performing real estate services for compensation must hold a valid license, but the amount of that compensation is left entirely to the parties and whatever they put in writing.²

On a home at Indiana’s roughly $250,000 median, 5% total works out to $12,500 and 6% to $15,000. Indiana’s administrative code requires that a listing broker operate under a written contract before collecting any fee, so the exact percentage or dollar amount should be documented before you commit.³

How the Seller Pays at Closing

When the seller covers the commission, nothing changes hands directly between seller and agent. The title company or escrow agent handles it at the closing table. The commission is deducted from the sale proceeds before the seller receives any funds. Sell for $250,000 with a 5% total commission, and $12,500 comes off the top along with the mortgage payoff and other closing costs. There is no separate check to write.

Both commissions appear as line items on the Closing Disclosure. Review that document in advance so the numbers match what your listing agreement and (if applicable) buyer agreement show.

When the Buyer Ends Up Paying

Three situations commonly push the commission onto the buyer. The seller may simply refuse to contribute, or may offer less than the amount in your buyer agreement. The property may be for sale by owner. Or the seller’s permitted contribution may be capped by the buyer’s loan program.

A buyer who is responsible for the agent fee will see it added to the cash-to-close figure. The title company disburses the payment to the buyer’s brokerage at the same time the deed is recorded and the other funds move.

For-Sale-By-Owner Homes

FSBO sellers chose that route specifically to skip a listing commission, so they may hesitate to pay a buyer’s agent. In practice, many agree once asked, because the agent brings a qualified buyer and handles the contract paperwork the seller would otherwise need to manage or pay an attorney to review. The seller still saves the listing-side half. If the seller flatly refuses, your options are to pay the agent yourself, negotiate the purchase price down to offset the cost, or walk away. Your written buyer agreement governs what you owe your agent either way.

VA Loan Buyers

Veterans using VA home loans face a wrinkle. VA regulations have long prohibited veterans from paying real estate brokerage charges, which was fine when sellers covered both sides by default. After the NAR settlement, a seller refusal would have left veteran buyers with no way to hire representation.⁴

The VA issued a temporary variance effective August 10, 2024, letting veterans pay reasonable and customary buyer-agent fees when MLS rules in the area prohibit listing brokers from setting that compensation. The fees cannot be rolled into the loan amount, and the lender has to confirm the veteran holds enough liquid assets to cover the commission on top of other closing costs. The VA has called this temporary and plans to pursue a permanent rule, but the circular stays in effect until rescinded. Negotiating a seller-paid commission into the purchase agreement is still the simplest route on a VA deal.⁴

Conventional Loan Concession Caps

If you are counting on the seller to cover your agent, be aware that Fannie Mae caps how much a seller can contribute toward a buyer’s closing costs on a conventional loan. The limits run against the lower of sale price or appraised value:⁵

Loan-to-value of 75% or less (more than 25% down): up to 9%
LTV between 75.01% and 90% (10% to 25% down): up to 6%
LTV above 90% (less than 10% down): up to 3%
Investment properties: up to 2% regardless of down payment

The 3% cap is where buyers get squeezed. On a $250,000 home with 5% down, the seller can contribute at most $7,500 toward all buyer closing costs combined. A 2.7% buyer-agent fee alone is $6,750, leaving almost nothing for title insurance, prepaids, or lender charges. Fannie Mae notes that fees a seller pays under “local custom” are treated differently from financing concessions, but how lenders classify buyer-agent commissions in the post-settlement environment varies. Raise it with your loan officer early.⁵

Negotiating the Rate

Every commission is negotiable. Indiana law provides no floor or ceiling, and whatever appears in your listing or buyer agreement is something you agreed to. A few approaches that actually work:

Ask directly. After you have interviewed an agent and checked references, say you would like to discuss the rate. Some agents will reduce their percentage, especially on higher-priced homes where a small cut still yields a meaningful fee.
Reduce the agent’s workload. Offering to handle your own photography, staging, or open houses gives the agent a reason to lower the fee. For buyers, having already identified the home you want saves search time that has value.
Consider flat-fee or discount brokerages. Some Indiana brokerages will list a home on the MLS for a flat fee if you take on more of the work yourself.
Split the two sides. As a seller, you can set your listing agent’s commission at one rate and offer the buyer’s agent a different amount. A lower buyer-side offer saves money, though it may discourage some agents from showing the property.

Administrative fees and transaction coordination charges that brokerages add on top of the percentage are also negotiable. These flat fees, often a few hundred dollars, are easy to miss when you are focused on the percentage. Ask about them upfront.

Tax Treatment of What You Pay

Commissions change your tax picture differently depending on which side you were on. For a seller, the commission is a selling expense that reduces taxable gain. The IRS calculates profit by subtracting selling expenses, including agent commissions, and your adjusted basis from the sale price. A home bought for $200,000 and sold for $300,000 shows a $100,000 gain, which drops to $85,000 after $15,000 in commissions.⁶

Most sellers owe nothing on that gain anyway. The IRS excludes up to $250,000 in profit from the sale of a primary residence, or $500,000 for married couples filing jointly, as long as you owned and lived in the home at least two of the five years before the sale. Above those thresholds, every dollar of commission paid reduces the tax bill.⁶

For a buyer who pays an agent commission directly, the cost is added to the cost basis of the property, the same treatment given to recording fees and title charges. A higher basis means a smaller taxable gain when the property is eventually sold.⁷

1
National Association of Realtors. What the NAR Settlement Means for Home Buyers and Sellers
2
Indiana General Assembly. Indiana Code 25-34.1-3-2 – License Required for Real Estate Activities
3
Indiana General Assembly. Title 876 Indiana Real Estate Commission Article 5 – General Provisions
4
Veterans Benefits Administration. Circular 26-24-14 – Temporary Local Variance for Certain Buyer-Broker Charges
5
Fannie Mae. Interested Party Contributions (IPCs)
6
Internal Revenue Service. Publication 523 – Selling Your Home
7
Internal Revenue Service. Publication 551 – Basis of Assets