NAR Settlement Effects on Texas Buyers in 2026: New Commission Rules Explained

NAR Settlement Effects on Texas Buyers in 2026: New Commission Rules Explained

What the NAR Settlement Actually Changed for Texas Home Buyers

If you are buying a home in Texas in 2026, the single most important thing to understand about real estate commission rules is this: the system that existed for decades, where the seller's listing agreement automatically funded the buyer's agent, is gone. A March 2024 settlement agreement between the National Association of Realtors (NAR) and plaintiffs in several class-action antitrust lawsuits fundamentally restructured how buyer's agent compensation is disclosed, negotiated, and paid.

TL;DR / Quick Answer: Effective August 17, 2024, buyer's agents in NAR-member brokerages can no longer advertise their compensation on MLS listings. You must sign a written buyer representation agreement before your agent shows you a home, and that agreement must specify the agent's compensation in a dollar amount or percentage. Texas went further: effective January 1, 2026, state law (TRELA sections 1101.562 and 1101.563) mandates written buyer agreements statewide, regardless of NAR membership. In Houston, most sellers are still covering buyer agent compensation through the contract, but the mechanism changed from an automatic MLS field to a negotiated contract term under TREC 1-4 Paragraph 12A(1)(b). The practical impact for most buyers is modest if you know the new process. The risk comes from not knowing it.

The Lawsuit Background: Why the Rules Changed

The NAR settlement grew out of multiple class-action cases, including Burnett v. National Association of Realtors (filed in Missouri in 2019), in which plaintiffs alleged that NAR's rules requiring sellers to offer buyer-agent compensation through MLS systems constituted an anticompetitive practice that artificially inflated commissions. A jury verdict in October 2023 found NAR and two large brokerages liable for over $1.8 billion in damages.

NAR announced a proposed settlement agreement in March 2024, which received preliminary court approval and took effect on August 17, 2024. The settlement required NAR and all affiliated MLSs (including HAR, the Houston Association of Realtors MLS) to implement two major structural changes:

1. Ban compensation offers on MLS. Listing brokers and sellers can no longer offer buyer's agent compensation through the MLS platform. The HAR-MLS, which covers the greater Houston metro area, implemented this change on August 17, 2024.

2. Mandatory written buyer agreements. MLS participants (agents and brokers who are NAR members) must enter into a written buyer representation agreement with any buyer before showing that buyer a property. The agreement must disclose the agent's compensation in a specific, objectively ascertainable dollar amount or percentage.

These are the baseline requirements that applied nationally as of August 2024. Texas then layered on its own statutory mandate effective January 1, 2026.

Texas Law Now Goes Further: TRELA Sections 1101.562 and 1101.563

Texas was among the first states to codify the NAR settlement's buyer agreement requirement into state law. A bill passed in June 2025 (effective January 1, 2026) amended the Texas Real Estate License Act (TRELA) to add two new sections that every Texas buyer in 2026 needs to understand.

According to TREC's official guidance:

Section 1101.562 (Real Property Showings Without Representation): A license holder can show residential property to a buyer without a representation agreement only under very specific conditions: the agent must not have agreed to represent the buyer, must not provide opinions or advice about the property or real estate transactions, and must not perform other brokerage services. Any showing-only agreement under this section is limited to 14 days and must be non-exclusive.

Section 1101.563 (Written Agreement Required): Before showing any residential property to a prospective buyer, or before presenting an offer if no property will be shown, the license holder must have a written agreement with the buyer. That agreement must specify: the services to be provided, the termination date, whether the representation is exclusive or non-exclusive, whether the agent represents the buyer or not, the amount or rate of compensation and how it is determined, and a conspicuous disclosure that broker compensation is not set by law and is fully negotiable. Failing to enter into the required agreement can result in disciplinary action.

The practical implication: every licensed Texas real estate agent who wants to show you a home in 2026 must first present you with a written buyer representation agreement for your signature. You have the right to negotiate every term in it before signing, including the compensation amount, the exclusivity period, and the termination date.

What the Written Buyer Agreement Must Say: Key Clauses to Scrutinize

The written buyer representation agreement is a contract between you and the brokerage. Before signing, review these specific clauses:

Compensation amount or rate. Texas law requires this to be an objectively ascertainable figure, not an open-ended statement like "whatever the seller offers." The agreement must state a specific percentage of purchase price (for example, 2.5%) or a flat fee (for example, $9,500). Under NAR's settlement requirements, the agent cannot receive more total compensation from any source than the amount stated in this agreement. If the seller offers 2.5% and your agreement says 3%, you owe the agent the 0.5% difference yourself.

Exclusivity and duration. An exclusive buyer representation agreement means you agree to work only with that agent for the duration of the contract. Non-exclusive agreements allow you to work with multiple agents simultaneously. Shorter exclusivity windows (30 to 60 days rather than 6 to 12 months) reduce your exposure if the relationship does not work out. Negotiate a termination clause that allows either party to exit with reasonable notice.

Geographic scope. Some agreements specify that the agent represents you only in a defined area or price range. If you are considering multiple submarkets (for example, both Spring and The Woodlands), make sure the agreement covers all areas you intend to search.

Retainer fees. Some agreements include an upfront retainer, which may or may not be credited against the total compensation at closing. If a retainer is included, confirm in writing whether it is refundable if you do not purchase a property through that agent.

What compensation is negotiable. The TREC guidance is explicit: broker compensation is not set by law and is fully negotiable. Average buyer's agent compensation in Texas runs approximately 2.95% per 2026 survey data from Clever Real Estate, but you can and should negotiate, particularly for higher-priced homes where the percentage produces a large dollar figure.

How Buyer Agent Compensation Actually Gets Paid: Three Paths

Post-settlement, there are three ways a buyer's agent gets paid in Texas. Understanding all three helps you structure your offer strategically.

Path 1: Seller Pays Through TREC Paragraph 12A(1)(b)

The most common mechanism in Houston's current market. When your buyer's agent submits an offer on your behalf, Paragraph 12A(1)(b) of the TREC One to Four Family Residential Contract (Resale) allows the seller to agree to contribute a specified amount toward the buyer's brokerage fees that the buyer has agreed to pay.

Per TREC's explanation of the new Paragraph 12, this subparagraph creates a binding seller obligation capped at the lesser of: (1) the amount listed in the blank, or (2) the amount the buyer actually agreed to pay their agent in the buyer representation agreement. This is important: if you agreed to pay your agent 3% and the seller agrees to contribute 2.5%, you owe your agent the remaining 0.5% yourself.

Worked example on a $385,000 Spring TX purchase: - Buyer representation agreement: 2.5% buyer agent fee - Paragraph 12A(1)(b) seller contribution: 2.5% = $9,625 - Buyer pays agent out of pocket: $0 - Net to buyer: no additional cash required beyond closing costs

Path 2: Seller Concession Through Paragraph 12A(1)(c)

Paragraph 12A(1)(c) covers general seller concessions for "other Buyer expenses" as defined in Paragraph 12A(2). However, per TREC's guidance, funds contributed under this subparagraph cannot be used to pay buyer's brokerage fees. A general seller concession for closing costs cannot be redirected to agent compensation. If you want seller-paid agent compensation, it must go in Paragraph 12A(1)(b), not 12A(1)(c).

Path 3: Buyer Pays Directly at Closing

If the seller declines to contribute buyer agent compensation and no cooperative compensation is offered through other channels, the buyer pays the agent directly at closing. This amount is disclosed on the Closing Disclosure as a buyer-paid cost. For buyers using FHA, conventional, or VA financing, the buyer-paid agent compensation counts as a closing cost. FHA allows seller concessions up to 6% of the purchase price; conventional allows 3% to 9% depending on LTV. This means you could potentially negotiate a general seller concession toward closing costs to offset what you pay your agent, just not through the 12A(1)(b) mechanism.

For how these costs appear on the Closing Disclosure and how financing constraints affect your options, see our Texas Closing Costs guide.

What HAR-MLS Members Are Actually Doing: Houston Market Patterns Through 2025

Twelve-plus months into the post-settlement era, the HAR-MLS market has settled into patterns that differ from what many analysts predicted.

Most sellers are still paying buyer agent compensation. According to Redfin data through Q1 2025, the average buyer's agent commission nationwide was 2.40% in Q1 2025, down only slightly from 2.43% pre-settlement. In the Houston market, the consensus from HAR-member agents is that the majority of listings priced under $600,000 still feature a seller-paid buyer agent contribution communicated off-MLS (through the MLS agent remarks field, direct broker-to-broker communication, or the listing brokerage's website).

The communication channel shifted, not the economics. Before August 17, 2024, a buyer's agent could filter HAR-MLS search results by compensation offered, finding listings that offered 2.5% or 3%. That field no longer exists. Now, buyer's agents learn about seller-offered compensation by: reading the private agent remarks in the MLS, calling or emailing the listing agent directly, or reviewing the listing brokerage's website. This adds a step but does not eliminate seller-paid compensation from the market.

A small percentage of listings offer nothing. The TSAHC analysis of the new rules noted that some sellers, particularly in competitive seller's markets or with strong FSBO tendencies, are testing the market without any buyer agent compensation offer. In those cases, the buyer and their agent must negotiate how compensation is handled before or during the offer stage.

Commission rates at different price tiers in Houston's 2025 market: - Homes under $400,000: Seller-paid buyer agent compensation most common, typically 2.5% to 3% - Homes $400,000 to $700,000: Mix of 2.5% to 3%, with some sellers offering 2% - Homes over $700,000: More negotiation; some sellers offering 1.5% to 2%

Per Redfin's Q1 2025 data, average buyer's agent commission for homes under $500,000 was 2.49%, reflecting the reality that lower-price transactions still support full commission economics.

The Real Cost Shift to Texas Buyers: Who Actually Pays Now?

The short answer: if the seller contributes buyer agent compensation through Paragraph 12A(1)(b), buyers pay nothing new beyond what they would have paid pre-settlement. If sellers decline to contribute, the cost shifts to the buyer.

For a $385,000 Houston-area purchase with a 2.5% buyer agent fee:

For buyers with limited cash reserves, a $9,625 additional cost is material. The most important protection is a well-negotiated buyer representation agreement with a compensation clause that aligns with what sellers in your target market are typically offering. An agent who quotes you 3% compensation in a market where sellers are offering 2.5% creates a built-in $1,925 gap on a $385K purchase that you must fund.

An important nuance for FHA and VA buyers: FHA guidelines allow buyer agent compensation to be included as a buyer expense in the seller concession calculation, up to the 6% of purchase price limit. VA loans allow buyer agent compensation under the "reasonable and customary" closing cost rules. This gives buyers using government-backed loans more flexibility to negotiate seller-funded buyer compensation as part of the overall package.

For more on how different loan types handle seller concessions and buyer agent compensation, see our FHA vs Conventional vs VA loans guide.

Negotiating Buyer Agent Compensation Through TREC Contracts: A Step-by-Step

Here is how to structure your offer to maximize the chance of seller-funded buyer agent compensation in 2026's Texas market.

Step 1: Confirm off-MLS compensation offers before writing. Before your buyer's agent drafts the TREC contract, have them contact the listing agent to ask: "Is the seller offering any buyer agent compensation for this transaction?" Get the answer in writing (email is fine). This tells you what to put in Paragraph 12A(1)(b) without risking a double-commission situation.

Step 2: Use Paragraph 12A(1)(b) for buyer agent compensation. When a seller is offering compensation, enter the agreed amount in the blank in 12A(1)(b). Per Bramlett Partners' guidance on the new TREC forms, do not simultaneously fill in the cooperative compensation section on page 10 of the contract unless a formal broker-to-broker compensation agreement (TXR-2402) is in place. Doing both can create a double-compensation obligation for the seller.

Step 3: If no seller compensation is offered, consider building it into the purchase price. On a $385,000 purchase with no seller-offered buyer agent compensation, you might offer $393,000 with a request for a $9,625 seller contribution under 12A(1)(b) (approximately $8,000 net increase over a $385,000 clean offer). Whether this works depends on the property's appraised value, the competitiveness of the market, and the seller's situation. Your agent can advise on the probability and risk.

Step 4: Understand the cap. Per the TREC explanation, the seller's obligation under 12A(1)(b) is capped at the lesser of the stated amount or the amount the buyer actually agreed to pay in their representation agreement. If your buyer representation agreement says 2%, and the contract says 2.5%, the seller only owes 2%.

Buyer Representation Agreement Effective January 1, 2026: Texas Law Specifics

Under the new Texas statute effective January 1, 2026, the requirement applies to any "act of real estate brokerage" beyond a showing-only interaction. This includes advising you on the market, recommending a price, drafting an offer, or negotiating on your behalf.

A few important distinctions clarified by TREC's 2026 guidance:

• Before a showing: A showing-only agreement (non-representation, 14-day maximum, non-exclusive) is sufficient to allow the agent to show the property without providing advice or opinion.
• Before making an offer: A full buyer representation agreement must be signed before the agent presents any offer on your behalf.
• Subagency eliminated: Texas eliminated subagency from TRELA as part of these amendments. No agent can act as an informal representative of both buyer and seller without clear written disclosure.
• IABS required: Before any showing, the agent must provide you the Information About Brokerage Services (IABS) form, which explains the different types of representation available.

Refusing to sign a buyer representation agreement does not mean you can force an agent to show you homes without one. The agent is legally required to have a written agreement before showing residential property (or to limit themselves to a non-representation showing agreement under strict conditions). If you want full representation and advice, you need a signed agreement first.

How to Interview a Buyer's Agent on Compensation: Five Questions

Given the new transparency requirements, you have both the legal right and a practical reason to interview buyer's agents on compensation before signing anything.

Question 1: What is your compensation rate, and is it negotiable? A professional agent will quote a specific percentage or flat fee and acknowledge that it is negotiable. Be wary of agents who say compensation "is whatever the seller offers" without specifying their own rate. Per NAR's settlement requirements, the written agreement cannot have an open-ended compensation clause.

Question 2: What happens if the seller offers less than your stated compensation? This is the critical question. The answer tells you whether you will owe money out of pocket if you find a property where the seller offers 2% and your agreement says 3%. A buyer-friendly agent structures the agreement so their stated rate is the rate they actually expect from the current market, reducing gap exposure.

Question 3: Is the agreement exclusive, and for how long? Ninety days is a reasonable exclusivity window in most Houston suburban markets. Anything beyond 180 days without an easy early-termination clause is worth negotiating. Ask specifically: "If I am unhappy with the service after 30 days, what does it take to terminate?"

Question 4: Do you charge a retainer, and if so, is it credited at closing? Most buyer's agents in the Houston market do not charge retainers. Those who do should fully credit the retainer against the total compensation at closing if you purchase a home with them.

Question 5: How do you typically communicate seller-offered compensation to me before I decide to tour a property? A well-organized agent has a system for checking compensation status for each listing before scheduling showings, so you know going in whether there is a potential gap. This is now a professional competency that separates diligent buyer's agents from those still figuring out the new process.

What Has Not Changed: Seller Concessions on the MLS

One aspect of the post-settlement rules that causes widespread confusion: sellers can still offer general buyer concessions on the MLS. They simply cannot condition those concessions on the use of a buyer's agent or tie the concession amount to buyer agent compensation.

A listing on HAR-MLS can legally say: "Seller offering $8,000 toward buyer closing costs." A buyer can then use that $8,000 toward their buyer agent compensation (through the mechanism described in Path 3 above) or toward other closing costs. What the listing cannot say is: "Seller offering 2.5% buyer agent commission." The former is a closing cost concession; the latter is a compensation offer tied to agent use.

This distinction matters in practice because general seller concessions still appear prominently in HAR-MLS listings and are often used to effectively compensate buyer's agents in an economically equivalent way to the old system, just through a different legal mechanism.

For buyers in Houston suburbs like The Woodlands, Katy, Sugar Land, and Pearland who are curious about how these patterns play out by submarket, our Best Houston Suburbs for Families guide profiles the key neighborhoods along with typical price ranges that affect commission economics.

Pre-Approval First: The New Process Makes It Non-Negotiable

One consequence of the new written agreement requirement is that agents who properly follow the rules will require a signed agreement before showing you a home. This means you need to have made your agent decision before you are emotionally attached to any property. Making that decision well requires knowing what you can actually afford, which means pre-approval first.

A pre-approval letter also strengthens your position in any compensation negotiation. Sellers who are uncertain about a buyer's financing quality may be less willing to offer buyer agent compensation; a strong pre-approval removes that uncertainty. See our Texas Mortgage Pre-Approval guide for what to prepare before talking to lenders.

Also relevant: your loan type directly affects how much seller concession room you have, which in turn affects how you structure the buyer agent compensation ask. Buyers using conventional financing at 10% down are limited to 6% seller concessions; buyers at 5% down are limited to 3%. VA buyers have different rules. Our FHA vs Conventional vs VA loans guide covers how these limits interact with the new compensation structure.

And once you have a pre-approval and have selected an agent, understanding your full cost picture before making offers matters more than ever. Review our Texas Closing Costs guide and the Texas Title Insurance breakdown before writing your first offer.

Frequently Asked Questions

Do I have to pay my buyer's agent out of pocket if the seller does not offer compensation?

Under the post-settlement rules, if you have a written buyer representation agreement stating your agent earns 2.5% and the seller declines to contribute anything through Paragraph 12A(1)(b), you owe your agent 2.5% of the purchase price at closing. On a $385,000 home, that is $9,625. This appears on the Closing Disclosure as a buyer-paid expense. One option is to build the compensation into the offer price and request a seller contribution under 12A(1)(b). Another option is to negotiate a lower buyer agent fee before signing the representation agreement. The key is knowing this before you fall in love with a specific property.

Can a buyer's agent legally refuse to show me a home unless I sign a representation agreement?

Yes. Under Texas law effective January 1, 2026 (TRELA Section 1101.563), an agent who wants to provide representation services, including advice, market opinions, or drafting an offer, must have a written agreement in place first. Technically, an agent can show you a property under a non-representation showing-only agreement (Section 1101.562), but in that showing-only mode the agent cannot give you any advice about the property, negotiate on your behalf, or perform other brokerage services. Most experienced buyer's agents will not work as showing-only agents; they will want a full representation agreement before devoting meaningful time to your search.

How does the NAR settlement affect buyers financing with FHA or VA loans?

FHA and VA buyers have some structural advantages in the new environment. FHA allows seller concessions up to 6% of the purchase price, and buyer agent compensation can be included as a closing cost within that limit. VA loans allow "reasonable and customary" closing costs to include buyer agent fees. Both loan types allow you to structure seller contributions under Paragraph 12A(1)(b) the same way conventional buyers do. The key constraint is that seller concessions beyond these limits cannot be used, so on a $385,000 FHA purchase at 3.5% down (LTV above 90%), you can request up to $23,100 in total seller contributions, easily covering both agent compensation and other closing costs if the seller agrees.

Is the buyer representation agreement the same thing as an exclusive buyer agency contract?

Not necessarily. A buyer representation agreement can be exclusive (you agree to work only with that brokerage) or non-exclusive (you can work with multiple agents). Texas law allows either structure, but requires the agreement to clearly state which type it is. Most full-service buyer's agents prefer exclusive agreements. Non-exclusive arrangements are more common with flat-fee or limited-service models. The key distinction is that under any representation agreement, the agent owes you fiduciary duties including loyalty, confidentiality, and disclosure; a showing-only non-representation agreement does not create those duties.

What happens if I sign a buyer representation agreement and then the agent performs poorly?

Most Texas buyer representation agreements include a termination provision. Review the agreement carefully before signing to understand the termination procedure: how much notice is required, whether there are any fees, and whether the agreement can be terminated for cause (poor service, unresponsiveness, ethical violations) without penalty. If the agreement does not include any termination provision, negotiate one in before signing. Texas law does not require a specific termination clause, but the absence of one in a six-month exclusive agreement creates significant practical difficulty if the relationship deteriorates.

Did the NAR settlement change how listing agents are paid?

The settlement did not change how sellers pay their listing agents. The listing agreement between the seller and listing brokerage is unaffected. Sellers still negotiate and pay their listing broker a commission (typically 2.5% to 3% in the Houston market) through the listing agreement. What changed is that sellers are no longer required to offer any portion of that commission to the buyer's agent as a condition of MLS membership, and that offer can no longer appear in the MLS. Sellers can still voluntarily contribute toward buyer agent compensation, and most currently do, but through the TREC contract mechanism (Paragraph 12A(1)(b)) rather than an MLS field.

Work With an Agent Who Has Mastered the New Rules

The post-settlement process is more nuanced than the old system, and the cost of getting it wrong falls on you. An agent who does not understand how Paragraph 12A(1)(b) works, how to check for off-MLS compensation offers before scheduling showings, or how to structure a buyer representation agreement with a fair compensation clause is a liability, not an asset.

Erick Harbert at the Harbert Real Estate Group at Realty Right works exclusively with buyers and sellers in Spring, The Woodlands, Tomball, Cypress, Katy, and across the Houston metro. The team is located at 6605 Cypresswood Dr Ste 300, Spring TX 77379, positioned in the communities where most of their buyer clients are searching.

Call (281) 305-2520, email [email protected], or visit harbertgroup.com to discuss how the new compensation rules apply to your specific situation, what buyer agent compensation looks like in your target ZIP code, and how to structure your buyer representation agreement to protect your interests before you start touring homes.