Who Pays the Buyer’s Agent on a Short Sale?

Nobody publishes that number anymore. The buyer and their own agent agree it in writing, between the two of them, usually before they’ve walked through anybody’s front door. Whether any part of it comes off your side of the closing statement is a negotiation, and on a short sale your lender has to sign off on it.

That’s been the working rule since August 2024. On Wednesday an appeals court left it standing.

What Did the Court Actually Decide?

A three judge panel of the Eighth Circuit Court of Appeals upheld the Sitzer-Burnett class action settlement on Wednesday, August 19.

The objectors made three arguments. That the plaintiffs didn’t have standing to bring the case. That the payout and the way it gets distributed weren’t adequate. And that home buyers should never have been included in the class at all. The panel rejected all three, and the November 2024 final approval stands. Both sides were heard at oral argument back in January.

That’s from the National Association of Realtors’ own newsroom, which is where I read it. I haven’t read the opinion itself, so nothing here is a description of the court’s reasoning.

NAR pays $418 million over four years. What that bought is a release of liability covering more than a million members, every state, territorial and local Realtor association, association-owned MLSs, NAR’s affiliate organizations, and every brokerage with an NAR member as principal that did $2 billion or less in residential volume in 2022. MLSs and brokerages that opted in were released too.

NAR’s note to members says the plaintiffs can still petition the Supreme Court. So nobody should be writing the word final yet.

Didn’t the Bank Just Pay Everybody?

That’s the answer sitting on page one of Google, and most of it was written a long while ago.

I ran this exact question through a search before writing this, the way somebody would at eleven at night. The results include a real estate blog post from 2009, two Reddit threads from 2012, a lawyer answer from 2014, and Google’s own AI summary at the top of the page saying the total commission, typically 5 to 6 percent, gets split between the listing agent and the buyer’s agent and approved by the bank.

That’s how it worked when those pages were written. What’s out of date is where the buyer’s agent’s number comes from.

The “bank pays” part was always a little loose too, and on a short sale that difference costs real money.

A short sale doesn’t have the money in it that a normal sale has. I went through this on the 11th: a normal closing pays the mortgage, the closing costs and the commission out of what the house sells for, and when the house is worth less than the loan, that math doesn’t reach. There’s nothing there to pay any of it with.

So the lender isn’t writing anybody a check. It’s agreeing to take less than it’s owed and release its lien anyway so the sale can close. Every line on that closing statement that comes off the top is a line that reduces what the lender walks away with, which is exactly why the lender reads all of them. Whether a lender approves any particular line is the lender’s call on their own file, and I can’t tell you how yours would go.

So Where Does the Buyer’s Agent’s Number Come From Now?

The buyer’s agreement with their own agent.

Written buyer broker agreements are mandated. A buyer signs one before an agent starts showing them houses, and that document is where the agent’s pay gets set. Offers of cooperative compensation can’t be communicated on a Realtor MLS, so there’s no posted number sitting on your listing for a buyer’s agent to look up.

What’s left is a negotiation with three parties in it instead of two. A buyer can ask you to cover some or all of what they owe their agent, the same way they’d ask for help with closing costs. If you agree to it, it shows up as a line on the closing statement. And on a short sale that line goes in front of your lender along with everything else.

Which is why the answer to who pays the buyer’s agent isn’t a number anybody looks up. It’s a term two people negotiated, on a document a third party has to approve.

Do I Have to Sign Something Before an Agent Will Show Me Houses?

Yes, and that’s the rule Wednesday’s order left alone.

If you’re buying, that agreement is where your agent’s compensation gets decided, and it gets decided before you’ve seen a house. Worth reading what it says about who’s expected to cover it. If the seller doesn’t, or the seller’s lender won’t, the document you signed is what answers the question.

If you’re selling and you owe more than the house is worth, this lands on you from the other direction. You’re not bringing cash to closing, so you’re not in a position to promise a buyer’s agent anything on your own. Anything you agree to is provisional until the lender says yes to it.

Is the Written Buyer Agreement Rule Going Away?

Not on Wednesday’s order.

On a short sale listing the compensation conversation happens twice. Once up front and in writing with each side, the way the rules require now. Again with the lender when the package goes up for approval. Neither one is a good place to be improvising. Might wanna have the buyer’s agreement in hand before that package goes up, rather than finding out what’s in it when the lender asks what the line is for.

Two years of agents have been waiting to see whether these rules got undone on appeal. As of Wednesday, they didn’t.

Jacksonville, Florida is where I work, and distressed property is most of what comes across my desk. My license stops at the state line, so if you’re reading this somewhere else, a question like this goes out through the SFR referral network to somebody licensed where you are.

If any of this is useful, I’m not hard to reach. JimArmstrong904@gmail.com, or (904) 671-4161 if you’d rather say it out loud.

Jim Armstrong, REALTOR - Momentum Realty - SFR (Short Sales and Foreclosure Resource) certified. This is general information, not legal, tax, or financial advice.

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