In August 2024, the National Association of Realtors (NAR) finalized a landmark $418 million settlement, prompting widespread expectations of lower real estate commissions due to increased competition and transparency. However, recent data reveals a surprising trend: instead of declining, commissions have slightly increased. This development challenges initial predictions and raises questions about the settlement’s impact on the real estate market. Here’s a closer look at the numbers and what they mean for buyers and sellers.
The Unexpected Rise in Commissions
The NAR settlement introduced significant changes, including prohibiting offers of compensation on Multiple Listing Services (MLS) and requiring written buyer agreements to clarify agent fees upfront. These reforms were expected to drive down commissions by fostering negotiation and transparency. However, the data tells a different story: commissions have not only held steady but have edged upward.
Key Points
- Negotiation Challenges: Consumer advocates note that while commissions are now more negotiable, many buyers and sellers lack the experience to effectively negotiate lower rates, allowing higher commissions to persist.
- Business as Usual: Industry experts argue that the settlement hasn’t fundamentally disrupted the commission structure, with agents quickly adapting to new negotiation practices, resulting in minimal change to traditional models.
- Initial Dip, Then Recovery: Early post-settlement data showed a brief decline in commissions, particularly for buyers’ agents, but this trend reversed within months, suggesting agents have adjusted to the new rules.
Seller’s Agent Commissions
A February 2025 analysis highlights a slight uptick in seller commission rates. For the period ending January 17, 2025, the average seller commission rate was 2.73%, compared to 2.72% the previous year—a modest 0.01% increase. Commissions initially dipped to a low of 2.69% around 90 days post-settlement but have since trended upward, indicating stabilization or slight growth. This suggests that sellers are still willing to pay competitive commissions to attract buyers in a market where inventory remains high. Source: PR Newswire
Buyer’s Agent Commissions
Buyer’s agent commissions have also seen a slight increase. According to Redfin, the average buyer’s agent commission in Q2 2025 was 2.43%, up from 2.36% when the settlement took effect in August 2024 and 2.38% in Q2 2024. This marks the third consecutive quarter of rising commissions post-settlement. Similarly, RealTrends Consulting reported a rise in average commissions from 2.65% in September 2024 to 2.71% by early August 2025, reinforcing the upward trend. Source: HousingWire
Why Are Commissions Rising?
Several factors may explain this unexpected increase:
- Market Dynamics: With a buyer-favored market and elevated housing inventory, sellers are motivated to cover buyer’s agent commissions to make their homes more attractive, maintaining or even increasing commission rates.
- Agent Adaptation: Agents have adapted to the new rules by negotiating commissions off-MLS, preserving traditional compensation structures despite the settlement’s intent.
- Consumer Inexperience: Many consumers are unaware of their leverage to negotiate lower fees, allowing agents to maintain higher commissions.
What This Means for You
For sellers, the slight rise in commissions may feel like a setback, but the market’s competitive nature means offering to cover buyer’s agent fees can attract more offers. Negotiating with your agent upfront and exploring flat-fee or low-commission brokers could help mitigate costs.
For buyers, the increase in agent commissions—now often their responsibility—adds to the financial burden of purchasing a home. However, the new rules empower buyers to negotiate directly with their agents, potentially securing lower rates by shopping around or opting for alternative models like 1% flat fee brokers.
Looking Ahead
The NAR settlement was heralded as a game-changer, but the data suggests the real estate industry is more resilient to change than anticipated. While commissions have risen slightly, the increased transparency and negotiability offer opportunities for savvy consumers to save. As the market evolves, staying informed and proactive in negotiations will be key to navigating this shifting landscape.
Whether you’re buying or selling, consider discussing commission rates early and exploring all options, including fair fee brokers, to ensure you’re getting the best value for your money.