NAR Commission Settlement Fallout: How 0 – 3 % Buyer Fees Will Reshape Investor Deal Math

The March 2025 landmark agreement up-ended the “standard” 6 % commission. Here’s what it means for cap rates, flips, and rental DSCR calculations.

1 | What the Settlement Actually Changed

Before (Pre-March 2025)

  • Listing agents posted a bundled 5–6 % commission in the MLS.

  • The seller’s broker split 50/50 (roughly) with the buyer’s agent.

  • Buyers rarely wrote a direct check for representation.

After (Effective July 2025)

  • MLS can no longer advertise mandatory buyer-agent compensation.

  • Sellers may pay 0 – 3 % (or nothing) to buyer reps; it’s now a negotiable line item.

  • Buyers can:

    1. Pay their agent out-of-pocket,

    2. Append the fee to the offer price, or

    3. Forego an agent entirely.

Immediate Ramification:
The seller-paid half of the commission is no longer guaranteed. Thousands of transactions in test markets (CO, MO, NJ) have already closed with total commissions under 4 %—sometimes as low as 2.5 %.

2 | How Lower (or Shifted) Commissions Flow Through Investor Math

A. Fix-and-Flip Gross Profit

Metric Old Model (6 % Total) New Model (3 % Total) Δ
ARV $475,000 $475,000 —
Total Commission –$28,500 –$14,250 +$14,250
Net Profit (pre-tax) $70,000 $84,250 +20 %

Result: A 3 % drop in commission widens margin by ≈2.9 % of ARV—often the difference between meh and great returns.

B. Rental DSCR (Purchase Scenario)

Input Old New
Purchase Price $350,000 $350,000
Buyer-Agent Fee 3 % (seller-paid) 0 % (buyer-paid)
Cash Needed at Close $70,000 equity $80,500 equity
Annual P&I $25,600 same
Net Oper. Income $32,000 same
DSCR 1.25 1.18

Result: If buyers now foot the 3 %, cash injection rises; leverage drops; DSCR may improve slightly (lower LTV) or decline if the investor rolls the fee into price and finances it.

3 | Market Scenarios Investors Must Model

  1. Seller Pays 0 % Buyer-Agent Fee

    • Opportunistic buyers willing to self-represent gain cost edge.

    • Risk: Appraisers may see lower net comps, potentially lowering ARV.

  2. Buyer Adds Fee to Offer

    • Purchase price increases but appraisal may not support the bump.

    • Higher loan amount → higher monthly debt; DSCR sensitivity becomes critical.

  3. Dual Agency Surge

    • Listing agents entice buyers directly at 4 % total.

    • Less negotiation leverage for buyers; investors must sharpen ARV assumptions.

4 | Strategic Playbook for Investors

Move Why It Works Action Steps
Budget a “Negotiable 3 %” Line Item Treat buyer representation like closing costs; bake it into max offer. Use a simple deal analyzer column labeled “Buyer Rep Fee (0–3 %)”.
Self-Represent on Straightforward Deals Save 2–3 % equity on cosmetic flips or turnkey rentals. Leverage attorney-only representation and standardized FAR/BAR contracts.
Offer 1 % Buy-Side Bonus to Stand Out Small fee can attract pro agents in low-inventory markets. Disclose fee in offer; roll into seller net sheet.
Explore Dual-Agency/Transaction Brokerage Cuts total commission to 3–4 % without losing agent expertise. Confirm local dual-agency legality; set clear duties in writing.
Stress-Test DSCR at Two Fee Levels Know lock-vs-float decisions if price must rise to cover buyer fee. Run DSCR at purchase price with and without embedded 3 %.

5 | Implications for Brokers & Wholesalers

  • Value Shift: Agents must prove ROI—deal access, negotiation skill, off-market pipelines—to justify any buyer fee.

  • Fee-for-Service Menus: Expect à-la-carte pricing (tour package, offer prep, due diligence).

  • Lender Partnerships: Brokers who present fee-neutral deals (e.g., seller covers 1 %) may win faster approvals when DSCR thresholds are tight.

6 | Financing Considerations at LoanFunders.com

Scenario Our Approach
Buyer pays fee in cash LTV unchanged; verify reserves include fee.
Fee rolled into price Re-run LTV & DSCR; fee must appraise.
Dual-agency w/ 3 % total Treat as traditional 3 % seller-paid closing cost—no DSCR impact.
No buyer agent We still require buyer’s attorney/opinion of title to protect all parties.

Tip: When in doubt, upload the draft settlement statement early; our underwriters will flag DSCR or LTV issues before final disclosure.

7 | Key Takeaways

  • The historic “seller-pays-both-agents 6 %” model is over.

  • Investors can gain 2–3 % of ARV on flips or face higher cash-in if paying their own agent.

  • Always model DSCR, ROI, and cash-on-cash at two commission levels (0 % & 3 %).

  • Align with lenders who can underwrite flexible fee structures—LoanFunders.com adapted our guidelines the day the settlement dropped.

Ready to Re-Calculate Deals in the New Fee Era?

Upload your purchase contract—commission clauses and all—into our portal. We’ll issue a term sheet in 24 hours and show you exactly how 0–3 % buyer fees affect leverage and DSCR.

Change the math, not the timeline.