The disclosure map
Compensation disclosure obligations attach at specific moments on both sides. Here is who must be told what, when, and in which document.
The disclosure map
| Moment | Who discloses | To whom | In which document |
|---|---|---|---|
| Before marketing | Listing brokerage | Seller | Listing agreement: total compensation, plus any authorized buyer broker contribution |
| Before the first tour | Buyer's brokerage | Buyer | Buyer representation agreement: a specific compensation amount, and it caps what the brokerage may receive |
| At agreement signing | Both brokerages | Their own client | Conspicuous statement that compensation is negotiable and not set by law |
| When an offer is made | Listing brokerage to buyer's brokerage | The other side | Off-MLS communication, then the purchase contract or a separate compensation agreement |
| When a concession is requested | Buyer, through their brokerage | Seller | Purchase contract concession terms, which are not conditioned on the buyer using a broker |
| If one brokerage is paid by both sides | That brokerage | Both clients | Written dual compensation disclosure with informed consent, signed before closing |
| At closing | Settlement agent | Buyer and seller | Settlement statement, itemizing each brokerage payment and its source |
Four zones
Seller side, buyer side, cross-side and closing. Each zone has its own trigger, its own audience and its own document, and a file can satisfy three of them and still fail on the fourth. Most post-settlement audit findings sit in the cross-side zone, because that is the one that used to be handled automatically by the MLS.
The trigger is an event, not a date
A showing triggers the buyer-side disclosure. Marketing triggers the seller-side one. An offer triggers the cross-side communication. None of them are calendar deadlines, which is why they get missed: nothing on a due-date report shows a disclosure that should have happened yesterday.
Both agreements sit behind this
The disclosure obligations mostly resolve into two documents, and the guide on how broker compensation is agreed covers what each of those documents states. This guide covers when they have to exist and who has to see them.
State law layers on top
Several states have their own compensation disclosure requirements that predate the settlement and go further than it, including timing rules and required form language. Where state law is stricter it governs. This guide describes general practice and is not legal advice.
The negotiability statement
Compensation is not set by law, by regulation or by any trade association, and post-settlement agreement forms now say so on their face.
What the statement says
Standard language states that broker compensation is fully negotiable and is not fixed, controlled, recommended or suggested by any law or association. It appears in the listing agreement and in the buyer agreement, in conspicuous type, close to where the figure is stated.
Why it is placed next to the number
A negotiability statement buried on page seven of an agreement does less than one printed above the signature block. Placement is part of the disclosure, and forms published after the March 15, 2024 settlement announcement generally reflect that.
It applies on both sides
Sellers negotiate the listing brokerage’s compensation. Buyers negotiate their own brokerage’s compensation. Before the practice changes took effect on August 17, 2024, the second conversation frequently did not happen at all, because the number appeared to be set by the listing.
What this means operationally
If the brokerage uses its own forms rather than a state or association form, the negotiability statement has to be added and its presence has to be verifiable on every executed agreement. That is a form audit, done once, plus a file check on each new agreement.
Post-settlement disclosure mechanics
August 17, 2024 changed where compensation may be communicated. It did not change whether brokerages may share it.
Compensation communication before and after August 17, 2024
| Item | Before | After |
|---|---|---|
| Offer of compensation on the MLS | Published field on every listing | Prohibited, field removed entirely |
| Offer in public remarks or attachments | Rare, allowed | Prohibited, counts as an MLS offer |
| How a buyer broker learns the amount | Read it off the listing | Ask the listing brokerage directly |
| Where the offer is recorded | MLS history | Email, brokerage form, contract, or a separate compensation agreement |
| Seller concessions | Commonly displayed, sometimes conflated with compensation | Displayable where the MLS allows, and not conditioned on the buyer using a broker |
| Disclosure to the buyer | Often at offer or closing | In the buyer agreement, before the first tour |
| Cap on what the buyer broker receives | Whatever the listing offered | The amount in the buyer agreement |
What the MLS may not carry
No compensation field, and no offer expressed anywhere else in the listing record. MLSs removed the field rather than making it optional, and an offer written into public remarks or a document attachment is treated the same as the field would have been.
What the MLS may still carry
Seller concessions, where the MLS chooses to display them and where they are not conditioned on the buyer being represented by a broker. Display rules for concessions vary by MLS, so confirm the local policy before relying on the field.
The off-MLS paths
A buyer’s brokerage asks the listing brokerage directly, by phone, email or a brokerage inquiry form. The answer then becomes an actual term through the purchase contract or a separate compensation agreement between the two brokerages. Whichever path is used, the written record belongs in both files, and keeping compensation records for brokerages on the transaction rather than in an agent’s inbox is what makes the record retrievable later.
Verbal answers are not records
A listing agent saying two and a half over the phone is a starting point. It becomes a disclosure the file can rely on when it is confirmed in writing, dated, and attached to the transaction before the offer is submitted.
Dual compensation and disclosure
When one brokerage stands to receive compensation from both sides, both clients have to know the amounts and agree in writing before it happens.
When it arises
In-house transactions where the same brokerage lists and sells, designated agency arrangements where the brokerage collects both sides while two agents represent the two clients, and any case where a buyer’s brokerage receives a seller contribution on top of what the buyer agreed to pay.
What informed consent requires
The amount and the source, named. A disclosure saying the brokerage may receive compensation from more than one party does not give the client anything to consent to. Naming the figure and identifying who is paying it does.
The ceiling still applies
Consent to receive from two sources does not raise the cap in the buyer agreement. If the buyer agreed to two and a half percent and the seller is contributing three, the buyer’s brokerage collects two and a half unless the buyer signs an amendment first. The guide on buyer broker agreements covers how that ceiling behaves.
Timing
Before the compensation is received, which in practice means before closing. A dual compensation disclosure signed at the closing table is late, and one signed after funds disburse does not cure anything.
State variation is significant here
Dual agency itself is prohibited in a small number of states and heavily regulated in many others, and the disclosure requirements attached to it are set by state license law rather than by the settlement. Confirm the rule in each state the brokerage operates in.
The disclosure record in the file
A disclosure that happened but was not evidenced is, for audit purposes, a disclosure that did not happen.
Every disclosure evidenced before closing
Side represented
Cross-side communication
Consent
Closing reconciliation
One document per obligation
Each row of the disclosure map points at a specific document. The buyer-side obligation is evidenced by the signed buyer agreement and its date. The cross-side communication is evidenced by the written offer record or the contract terms. Dual compensation is evidenced by the signed consent. There is no general disclosure document that covers all four.
Dates carry the weight
Most disclosure failures are timing failures rather than missing documents. The agreement exists but was signed the day after the first showing. The consent exists but was signed at closing. Store the showing date and the agreement date as fields and the sequence check becomes a query instead of a reading task.
The closing reconciliation
Compare each brokerage payment on the settlement statement against the agreement that authorizes it and the source that funded it. Three items, two comparisons, done before the disbursement authorization is signed rather than after.
Retention
Disclosure records are retained with the transaction under state license law, commonly for three to five years from closing and longer in some states. They are also the records most likely to be requested years later, since a compensation dispute rarely surfaces during the transaction.
Questions brokers ask
When must commission be disclosed to a buyer?
Before the buyer tours a home. Since the NAR settlement practice changes took effect on August 17, 2024, an MLS participant working with a buyer must have a written agreement in place before that first showing, and the agreement must state the compensation the buyer's brokerage will receive as a specific and objective amount. The disclosure is the agreement itself, and it happens before any property is seen rather than at offer or at closing.
Can compensation offers appear on the MLS?
No. As of August 17, 2024, offers of compensation to buyer brokers cannot be published on a multiple listing service. MLSs were required to remove the compensation field entirely rather than make it optional, and an offer cannot be reintroduced through remarks, attachments, photos or any other field. Compensation is now communicated off the MLS, through the listing brokerage, the purchase contract, or a separate agreement between brokerages.
Is commission set by law?
No. Commission rates and compensation amounts are fully negotiable between a client and a brokerage, and no law, regulation or trade association sets or suggests a rate. Post-settlement listing and buyer agreement forms in most states now carry an explicit statement to that effect, in conspicuous type, so the client sees the negotiability disclosure in the same document that states the figure.
What is dual compensation disclosure?
When one brokerage will receive compensation from both sides of a transaction, or from a party other than the client it represents, both clients must be told in writing and must consent before it happens. This covers in-house dual agency, designated agency arrangements where the brokerage collects both sides, and any case where a buyer's brokerage is paid by the seller in addition to the buyer. The consent has to be informed, which means the amount and the source are named rather than described in general terms.
Where is compensation disclosed at closing?
On the settlement statement, which itemizes every amount paid to every brokerage and identifies who funded it. For most residential transactions with a mortgage this is the Closing Disclosure, provided to the borrower at least three business days before consummation under the TRID rule effective October 3, 2015. Cash transactions typically use an ALTA settlement statement instead. Either way the settlement statement is the record of what was actually paid, and it should reconcile against the agreements in the file.