The Real Estate Commission Lawsuit: What Actually Changed for Buyers and Sellers

We first covered this on our YouTube channel back in late 2023 when the lawsuit was still fresh. Since then, the settlement has been finalized, the new rules have been in effect for over a year, and Texas passed its own law on top of it. Here's where things actually stand and what it means if you're buying or selling a home in El Paso.

How It Used to Work

Under the old system, when a homeowner hired a listing agent to sell their home, they agreed to pay a total commission, typically 5 to 6% of the sale price. On a $300,000 house, that's $18,000.

Here's where it got weird: that commission wasn't just paying the seller's agent. It was split, usually 50/50, between the seller's agent and the buyer's agent. So on that $300,000 house, the seller's agent got $9,000 and the buyer's agent got $9,000.

The homeowner was paying both sides. The person selling the house was footing the bill for the agent representing the opposing party. When you say it out loud, it doesn't make much sense. And a lot of sellers didn't love it either, but that was just how the industry worked for decades.

There was also a less obvious problem. Under old Texas law, if a buyer didn't sign a representation agreement, the agent showing them homes was technically representing the seller, not the buyer. So a buyer could call an agent, say "hey, show me this house," go look at it, and have no idea that the person walking them through it had no legal obligation to act in their interest. That's not great.

What the Lawsuit Changed

In March 2024, the National Association of Realtors agreed to a $418 million settlement to resolve a federal lawsuit that found NAR's commission rules violated antitrust law by inflating agent fees. A federal judge granted final approval of the settlement in November 2024.

The new rules took effect August 17, 2024. Two big changes:

Sellers can no longer advertise buyer agent compensation on the MLS. Under the old system, a listing agent would post on the MLS something like "buyer agent commission: 3%." That's gone. Sellers can still offer to pay the buyer's agent, but that conversation happens off the MLS: verbally, by email, on the brokerage website, or during negotiations. It just can't be built into the listing anymore.

Buyers must sign a written agreement with their agent before touring homes. This is the one that affects buyers most directly. Before you can walk into a house with an agent, you have to sign a document that spells out what services the agent provides and what you'll pay them. No more casual "let me just tag along and see what happens."

Texas Added Its Own Rules

On top of the national NAR settlement, Texas passed Senate Bill 1968, which updated the Texas Real Estate License Act effective January 1, 2026. Texas law now requires a written buyer representation agreement before a licensee can take any substantive action on behalf of a buyer. That means your agent can't show you a home, write an offer, or do much of anything until you've both signed.

This is actually a good change for buyers, even if it feels like extra paperwork. It means the person helping you is legally representing you, not the seller. You know exactly what you're paying for, and the agent has a clear obligation to act in your interest. Before this law, a lot of buyers had no idea where their agent's loyalty actually sat.

What It Costs Now: The Real Numbers

Here's where people get nervous, so let me lay out what's actually happening.

Before the settlement, total commission nationwide averaged around 5.5 to 6%, split between the two agents. Most people expected buyer agent commissions to drop after the lawsuit. Instead, according to CNBC's reporting on Redfin data, buyer agent commissions dipped briefly after the rules changed, then climbed back to about 2.82% as of early 2025. Total commissions nationwide sit around 5.70%. So the big commission drop that everyone predicted hasn't really materialized.

In El Paso, the median home price is around $265,000. At 2.5 to 3%, a buyer agent commission would be $6,625 to $7,950. For first-time buyers and military families already stretching to cover a down payment and closing costs, that's a real number.

But here's what's actually happening in most transactions: sellers are still offering buyer agent compensation in the majority of deals. They just do it off the MLS. Why? Because a home that offers buyer agent compensation attracts more buyer agents showing it to their clients, which means more offers, which typically means a higher sale price. It's a marketing decision.

The Risk of Going Without an Agent

Some buyers are looking at these numbers and thinking they'll skip the agent entirely to save money. More buyers are going unrepresented since the settlement, but over 90% still use an agent, and there are good reasons for that.

When you're unrepresented, the listing agent's job is to get the best deal for the seller. That's their legal obligation. If you walk in without your own agent, nobody at the table is looking out for your interests. The listing agent may be polite and helpful, but they're not on your side.

Beyond that, buying a home involves a stack of legal documents, inspection negotiations, appraisal disputes, title issues, and lender requirements. Missing a deadline or misunderstanding a contract clause can cost you thousands, or kill the deal entirely. On a $265,000 purchase, a $7,000 agent commission is cheap insurance against a $15,000 mistake in negotiations.

The DOJ Isn't Done

One more thing worth knowing: the Department of Justice raised concerns about the settlement, specifically the requirement that buyers sign representation agreements before touring homes. The DOJ argued this could actually limit competition by locking buyers into agreements too early. The settlement was approved anyway, but the DOJ made clear that approval doesn't prevent future enforcement actions.

There's also a second commission lawsuit filed in Texas targeting 47 real estate firms and associations. The industry isn't done evolving on this.

What This Means in El Paso Right Now

In El Paso, the practical impact is more about transparency than cost. Here's what you need to know on each side:

If you're buying: Have the commission conversation with your agent before you tour the first house. Understand what you're agreeing to pay and how it interacts with what the seller may or may not be offering. If a seller is offering 2.5% to your agent and your agreement says 3%, you might owe the 0.5% difference. Know that math going in. You can also negotiate your agent's fee, ask about flat-fee options, or build the commission into the purchase offer as a seller concession.

If you're selling: Decide with your agent whether to offer buyer agent compensation and how much. In El Paso's current market, most sellers are still offering something because it keeps the buyer pool wide. But the amount is negotiable now, and in some price ranges you can offer less than the old 3% standard. It's a strategy conversation, not a default setting.

The commission structure changed. The fundamentals didn't. Hire an agent who actually knows your market, who's going to negotiate hard for you, and who's transparent about how they get paid. That applies on both sides of the deal.

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John David Peña is the owner of Peña El Paso Realty Group. For questions about buying or selling in El Paso under the new commission rules, visit penaelpaso.com.