Commission Rule Confusion Still Plaguing Transactions Over a Year Later

More than a year after new commission rules took effect in August 2024, real estate agent Ryan Bruen continues encountering professionals who fundamentally misunderstand the regulations. As leader of The Bruen Team serving Morristown and surrounding New Jersey markets, he’s watched the confusion create negotiation problems, boxed-out qualified buyers, and potentially violated regulations.

“I’ve been surprised at how many agents over a year after the new commission rules have come into play are not well versed and do not understand how they work,” Bruen says. The consequences extend beyond procedural confusion to affecting deal outcomes and client interests.

The Regulatory Change

The August 2024 legislation eliminated the previous practice where sellers automatically paid buyer’s agent commissions through listing agreements. Under current rules, buyers must sign buyer’s agency agreements before viewing properties, with those agreements specifying the agent’s commission structure.

Listing agents can now only contract with seller clients for their own commission portion, not the buyer’s agent compensation. Sellers or listing agents can offer to cover buyer’s agent commissions, but those offers function as negotiable terms rather than automatic payments.

The distinction between offer and obligation creates the confusion Bruen sees regularly. “A lot of sellers’ agents I’m seeing still do not understand that that is just an initial offer just as the list price is,” he explains.

Where Transactions Break Down

Bruen recently encountered a situation that illustrates the knowledge gaps. After his buyer submitted an offer with specific terms regarding buyer’s agent commission coverage, the listing agent called to discuss increasing the offer price to compete with other bids.

“I’m about to hang up the phone and, oh, by the way, just a reminder, we’re only paying out X amount commission for the buyer’s agent’s commission,” Bruen recalls. The amount differed from what the buyer’s offer specified.

When Bruen pointed out the discrepancy, the listing agent indicated they planned to simply change that number in the contract. “I had to explain that you can’t just change that amount in the contract. If you would like to structure the counter offer differently and make a counter to that piece of the offer as well, you’re welcome to, but you can’t just ignore it.”

This represents more than procedural nitpicking. Contract terms require mutual agreement, and unilateral changes to submitted offers violate basic transaction protocols.

The Net Proceeds Reality

The confusion often stems from treating commission terms as fixed rather than negotiable. Bruen emphasizes that all offer components function as negotiable terms, including how buyer’s agent compensation gets structured.

“At the end of the day, it should be about net proceeds,” he notes. Sellers should focus on their bottom line after all transaction costs, while buyers have already committed to their agent’s compensation through buyer’s agency agreements.

When listing agents request increased offer prices while simultaneously reducing the amount they’ll cover toward buyer’s agent commissions, the net effect often cancels out. “That net number is really what we’re talking about. That should all be considered in that offer,” Bruen explains.

The transaction can be structured with sellers covering none, some, or all of the buyer’s agent commission. But regardless of structure, most buyers have a net number they’re willing to pay. Adjusting how costs get allocated doesn’t fundamentally change transaction economics.

Identifying Knowledgeable Representation

For consumers navigating these complexities, Bruen suggests focusing less on specific questions and more on agent behavior. Knowledgeable agents should initiate these conversations and explain the regulations thoroughly before clients need to ask.

“Every buyer and seller that I work with, I have a consultation. I explain these things in detail and I present them to my buyers and sellers as far in advance as possible,” he says.

Red flags include presenting buyer’s agency agreements at the last minute when making offers, rather than before property viewings begin as regulations require. Agents who shy away from discussing commission structures or become defensive about questions likely lack adequate understanding.

“If your agent shies away from having the conversation and asking questions, then they probably don’t know what they’re talking about,” Bruen observes.

The Complexity Reality

The regulatory change added genuine complexity to transactions that previously followed more standardized patterns. Bruen acknowledges this directly with clients: “I let them know, this is confusing. We apologize for that. We’re not the ones who made things this way. But these are the rules that we have to operate under.”

Early presentation of information serves strategic purposes beyond compliance. “I want them to ask questions. Because it is somewhat complex, I want you to be aware of this as soon as possible so that you have the opportunity to think of and ask me as many questions as you might come up with.”

The additional options for structuring transactions provide more flexibility than previous systems, but that flexibility requires understanding multiple scenarios and their implications. Agents treating the new rules as simple replacements for old procedures miss the nuances that can benefit or harm clients depending on how terms get negotiated.

Market Impact

Beyond individual transaction confusion, the knowledge gaps affect market dynamics. Bruen has seen sellers receive suboptimal offers because their agents couldn’t effectively explain different structural options. Buyers with legitimate purchasing power get excluded when listing agents don’t understand how to evaluate offers structured differently than their initial expectations.

These inefficiencies harm both sides of transactions. Sellers lose opportunities for better terms or higher effective proceeds. Buyers face arbitrary barriers created by agent misunderstanding rather than genuine qualification issues.

The persistence of confusion more than a year after implementation suggests the learning curve extends beyond reasonable adjustment periods. Agents treating these as “new” commission rules at this point haven’t maintained professional competency in changed regulatory environments.

Looking Ahead

As the regulatory framework continues evolving – with potential additional changes on the horizon – the gap between knowledgeable and confused practitioners may widen further. Agents who struggled to master 2024’s changes will likely face greater challenges adapting to future modifications.

For consumers, the environment reinforces the importance of agent selection beyond marketing capabilities or personality fit. Technical competency in current regulations directly affects transaction outcomes and legal compliance.

Bruen’s experience suggests that confusion concentrates among agents who view regulations as obstacles rather than frameworks requiring professional mastery. The distinction matters significantly for clients whose transactions depend on proper structure and negotiation.

Ryan Bruen leads The Bruen Team, serving Morristown, New Jersey and surrounding markets. His practice emphasizes comprehensive client education and technical expertise in evolving real estate regulations and transaction structures