You Cannot Keep the Difference: Buyer-Agent Compensation Limits and Fiduciary Duty After the NAR Settlement

Consider the following scenario. A buyer’s agent learns that a seller is offering, for example, 2.5% to the broker who brings the buyer, but the agent’s own buyer representation agreement provides for only 2.0%. The deal closes; the listing side, whether it is the listing broker or the seller, pays the 2.5% to the buyer’s agent and the agent retains the entire amount, without any conversation with the buyer, disclosure, or choice offered. The listing side simply paid what the seller authorized. On the surface, everyone seems content. And yet that extra half-percent was, under the rules now governing the industry, never the buyer’s agent's to keep. Every real estate practitioner, including the attorneys representing the buyers, should consider this scenario.

In light of the NAR settlement and longstanding New York fiduciary law, it is important to restate what buyer’s agents may and may not do when a seller-side offer exceeds the amount in their buyer agreement. The short answer: the buyer’s agent cannot simply pocket the difference.

The Governing Rule: Compensation Cannot Exceed the Buyer Agreement

Among the settlement-driven practice changes that took effect on August 17, 2024, every written buyer agreement must now contain a term prohibiting the MLS participant from receiving compensation for brokerage services, from any source, that exceeds the amount or rate agreed to with the buyer in advance. The agreement must also state compensation in an objectively ascertainable, non-open-ended manner, clearly and conspicuously disclose how and what the agent is compensated, and state that broker fees are not set by law and are fully negotiable. (see NAR, Summary of 2024 MLS Changes; see also NAR, What the Settlement Means for Buyers and Sellers)

The operative word in the NAR settlement is “exceeds.” If the buyer agreement says 2.0%, then 2.0% is the ceiling on what the broker may receive, whatever the source and whether the excess is labeled a commission, a bonus, a co-broke fee, or an incentive. The cap is the cap. This principle is built into the model MLS rules and into the buyer-agreement forms HGAR and NYSAR have made available to members. (see HGAR, NAR Settlement Forms & Resources) OneKey® MLS removed all compensation fields in August 2024, so offers of cooperative compensation are no longer published in the MLS and must be communicated, if at all, outside of it. (see OneKey® MLS, Compensation Fields Removed)

What Happens to the Excess?

If a seller or listing broker offers 2.5% and the buyer agreement caps the buyer’s agent’s fee at 2.0%, the half-percent does not vanish, nor does it default to the buyer’s agent. The buyer’s agent has two permissible paths, and both run through the buyer:

1. Apply the Excess for the Buyer’s Benefit. The additional amount can be redirected to the buyer’s advantage, for example as a reduction in the purchase price or a seller concession toward closing costs. This keeps the agent within the agreed 2.0% while letting the buyer capture the value the seller was prepared to give.

2. Amend the Buyer Agreement with Informed Consent. The buyer and broker may agree, in writing and before the agent earns the higher amount, to increase the agreed compensation. This is a negotiation with the client, made with full disclosure, and not a unilateral decision to accept whatever the other side offers. A buyer who understands the choice may agree to let the agent receive the larger sum, but it must be the buyer’s informed choice, not the agent’s default.

What a buyer’s agent may not do is take the full 2.5% silently and keep the surplus; that retention is what the compensation cap under the NAR settlement was designed to prevent. As one widely cited analysis of the post-settlement forms put it, buyers’ agents may collect only the amount listed in their buyer representation agreement, whether characterized as commission, fee, bonus, or anything else. (see Monestier, Report on Buyer Representation Agreements (Univ. at Buffalo School of Law)

Why Fiduciary Duty Makes This Non-Negotiable

The compensation cap does not operate in a vacuum. It sits atop the buyer’s agent’s pre-existing fiduciary duties under New York law, specifically the duties of loyalty, full disclosure, and the obligation to place the client’s interests above the agent’s own. When a seller is prepared to part with 2.5% and the agent has contracted for 2.0%, that additional half-percent is a material fact bearing on the client’s financial interests. The duty of disclosure requires the buyer’s agent to inform the buyer. The duty of loyalty forbids converting, to the agent’s own benefit, value that could flow to the client.

The settlement rule and fiduciary law thus point to the same conclusion. Even without the contractual cap, a buyer’s agent who silently retained an undisclosed excess would be on difficult ground under ordinary agency principles. For the conscientious practitioner, having the conversation with the buyer is not merely best practice; it is the discharge of a legal duty.

The Code of Ethics Reinforces the Same Point

The REALTOR® Code of Ethics has been updated to reflect the new compensation landscape. Under the principles carried into the 2026 Code of Ethics and Arbitration Manual, a REALTOR® is not to accept compensation from more than one party, even where permitted by law, without disclosure to all parties and the informed consent of the REALTOR®’s client. The accompanying rationale acknowledges that buyer’s brokers are now commonly paid partly by the buyer and partly from the listing side, the multi-source scenario at issue here, and confirms that the duty of disclosure to one’s own client governs those arrangements. The Manual’s arbitration provisions likewise reflect that an award may not exceed the amount set out in the buyer representation agreement. (see NAR, 2026 Summary of Key Professional Standards Changes)

Notably, the Code of Ethics does not require the buyer’s broker to disclose the contents of the buyer agreement to the seller or listing broker. That is why the listing side simply offers what the seller authorizes and never inquires; it has no right to see the buyer-side contract and no obligation to police it. The responsibility to honor the cap and to have the disclosure conversation rests squarely, and solely, with the buyer’s agent and the client.

Practical Guidance for Members

With those principles in mind, the following practices will help buyer agents stay within both the settlement rules and their fiduciary obligations whenever a seller-side offer exceeds the agreed compensation. None of this is complicated, but each step is best handled deliberately and in writing rather than left to chance at the closing table.

• Treat the buyer agreement amount as a hard ceiling. Whatever the seller or listing broker offers, the agent’s take cannot exceed the agreed rate without a written, informed amendment.

• Have the conversation every time there is a gap. When the seller-side offer exceeds the agreed compensation, disclose it to the buyer and present the options, applying the difference to price or concessions, or amending the agreement.

• Get amendments in writing and in advance. Any increase to the agent’s compensation should be documented and consented to before the agent becomes entitled to it, not reverse-engineered after closing.

• Remember the listing side cannot do this for you. Because the listing broker has no visibility into the buyer agreement, compliance is entirely the buyer-agent’s responsibility. Silence is not consent, and the absence of a question is not permission.

• Document the disclosure. A short, written confirmation of the conversation and the buyer’s election protects the agent, the brokerage, and the client alike.

The post-NAR settlement world asks buyer’s agents to be more transparent about compensation than ever before, and that transparency is a requirement of the law, the Code of Ethics, and the terms of the NAR settlement alike. An agent must explain the half-percent and let the buyer decide where it goes. An agent who retains it in silence is, regardless of the other side’s lack of objection, in violation of the settlement rules, the NAR Code of Ethics, and the duties New York law has always imposed.

About the Author: Legal Corner Column author John Dolgetta, Esq. is the principal of the law firm of Dolgetta Law, PLLC. For information about Dolgetta Law, PLLC and John Dolgetta, Esq., please visit http://www.dolgettalaw.com. The foregoing article is for informational purposes only and does not confer an attorney-client relationship and shall not be considered legal advice. The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views or positions of HGAR, its affiliates, or any other entity.