On August 17, 2024, the real estate industry underwent a seismic shift with the implementation of the National Association of Realtors (NAR) settlement. This was in response to lawsuits claiming that traditional commission structures inflated costs for home sellers.
The settlement eliminated the practice of listing buyer-agent real estate commissions on Multiple Listing Services (MLS). They now mandate written buyer agreements, sparking widespread speculation about the future of real estate commissions.
Many predicted a dramatic decline, with some even forecasting a “buy-side price war” that would slash fees by as much as 30%. Yet, more than six months later, as of February 27, 2025, real estate commissions are proving resilient. Here’s why – and a look at where they might be headed over the next five years.
The Initial Shock and Adaptation
The NAR settlement altered how buyers and sellers negotiate real estate commissions. Previously, sellers paid a total commission of about 5-6%. This was split between their agent and the buyer’s agent, with the buyer-agent share advertised on the MLS.
Post-settlement, buyer-agent compensation must be negotiated between buyers and their agents or hashed out off-MLS with sellers. Critics argued this would dismantle the traditional model, forcing buyer agents to lower fees to stay competitive and shifting costs to buyers who might balk at paying out of pocket.
However, early data suggests the industry is adapting rather than collapsed.
Redfin, a national brokerage, reported that as of early 2025, “overall buyer-agent commissions have barely budged” since the August 17 rules took effect. They’ve dipped a tad since the settlement announcement in March 2024.
This stability stems from a combination of seller incentives and agent ingenuity. Many sellers, keen to attract buyers in a competitive market, continue offering to cover buyer-agent fees, even if it’s no longer mandated. Meanwhile, agents are leveraging their value – expert negotiation, market knowledge, and transaction management – to justify their rates.
Why Real Estate Commissions Are Holding Steady
One key factor is the persistent complexity of real estate transactions. Despite the rise of for-sale-by-owner (FSBO) options—NAR data shows 6% of homes were sold without agents between July 2023 and June 2024. Most consumers still rely on professionals.
Selling or buying a home involves legal, financial, and logistical hurdles that agents navigate. That’s their service and commands a premium even in a shifting landscape. Additionally, in high-demand markets like Los Angeles, sellers see value in offering buyer-agent compensation to broaden their pool of potential buyers.
Another resilience driver is negotiation flexibility. While real estate commissions were always negotiable, the settlement heightened awareness of this fact. Low-commission agents (charging 1-1.5%) are gaining traction, but traditional agents are holding ground by offering tiered services or emphasizing their full-service expertise. This adaptability suggests real estate commissions won’t plummet as drastically as some feared.
I’ve written over a half-dozen essays about the NAR Settlement that took place in 2024. This, this, and this will get you caught up.
The Next Five Years: A Data-Driven Outlook
Predicting commission trends through 2030 involves analyzing current data and market dynamics. Pre-settlement, real estate commissions hovered around 5%, with each agent taking 2.5%.
Redfin’s early 2025 analysis indicates a slight decline to about 4.8% total, a modest adjustment rather than a freefall. Experts like Stephen Brobeck from the Consumer Federation of America, anticipate a gradual drop as competition intensifies, projecting an average of near 4.5% by 2027. Over the next five years, this trend could continue, stabilizing around 4% by 2030, assuming no major regulatory shifts.
This forecast aligns with historical declines – real estate commissions fell from 6% decades ago to under 5% before the settlement – balanced by rising home prices that keep agent earnings viable.
If median home prices climb from $420,800 in 2024 to, say, $500,000 by 2030 (a conservative 3% annual increase), a 4% commission would still yield $20,000 per transaction, split between agents. Discount models may push the lower end to 2-3%, but full-service real estate commissions are likely to remain above 4% in premium markets.
Conclusion
The NAR settlement hasn’t triggered the commission apocalypse many predicted. Instead, it’s revealed the real estate industry’s resilience, driven by consumer demand for expertise and strategic adaptations by agents and sellers. Over the next five years, expect a gradual decline to 3.5-4%, not a collapse, as the market finds a new equilibrium. For now, real estate commissions are bending, not breaking—proof that even in upheaval, value endures.
