Alabama guide

How Cooperating Compensation Works in Alabama Post-NAR Settlement

In Alabama, after the August 17, 2024 NAR settlement, your buyer's agent's pay is set in a written agreement you sign before touring homes.

Reading as buyer.

TL;DR

In Alabama, after the August 17, 2024 settlement, your buyer's agent's pay is set in a written agreement you sign before touring homes. The seller may agree to cover some or all of that pay in the purchase contract, but if they don't, you owe the difference out of pocket. Talk numbers with your agent up front so you know your true cost before you make an offer.

Before you start — 7 things to know

  • In Alabama, you must sign a written buyer brokerage agreement with your agent before they can show you homes, and that agreement spells out exactly how much you owe your agent if a seller does not pay it.

  • Buyer-agent pay is no longer advertised on the in Alabama, so any offer of pay from the seller now gets negotiated directly in the purchase contract for your specific deal.

  • If the seller agrees to pay your agent, it usually shows up in the Alabama purchase contract as either a seller concession or a direct payment to your agent's broker.

  • If the seller will not cover your agent's full fee, you must pay the gap yourself in cash at closing, and that money is on top of your down payment and closing costs.

  • Most loan programs (FHA, VA, and conventional) now allow a seller to pay your buyer-agent fee as part of seller concessions, but each loan type caps total concessions, usually somewhere between 2% and 9% of the price.

  • Alabama's real estate regulator, , requires your agent to clearly disclose how they get paid, so you should always ask for that breakdown in writing before signing anything.

  • Sort out who is paying your agent before your inspection or appraisal deadline passes, because backing out for cost reasons after that point can cost you your earnest money.

The timeline — step by step

  1. Before touring any home in Alabama, sign a written buyer brokerage agreement with your agent that lists the exact dollar amount or percentage you owe them.

  2. When you find a home you like, ask your agent to check with the listing agent about whether the seller is open to paying your agent's fee, since that is no longer posted in the .

  3. When writing your offer on the REALTORS of Alabama purchase contract, include a request for the seller to pay your buyer-agent fee as a concession or direct payment to your agent's broker.

  4. During contract negotiation, confirm with your lender that the seller-paid agent fee fits inside your loan's seller concession cap before you finalize the offer terms.

  5. If the seller refuses to cover the full fee, decide before your inspection deadline whether to pay the difference yourself, ask your agent to lower their fee, or walk away.

  6. At closing in Alabama, the title company or attorney shows the agreed buyer-agent payment on the closing disclosure so you can see exactly who paid what.

Common questions

Do I have to pay my buyer's agent out of my own pocket in Alabama?
Only if the seller does not agree to cover the full amount in the purchase contract. Your written buyer brokerage agreement says what you owe, and any gap between that and what the seller pays falls on you in cash at closing.
Can I roll my buyer-agent fee into my mortgage?
Not directly, but if the seller agrees to pay it as a seller concession, it can be financed through the home price as long as it stays within your loan's concession cap, which is usually 2% to 9% depending on the loan type.
Why can't I just look at the [[MLS]] to see what the seller is offering my agent?
After the August 17, 2024 settlement, offers of buyer-agent pay are no longer allowed on the . Your agent now has to ask the listing side directly or write the request into your offer.
What happens if I sign a buyer agreement at 3% but the seller only offers 2%?
You owe your agent the missing 1% at closing in cash, unless your agent agrees in writing to lower their fee or you negotiate the seller up. Talk this through before your inspection deadline so you have time to decide.
Is it legal in Alabama for the seller to pay my agent?
Yes. Sellers can still pay buyer-agent compensation in Alabama, but it now has to be negotiated in the purchase contract instead of being pre-set through the , and rules require the payment be clearly disclosed.

Glossary

4 terms
BRRETA — Real Estate Brokerage Agreement
Alabama's law that spells out what duties your real-estate agent owes you and what disclosures must happen before they represent you.
AREC — Alabama Real Estate Commission
The state agency that licenses real-estate agents in Alabama and enforces the rules they have to follow.
NAR — National Association of Realtors
The national trade group for real-estate agents. The 2024 NAR settlement is the legal deal that changed how buyer's agents get paid.
MLS — Multiple Listing Service
The shared database agents use to list and find homes for sale. Most homes you'll see online started here.

Sources

  1. [1]
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