What the Real Estate Commission Changes Mean for Homebuyers and Sellers
The National Association of Realtors (NAR) agreed to new rules around real estate agent commissions as part of a landmark lawsuit settlement in March 2024. The new rules rolled out in August — along with a deluge of confusion and conflicting predictions.
One narrative predicts a utopia for homebuyers: A price war will erupt, and commissions will plunge amid a new wave of competition among buyers’ agents. A competing narrative goes in the opposite direction: Under the new commission structure, buyers will realize they’re on the hook for thousands and decide not to use agents at all. NAR, meanwhile, has portrayed the changes as minor tweaks rather than a major shift.
The opposing narratives underscore just how complex Realtor compensation has always been — and how much more complex it has now gotten.
But as of early 2025, the effects look muted. “Overall buyer-agent commissions have barely budged since new real estate commission rules went into effect on Aug. 17, though they have come down a bit since the rules were announced nearly a year ago,” national brokerage Redfin reports.
The average buyer’s agent commission was 2.37 percent for homes sold in the fourth quarter, per Redfin’s data. That was up ever so slightly from 2.36 percent in the third quarter, but down from 2.45 percent a year earlier, before the new rules were unveiled.
Here’s a look at the new commission structure, what changed and what it could mean for both homebuyers and sellers.
How Real Estate Commissions Used to Work
Traditionally, when a home seller hired a real estate agent to represent their listing, the seller agreed to pay a commission. The national average was about 5 percent of the home’s sale price, typically split down the middle with about 2.5 percent going to the listing agent and the other 2.5 percent to the buyer’s agent. (On a $400,000 home, 5 percent comes to $20,000, or $10,000 for each agent.)
Who paid this fee was a bit murky. Agent fees came out of the seller’s proceeds at closing, so technically, the seller paid. But it’s reasonable to assume that the seller adjusted their price accordingly — the fees were often baked into the home’s sale price. And so the buyer ultimately paid, just not directly to the agents: That extra 5 percent was rolled into the home’s sale price.