-Information provided by ChatGPT, OpenAI’s AI language model, on March 23, 2025. Edited for accuracy by Dave Lenhardt. https://chat.openai.com/
If you’re buying a home in Massachusetts for the first time, it’s important to understand how real estate agents get paid and who they’re really working for. Things have changed a lot over the years—and especially recently—so let’s break it down step by step.
1. Historical Context: Sellers Were Always Represented, Buyers Were Not
Before buyer agency was created, all real estate agents—no matter who they were working with—technically represented the seller. Even if an agent showed homes to a buyer, answered their questions, and helped them write an offer, that agent’s legal duty was to the seller. This meant that buyers often shared personal financial details or negotiating strategies with someone who was actually obligated to help the other side. This created a lopsided relationship in which buyers had little or no representation in one of the biggest financial decisions of their lives.
https://www.mass.gov/info-details/re02r24-buyer-agency
2. The Legalization of Buyer Agency in Massachusetts
In the early 1990s, Massachusetts (along with many other states) passed laws allowing for “buyer agency.” This meant real estate agents could legally represent the buyer and owe them the same loyalty, confidentiality, and advocacy that listing agents already owed to sellers. Today, when you meet with an agent in Massachusetts, they are required to give you a “Mandatory Licensee-Consumer Relationship Disclosure” form explaining whether they’ll represent you, the seller, neither (as a facilitator), or a little of both (as a dual agent).
https://www.mass.gov/info-details/re02r24-buyer-agency
3. How Buyer Agent Compensation Worked Before the 2024 NAR Settlement
Traditionally, sellers agreed to pay a commission to their listing agent, who would then share that commission with the buyer’s agent. This shared compensation offer was posted on the Multiple Listing Service (MLS), and it was common for the buyer’s broker to receive 2–3% of the home’s purchase price. This system allowed buyers to get representation without paying out of pocket—but it also meant buyers often didn’t realize how their agent was being paid or who was technically paying them.
4. The Secondary Mortgage Market and Why It Matters
Quasi-Governmental Agencies That Buy Mortgages
After a home is purchased, many lenders sell those loans to large entities like Fannie Mae, Freddie Mac, or Ginnie Mae. These are quasi-governmental organizations that buy and bundle mortgages into investment products called mortgage-backed securities. This process helps ensure banks have enough money to keep issuing new mortgages.
Underwriting Rules and Broker Compensation
These agencies have strict underwriting rules to protect the financial system. One rule says they won’t let buyers borrow money to cover anything that’s not part of the home’s value—and that includes paying a real estate agent.
Why Can’t Buyers Directly Roll Broker Fees into Their Mortgage?
Because buyer broker commissions aren’t tied to the physical home (like the roof or plumbing), mortgage guidelines don’t allow you to include that cost in your loan. That’s why, under the old system, the seller would pay both agents—so the buyer didn’t have to come up with extra cash. If the seller pays, it can be “rolled into the price” and financed as part of the mortgage. But if the buyer pays their agent directly, it must come from their savings.
https://www.bankrate.com/mortgages/secondary-mortgage-market/#pros-v-cons
5. How Buyer Broker Compensation Works in 2025
Starting in August 2024, after the National Association of Realtors (NAR) legal settlement, things changed significantly. In Massachusetts and nationwide, buyer agents must now have a written agreement with their buyers before showing homes if they want to get paid, and this agreement needs to spell out *how* the agent will be paid. Buyers and their agents must negotiate the commission amount directly. That fee may still be paid in full or part by the seller (if the seller agrees it), or the buyer may need to pay all or part of it out of pocket depending on the situation. This new rule is designed to make the process more transparent, but it also means buyers need to plan ahead and talk about fees with their agents early on.
https://www.bostonglobe.com/2024/03/15/business/realtors-settlement-home-buying
I know this stuff is a bit complicated. Call, text, or email me if you have any questions!