Commissions after the 2024 national settlement: buyer agreements, negotiable fees, disclosure

Bottom line: Real estate commissions are not set by law and never were. After a 2024 national settlement, the industry changed how buyer-broker pay is offered and agreed. This is a national practice change driven by a lawsuit settlement and the National Association of REALTORS (NAR) rules, not a new Colorado statute. Colorado law about compensation stayed the same, and it fits neatly with the new practice.

Why this happened

Antitrust law is the body of law (the federal Sherman Act, 15 U.S.C. 1, and similar state laws) that forbids competitors from agreeing to fix prices or limit competition. A group of home sellers sued NAR and large brokerages, claiming that rules which pushed sellers to offer a set buyer-broker commission through the MLS kept commissions artificially high. NAR agreed to settle. The settlement's practice changes took effect on August 17, 2024. Because NAR rules bind NAR members and their MLSs, the changes spread across the country, including Colorado. Read this as industry practice, not as a Colorado law. Always check your brokerage's policy and the current forms.

An MLS (multiple listing service) is a database where brokers list homes and share information with each other. A cooperating broker is the broker for the other side. A buyer's broker works for the buyer. A listing broker works for the seller.

The main changes

• No offers of compensation in the MLS. Listing brokers and sellers may no longer advertise, in the MLS, a commission offered to the buyer's broker. A seller may still agree to pay a buyer's broker, but that offer is made off the MLS, such as in the listing or purchase negotiation, and not as a posted field. Sellers can still offer other help to buyers (like closing-cost help) if the MLS rules allow.
• Written agreement before touring. A broker working with a buyer must have a signed written agreement with that buyer before the buyer tours a home. Touring includes an in-person visit and, under many MLS rules, a live virtual tour. An open house walk-through usually does not require one.
• Specific, objectively ascertainable compensation. The agreement must state the broker's pay as an amount or rate that anyone can figure out without guessing, such as "3% of the purchase price" or "$12,000." Language such as "whatever the seller offers" is not specific enough. The broker may not receive more than the amount in the agreement from any source.
• Negotiable, plainly stated. The agreement must say that broker fees are fully negotiable and not set by law.
• Disclose where pay comes from. Brokers must disclose any compensation they will receive (for instance from the seller) and a seller may negotiate who pays.

Brokers also must not promise or imply that a commission is fixed by law, or by the MLS, or by their brokerage. A group agreeing with competitors on a rate would raise antitrust risk for them personally.

How this fits with Colorado law

Colorado already has rules that line up with this practice. These are in your sources:

• A broker's compensation may be paid by the seller, the buyer, the landlord, the tenant, a third party, or by sharing or splitting a commission between brokers (C.R.S. 12-10-410(1)). Being paid by one party does not make the broker that party's agent (12-10-410(2)).
• A buyer's agent must get the buyer's written approval before proposing to the seller's side that the buyer's agent be paid by sharing compensation the seller pays (C.R.S. 12-10-410(5)).
• Before signing a brokerage or listing agreement or a contract, the identity of anyone paying compensation to a broker must be disclosed to the parties (C.R.S. 12-10-410(6)). A broker paid by more than one party needs written consent from those parties first (12-10-410(7)).
• Secret or undisclosed compensation is a ground for discipline (C.R.S. 12-10-217(1)(t)).
• Written agreements with consumers must have a definite end date (Rule 6.14(D); C.R.S. 12-10-409(1)(b)). Seller and landlord listings must be in writing before services start (Rule 6.14(C)). A broker engagement contract for a residential property may not run with the land, may not be assigned without notice and consent, and may not create a lien. Any such lien is void (C.R.S. 12-10-403.5). A broker cannot file a lien or lis pendens on a residential property to collect a commission unless the broker has first won a court judgment (Rule 6.22(B)).

Colorado forms. The Colorado Real Estate Commission's approved buyer agency and listing forms have compensation sections, where the parties fill in the amount, who pays, and how it is split. After the national change, the forms and the Contract to Buy and Sell were updated so the compensation terms can be stated clearly. Because form section numbers change between versions, refer to the "Compensation" section of the agreement, not a paragraph number, and always use the current Commission-approved version. We have not confirmed the exact version dates of Colorado's revised forms in this course, so look at the current forms on the Division of Real Estate website.

Also note rule 6.14(A): any contract a broker prepares must itemize financial terms and show who gets each thing of value. If a seller's agreed payment to the buyer's broker is part of the deal, it belongs on paper, not in a handshake.

What brokers should do now

1. Present a written buyer agreement before the first showing, and explain it in plain words.
2. Fill in the compensation as a rate or flat amount, who pays, and what happens if the seller pays less.
3. Say out loud that the fee is negotiable. Do not say "everyone charges 3%."
4. Do not put a buyer-broker commission in the MLS listing.
5. If the seller will pay some or all of the buyer broker's fee, write it into the purchase contract.
6. Keep the signed agreement in the transaction file for four years (Rule 6.20).

Example with real numbers

A buyer wants to buy a $500,000 Boulder County home and signs a buyer agreement before touring with Brenda, a broker. The agreement says the broker's pay is 2.5% of the purchase price, paid first from any amount the seller offers in the purchase negotiation, and the buyer pays the remainder.

1. Full fee: 2.5% x $500,000 = $12,500.
2. The buyer's offer asks the seller to pay $10,000 toward the buyer's broker fee. The seller agrees in the contract.
3. Remainder: $12,500 - $10,000 = $2,500, which the buyer pays at closing.
4. If the seller had offered nothing, the buyer would owe all $12,500 and Brenda cannot ask the seller for more than what her agreement states.
5. If the seller offered $15,000, Brenda still may only take the $12,500 in her agreement. The extra $2,500 goes back to the buyer as a credit or stays with the seller.