A landmark settlement intended to lower real estate agent commissions has, in practice, failed to significantly alter the long-standing fee structure. Despite rule changes designed to encourage separate negotiations between buyers and agents, sellers continue to pay the majority of commissions, with fees remaining largely unchanged since the settlement’s implementation.
Key Takeaways
- A recent settlement aimed at reducing real estate agent commissions has not resulted in lower fees for sellers.
- New rules require buyers to sign agreements with their agents, but sellers often still cover these costs to secure offers.
- Industry conventions and market pressures contribute to the persistence of standard commission rates.
The Settlement’s Unfulfilled Promise
Last year, Eric Itakura, a condo owner in Mountain View, California, hoped to save on commissions when listing his property. The National Association of Realtors (NAR) had recently agreed to a settlement that rewrote rules regarding agent fees. Previously, sellers typically paid between 5% and 6% of the sale price, split between their agent and the buyer’s agent. The expectation was that the new rules, which mandated buyers and their agents to negotiate fees separately, would lead to a reduction.
However, Itakura’s experience mirrored that of many sellers nationwide. Both offers he received included requests for him to cover the buyer’s agent fee, with one asking for 2.5% and the other 3%. Despite knowing he could refuse, Itakura felt compelled to agree, citing the established convention and the risk of losing potential buyers. "The more you try to buck against that standard, the more potential problems you create for yourself," he stated.
The Persistence of Standard Fees
Data from Redfin indicates that the average buyer’s agent commission in the second quarter of 2025 was 2.43%, virtually unchanged from the previous year. For a median-priced Bay Area home of $1.3 million, this translates to approximately $31,600 for the buyer’s agent.
Historically, buyers were often unaware of their agent’s commission, as it was typically paid by the seller. This practice was reinforced by an NAR rule requiring sellers to disclose commission splits for listings on NAR-affiliated multiple listing services (MLS).
The lawsuit that led to the settlement, filed in Missouri in 2019, argued that this practice artificially inflated fees. The settlement required buyers to sign a representation agreement outlining their agent’s fee and stipulating that the buyer would pay if the seller declined. This contract, especially in a slower housing market, has inadvertently pressured sellers to continue paying buyer agent commissions. If sellers refuse, buyers might be unable to afford the agent’s fee out-of-pocket.
Industry Dynamics and Seller Pressure
Stephen Brobeck, a senior fellow at the Consumer Policy Center, noted that these contracts place "great pressure" on sellers to accept standard rates of 2.5% or 3.0%. The U.S. Department of Justice has also expressed concerns, warning that the new requirement could harm buyers and limit broker competition.
The NAR, however, maintains that these written agreements enhance transparency and allow for fee negotiation. In California, a bill passed in 2024 mandates these buyer agreements, with the California Association of Realtors (CAR) stating that sellers are free to decide on compensation contributions.
Real estate agents emphasize that while fees are negotiable, many are reluctant to lower them. Agents like Ricky Flores of Sotheby’s in Menlo Park believe their value justifies a standard 2.5% commission. Some agents report pressure from their brokerages to maintain these rates, as brokerages typically take a significant percentage of the commission. Major brokerages like Coldwell Banker, Sotheby’s, and Christie’s have declined to comment on fee enforcement, while Compass stated that commissions are negotiable.
Conclusion
While the settlement aimed to disrupt the traditional commission structure, the reality on the ground shows little change. The convention of sellers paying buyer agent fees, coupled with market pressures and contractual obligations, has largely preserved the status quo. For sellers like Itakura, the priority often remains closing the sale, making the negotiation over commissions a secondary concern compared to offer price and other terms.