Commissions rebound following post-settlement decline
Two recent studies found that real estate agent commission rates fell after industry practice changes took effect, but they have largely recovered.
Key points:
- An analysis of more than 224,000 transactions found that five months after the rule-change deadline, both buyer and seller agent commissions are about the same as they were a year ago.
- A separate report looked only at buy-side commissions and found small declines overall, but more variance at different price points.
- While many agents are worried about future commission trends, around half say rates haven’t changed much so far.
In the immediate aftermath of the NAR settlement, some industry professionals feared that commission rates could plummet. Data from two recent studies, however, suggests that commissions are now roughly the same as they were before new industry practices took effect.
Commissions back to 2023 levels
Following the August rule changes, commissions for both buyer and seller agents fell, but they have since rebounded, according to an AccountTECH study that analyzed more than 224,000 transactions from 1,290 real estate offices.
As of January 17 — five months after the new rules kicked in — buyer agent commissions averaged 2.55%, AccountTECH found. That's identical to the average commission rate a year ago.
Listing agent commissions averaged 2.73% in mid-January, up slightly from 2.72% a year ago and an improvement over the post-settlement low of 2.69% in November.
"This consistent upward trend over the past months suggests a modest recovery or stabilization in seller commissions, countering initial fears of significant rate declines," the report stated.
Market forces, such as inventory levels and mortgage rates, are likely to have the biggest effect on commissions going forward, the report concluded.
Some declines, but little change for mid-tier listings
A Redfin report released this week, which used a different data set, found that commissions had dropped year-over-year but were relatively stable in the second half of 2024. When looking at commissions based on a home's price point, however, the data revealed some interesting trends.
Overall buyer agent commissions averaged 2.37% during the fourth quarter, Redfin found — essentially unchanged from the third quarter, but down from a year ago, when the average rate was 2.45%.
Commissions on homes under $500,000, however, rose in the fourth quarter to 2.46%, though they were still down from 2.5% a year ago.
But for homes in the $1 million-plus range, buyer agents earned 2.17%, down from 2.22% in the third quarter and 2.33% a year ago. While buy-side commission percentages are typically lower on high-end homes, the downward trend appears to support predictions from Redfin economists, who said in December that commissions for luxury homes were expected to fall in 2025.
Commission averages were derived from "a sample of thousands of transactions per quarter," the report noted, including buy-side commissions on sales of Redfin listings and deals referred by Redfin. The discount brokerage did not include its own buy-side transactions given the firm's lower commission rates.
What are agents seeing?
The Redfin report also included data from a recent agent survey. Nearly half (48%) of the 500 agents polled said commissions had stayed about the same post-settlement, although 43% reported some declines. A slight majority (54%) also said more buyers and sellers have been negotiating commissions since the new rules took effect.
A December survey by Real reported similar findings, with most buyer agents (55%) and listing agents (64%) saying commissions hadn't changed much from 2023.
That doesn't mean they aren't worried, however. Three-quarters of the agents in Redfin's survey said declining commissions are a concern when thinking about the future of their business, and just over half expect commissions to fall in the next year.
David Palmer, a Redfin Premier agent in the Seattle area, has noticed some movement in commissions, but he hasn't found the practice changes to be a big issue — "if anything, it has added more transparency to the market," Palmer told Real Estate News.
And having the business conversation earlier in the process makes a difference. "That's how I work, so I love it."
It's too early to know how much sales will pick up this spring — or how commission rates will trend throughout the year — but for now, Palmer said he's busier compared to a year ago. The market is still competitive, so there may be more commission negotiations, but his plan is to stay consistent and continue to talk about what will get the deal done for buyers and sellers.
"This is the new world we're in," Palmer said.