What Does the New 2026 Texas Real Estate Contract Change About Commission?

As of July 1, 2026, every Texas real estate contract uses a revised Paragraph 12B that separates broker compensation from general buyer and seller expenses. Sellers can still offer to contribute to a buyer's agent compensation, and buyers can now offer to contribute to a seller's side too, but the old assumption that the seller automatically covers the buyer's agent is gone. If you're signing a contract in Dallas this fall, it's worth understanding exactly what you're agreeing to before you sign.

By Matt Watson, Broker, REALTOR® | August 28, 2026

If you bought or sold a home in Texas before this year, the commission conversation probably felt simple: the seller paid both agents out of the proceeds, and nobody thought much about it. That assumption started breaking down after the 2024 NAR settlement, and as of July 1, 2026, it's built directly into the paperwork you sign.

The Texas Real Estate Commission adopted new versions of all six standard contracts this year, replacing the forms that had been mandatory since January 2025. The headline change is in how the contract handles broker compensation, and it's the kind of detail that's easy to gloss over in a stack of initials and signatures. It shouldn't be.

This is also landing at a moment when commission questions are already top of mind for a lot of Texas buyers and sellers. There's an active $28.5 million settlement involving several major brokerages working through the courts right now, covering Texas purchases going back to 2019, and it's a separate matter from the July 2026 contract update, but it's part of the same broader shift: commission is negotiated and disclosed explicitly now, not assumed. After 25 years of watching Texas contract forms evolve, I can tell you this is one of the more consequential updates in a while, not because the concept is new, but because it's now spelled out in black and white on the document you sign.

What Changed in Paragraph 12B, in Plain English

Under the old contract, Paragraph 12 mixed general expenses and broker compensation together in one section. The new version splits them apart.

Paragraph 12A now covers buyer and seller expenses that have nothing to do with agent compensation, things like home warranty costs or survey fees.

Paragraph 12B is where broker compensation lives now, and it works in two directions:

  • 12B(1) lets the seller offer to contribute toward the buyer's broker compensation.
  • 12B(2) lets the buyer offer to contribute toward the seller's broker compensation.

That second option is new. It didn't exist in this form before, and it reflects how much more negotiable commission has become since 2024. The old broker-to-broker compensation agreement (TXR 2402) has also been retired. Compensation discussions now happen inside the sales contract itself instead of a side agreement between brokerages.

None of this means commission rates went up or down across the board. What it means is that the number gets negotiated and written down explicitly, on a deal-by-deal basis, instead of assumed.

What This Means If You're Selling in Dallas

As a seller, you're not required to offer anything toward the buyer's agent's compensation. You can offer 3%, 2%, 1%, or nothing, and it's a real decision with real trade-offs, not a formality.

Here's the thing worth sitting with: offering nothing doesn't automatically save you money. It can narrow your buyer pool, especially with Dallas inventory up and buyers doing more comparison shopping than they were a few years ago. A buyer working with an agent they've contracted to pay directly may pass over listings that don't offer any compensation, especially in the $200,000 to $600,000 range where every dollar of a buyer's closing budget matters.

Put real numbers on it. On a $450,000 Oak Lawn townhome, offering 3% toward buyer's agent compensation in 12B(1) is $13,500. Offering nothing keeps that money in your pocket on paper, but if it means fewer showings and a longer time on market, you can lose more than $13.500 in carrying costs, price reductions, or a lower final offer than you'd have gotten with a wider buyer pool. Neither choice is automatically right. It depends on your inventory, your price point, and how your specific street or building is moving right now.

This is exactly the kind of decision where the right answer depends on your specific listing, price point, and how competitive your immediate neighborhood is right now. I walk every seller through this trade-off before we finalize a listing strategy, because the number you put in 12B(1) is a marketing decision as much as a financial one. If you haven't already run the full math on what you'll actually net after commission and other closing costs, it's worth understanding your real seller closing costs and net proceeds before you decide what to offer.

What This Means If You're Buying in Dallas

As a buyer, the practical reality hasn't changed as much as the paperwork suggests, but there's one thing you can't skip anymore: you need a signed representation agreement with your agent before they can show you homes, spelling out what you owe them if the seller doesn't cover it. If you haven't looked into what Texas's buyer representation agreement requirement actually covers, that's the piece that connects directly to this contract change.

Once you're under contract, 12B(2) gives you the option to offer compensation toward the seller's side too, which sounds unusual but shows up in specific situations, like when a buyer wants to make an offer more attractive without raising the purchase price itself. It's a tool, not a requirement, and most Dallas buyers in the $200,000 to $800,000 range won't use it. But it's there now, and a buyer's agent who explains it well is doing their job.

Say you're competing for a well-priced East Dallas bungalow that's drawing multiple offers. Raising your price by $5,000 changes your appraisal risk and your monthly payment. Offering $5,000 toward the seller's broker compensation in 12B(2) instead can make your offer more attractive to a seller weighing net proceeds, without touching your loan amount at all. It's a narrow use case, but it's a real option your agent should be walking you through if it applies to your situation.

Either way, the money you bring to closing is still shaped by more than commission. If you want the fuller picture of what buyers actually pay at closing in Dallas, that breakdown pairs directly with this one.

A Few Other Contract Changes Worth Knowing

Paragraph 12B gets the most attention, but two other changes in the July 2026 forms are worth a quick mention:

  • A new back-up contract notice form. If your offer is in back-up position and the primary contract falls through, there's now a specific form, the Seller's Notice to Buyer of Removal of Contingency Under Addendum for "Back-Up" Contract, that documents exactly when your contract moves into primary position. That date matters for your own timelines, including your option period.
  • New language referencing FinCEN reporting requirements in Paragraph 20. Here's the nuance worth knowing: a federal court in the Eastern District of Texas vacated the underlying Residential Real Estate Rule in March 2026, and as of this writing, that order is still in effect while the federal government appeals it. So the contract references a reporting requirement that isn't currently active. This is a good example of why it's worth having someone who's tracking these changes walk you through your specific contract rather than assuming last year's rules, or last month's headlines, still apply exactly as written.

None of these changes should scare you off a Dallas transaction this fall. They're refinements, not landmines. But they're also proof that the paperwork keeps evolving, and the version you sign should match the version that's actually in effect.

If you're weighing a purchase or sale in Uptown, Oak Lawn, East Dallas, or North Oak Cliff and want someone to walk you through exactly how the new contract language applies to your specific deal, that's a conversation worth having before you write or accept an offer, not after.

Frequently Asked Questions

Do I have to use the new TREC contract if I'm already under an old one?

No. Contracts signed before July 1, 2026 under the previous forms remain valid as written. The new forms apply to contracts entered into on or after the mandatory use date. If you're mid-transaction, your existing paperwork stands.

Who pays my agent's commission in Texas now?

It depends on what gets negotiated and written into Paragraph 12B of your contract. Sellers can still offer to contribute toward a buyer's agent compensation, and many do to keep their buyer pool wide, but it's no longer an automatic assumption. If a seller offers nothing, the buyer is responsible for their own agent's fee as spelled out in their representation agreement.

What is Paragraph 12B in a Texas real estate contract?

Paragraph 12B is the section of the current TREC contract forms, mandatory as of July 1, 2026, that addresses broker compensation specifically. It's split from Paragraph 12A, which now covers only non-commission expenses, and it includes options for both the seller (12B(1)) and the buyer (12B(2)) to offer compensation toward the other side's broker.

Is the FinCEN reporting language in my contract actually enforceable right now?

Not currently. A federal court order from March 2026 vacated the Residential Real Estate Rule that the contract language references, and that order remains in place while the government appeals. Your contract may still include the reference language, but you're not required to file the reports it describes unless and until that changes. Confirm the current status with your title company at the time you're under contract.

What's the new back-up contract form for?

It's a notice, the Seller's Notice to Buyer of Removal of Contingency Under Addendum for "Back-Up" Contract, that documents the exact date a back-up contract becomes the primary contract after the original deal falls through. That date sets the clock on the back-up buyer's own option period and other contract deadlines.

If you want to know exactly how these changes apply to a specific purchase or sale you're considering in Dallas's urban core, I'd be happy to walk through it with you. No pressure, no obligation, just a clear read on what you're signing. Reach out at mattwatson.com and we'll go through it together.

About Matt Watson, Broker, REALTOR®
Matt Watson is a Dallas-based real estate broker and REALTOR® with over 25 years of experience in the city's urban core neighborhoods. He specializes in condos, townhomes, and single-family homes in Uptown, Oak Lawn, East Dallas, and North Oak Cliff. Whether you're buying your first condo or selling a longtime home, Matt brings deep local knowledge and straightforward guidance to every transaction. Connect with Matt at mattwatson.com.