**Sources (with links) used for this article are compiled at the bottom. These sources would also be good for further reading/research into the topic.
If you’ve been wondering where real estate commissions might be headed, you’re not alone. A lot has been happening around commissions lately (new industry rules to high-profile lawsuits), and many agents are curious (and maybe a bit concerned) about what’s next. Well, the Federal Reserve recently released a research note titled “Commissions and Omissions: Trends in Real Estate Broker Compensation” (May 2025) that digs into nearly 30 years of commission data. The findings might surprise you, but they also offer some reassurance. Let’s break down what the Fed researchers found, how it compares with other insights on commission trends, and what it all means for you as an agent.
A Surprisingly Stable Commission Trend
One big takeaway from the Fed’s analysis is that commission rates have been surprisingly stable over the past couple of decades. Yes, there’s been a modest decline... The average buyer’s agent commission was around 3% in the late 1990s and is roughly 2.7% today, but that’s a pretty small dip over 20+ years.
In other words, the classic “6% total commission” (split 50/50 between listing and buyer agents) is still very much alive in practice. The data shows that in 2002, most commissions clustered right at 3%. Twenty years later, in 2022, there’s a bit more variation (more deals at 2.5% or even 2%), but the most common rate offered to buyer agents is still 3%. Despite all the changes in technology and consumer behavior, commissions haven’t collapsed. They’ve budged just a little.
Steering
Why are commissions so steady? The Fed note points to a few reasons. One is the issue of steering and how hard it is to break from industry norms. Properties listed with below-market commissions (say, offering a buyer agent only 1% or 2%) often struggle. They tend to sit on the market longer and are less likely to sell.
Buyers’ agents, consciously or not, may steer clients toward homes that offer a typical commission. Similarly, brokerages that try to significantly undercut commissions often find that outside agents (especially from big firms) are reluctant to show their listings.
In short, going too low on commission can put a listing at a disadvantage, reinforcing the norm. This dynamic helps explain why even in 2025 we haven’t seen a race to the bottom on commissions.
Rising Home Prices
Another reason is rising home prices. National median home prices have almost doubled since the 1990s. Because of this, many agents have been willing to accept a slightly lower percentage rate. The pie got bigger, so a thinner slice can still fill you up.
The Fed researchers actually found that when you adjust for the surge in home prices, the downward trend in commission percentage almost disappears. In fact, they estimate that over half of that tiny dip from ~3% to ~2.7% could simply be because home prices rose so much.
Higher sale prices offset lower rates. A 2.5% commission on a $500,000 home pays more dollars than a 3% commission on a $300,000 home. From an agent’s perspective, you might have felt this intuitively... You can afford a bit off the rate if the deal size is larger. The data confirms that’s been happening organically.
Buyer’s Agent vs. Seller’s Agent: Who Gets What?
In U.S. residential real estate, it’s long been standard that the seller covers the total commission, which is then split between the listing agent and the buyer’s agent. Despite some new practices and debates, that’s still how most deals play out.
The Fed study specifically analyzed the commission offered to buyer agents (since MLS listings usually specify the buyer agent’s cut). On average, that buyer-side commission hovers in the high-2% range nationally. Importantly, the researchers assume (and industry practice generally confirms) that the listing agent’s commission tends to mirror the buyer agent’s. So if 2.7% is average on the buy side today, it’s likely around 2.7% on the listing side too, meaning roughly a 5.4% total commission on a typical sale (down just a tad from the old 6% standard).
Minor Changes
The key point is that both buyer agents and listing agents have seen only minor changes in their percentage fees over time. The split itself (often 50/50) hasn’t fundamentally changed. What has changed a bit is that there’s more variability in the buyer agent commission than before. While 3% remains very common, you now see more offers at, say, 2.5% or 2%. This can depend on the market, price point, or the listing brokerage’s strategy.
For instance, some discount brokers or limited-service listings might offer lower co-op commissions, whereas luxury listings might still stick closer to traditional rates but count on price to attract cooperating agents.
Overall, though, there’s no evidence of a sweeping shift in how buyer vs. seller agents are paid. It’s still typically a paired arrangement, with the seller’s side writing the check that gets divided between the two brokers at closing.
Consumers Still Confused...
One interesting insight... many consumers still don’t fully understand how commissions work or that commissions are negotiable. Recent surveys have found that a large share of buyers and sellers weren’t aware of how much their agent was earning, and a significant number didn’t realize they could negotiate the fee.
As an agent, this is a reminder that clarity and education are key. When you discuss your buyer representation agreement or listing agreement, clarifying your commission and how it’s split can build trust. It also opens the door to explain the value you provide for that fee, which is important if clients start hearing that commissions are under scrutiny.
How the U.S. Stacks Up Globally
It’s also helpful (and humbling) to see U.S. commission practices in a global context. By international standards, American real estate agents are very well compensated on a percentage basis. In many other developed countries, total commission rates are dramatically lower than the 5–6% we often see here.
For example, in the United Kingdom, it’s common for the listing agent (or “estate agent”) to charge the seller around 1–1.5% of the sale price, and that’s it (there’s typically no separate buyer’s agent in the UK model).
Similarly, in countries like Australia, Ireland, or the Netherlands, total commissions tend to fall in the 2–3% range. In places such as Sweden or Norway, sellers usually pay well under 2% total. Often, the structure abroad is different... The listing agent might handle the whole transaction, or if there is a buyer’s agent, the buyer might pay them directly rather than through a split of a seller-paid commission.
High-Percentage Commission Model
The Fed’s report highlights this anomaly. The U.S. stands out for sticking with a high-percentage commission model even as technology and consumer behavior have evolved. In fact, the way we bundle services (with the seller paying both sides) can obscure the true cost of buyer agency from the client who benefits from it.
In other countries, because buyers sometimes hire and pay their own agents out-of-pocket, there’s naturally more pressure to keep fees down, or buyers forego an agent entirely if they feel it’s not worth the extra cost. Here, since the buyer agent’s fee is baked into the seller’s costs (and by extension the buyer’s purchase price), consumers have historically been less sensitive to it.
That’s starting to change, though, with more media coverage on commissions and some high-profile lawsuits alleging our system keeps fees artificially high.
Double-Edged Sword
For you as an agent, this international perspective is a double-edged sword. On one hand, it’s a reminder that our commission rates could face downward pressure in the long run. What’s “normal” in the U.S. might not be forever, especially if regulators or new business models have their say.
On the other hand, it highlights that agents elsewhere have found ways to thrive with different models, whether that’s lower percentages or buyers paying their agents directly.
It important to clearly demonstrate your value. If a future market or policy shift had American buyers paying agent fees directly (just as a hypothetical), could you convince a client that your service is worth, say, 2.5% of the purchase price in cash? It’s an interesting thought exercise that many brokers are now considering.
Why Haven’t Commissions Dropped More?
Given the internet, zillions of listing sites, and savvier consumers, you might think commissions would have dropped like a rock in recent years. So why have they only edged down slightly? The Fed researchers and other experts point to a few key factors.
Steering and Uniformity
As mentioned earlier, there’s a strong incentive for sellers to offer a “standard” commission to buyer’s agents, typically around that 2.5–3% mark, because offering much less could deter agents from showing the property. Empirical studies have backed up that steering happens when commissions are outside the norm.
This naturally creates a floor under commissions. Even if, in theory, a home could be sold by offering a buyer’s agent just 1%, many sellers fear (perhaps rightly) that their home would get less exposure.
So then, tradition self-perpetuates. Agents, of course, don’t have any formal agreement to all charge the same, but market dynamics reward staying within the pack.
Rising Home Values
We touched on this, but it’s worth emphasizing. Home prices doubled (or more) since the ’90s, and incomes for agents rose with those prices, even if the percentage stayed flat or dipped a bit. That’s a strong disincentive for agents to rock the boat on rates.
Rather than cut your commission rate in half (and your income), you could accept a tiny trim while still earning more in absolute dollars on each sale than you did in years past. For many agents, especially top producers, the past decade’s housing boom was a rising tide that lifted all ships, without needing to fundamentally alter commission structures.
Technology (No Big Impact So Far)
Yes, buyers today can search listings on their phones and often find homes themselves. By the time they call you, they may have a Redfin or Zillow list of favorites. In theory, this should reduce the “work” an agent has to do to find the right home, possibly warranting a lower fee. However, technology hasn’t eliminated the buyer agent’s role. Rather, it’s changed it.
Agents have shifted to adding value in other ways... Expert guidance on pricing, negotiations, inspections, navigating the transaction, etc., plus acting as an advisor in a complex purchase. From that perspective, clients still see a lot of value in having an agent, even if online search is now a big part of the process.
The Fed note observes that despite the internet revolutionizing information access, commission percentages “barely budged” during the same period that, say, travel agents or stockbrokers saw their fees compress. Real estate might just be a tougher nut to crack. Each transaction is unique and high-stakes, so people are willing to pay for personal service.
Policies Didn’t Move the Needle
A fascinating element of the Fed study is that it examined states that adopted buyer agency disclosure or agreement requirements, as well as states that banned rebates to buyers. The idea was to see if forcing buyer agents and clients into formal agreements (or conversely, restricting certain competitive tactics like rebates) affected commission levels. The result? No significant impact on commission rates was found from these policies.
Fifteen states had long since required buyers to sign an agent agreement; their commission trends looked no different than states that didn’t require it. Likewise, banning commission rebates to buyers (which a few states still do) didn’t notably raise or lower the going rates.
In short, the market power of entrenched norms overshadowed these policy tweaks. For agents, this might suggest that simply having buyers sign an agreement (now a nationwide NAR rule as of 2024) won’t automatically lead to lower fees. And indeed, it could even reinforce professional value by formalizing the relationship. It also suggests that if commissions are to change substantially, it would take more than just procedural rules. It likely requires deeper shifts in either market competition or consumer behavior.
Looking Ahead
So, what does all this mean for the future of your business? The Fed’s note stops short of making bold predictions, but it does hint that bigger changes could be on the horizon, though there’s a lot of uncertainty. Here are a few forward-looking points and practical takeaways for agents.
The NAR Settlement and New Rules
You probably recall that in 2024, the National Association of REALTORS® agreed to some major rule changes as part of an antitrust settlement. Among other things, these changes included banning the display of buyer-agent commission offers in public MLS listings and requiring all REALTORS® to implement buyer agency agreements. The idea was to increase consumer clarity and encourage competition (buyers might negotiate if they see the commission, etc.). Now, about a year later, what’s happened?
According to early data (including a recent Redfin report), buyer-side commissions have not fallen off a cliff. They’re roughly the same as before the rules took effect. In fact, the average buyer’s agent commission in the first quarter of 2025 was about 2.4%, which is virtually unchanged from mid-2024.
This lines up with the Fed study’s finding that just requiring agreements didn’t change much in the past. It appears that simply hiding the co-op offer from public view hasn’t suddenly empowered buyers to demand less or caused listing brokers to cut rates en masse.
Agent Adaptation
One reason the settlement’s impact seems muted so far is that the industry finds ways to adapt. For instance, even though commission offers aren’t displayed on consumer-facing sites now, agents can still share that info amongst themselves or directly with their clients. The Fed note keenly observed that listing agents have found ways to inform buyer agents about commissions “outside of the MLS.”
Additionally, NAR’s relaxation of the Clear Cooperation Policy (allowing more flexibility for “coming soon” or delayed listings) means some deals might bypass the traditional MLS process altogether. These adaptations make it harder to predict long-term effects.
It’s a bit of a cat-and-mouse game... Rules change, the market adjusts. For you, this highlights the importance of staying plugged in to policy shifts and how your local MLS is implementing them. Small changes in rules might mean tweaks in how you market listings or communicate commissions, but as of now the fundamental practice remains.
Could Commissions Unbundle?
There’s increasing chatter about a world in which buyers pay their agents directly rather than via seller proceeds. This could emerge if sellers (especially in a hot market) start saying, “I’m only offering $1 or a 0% commission to any buyer’s agent... Take it or leave it.” In such a scenario, buyer’s agents would need to have compensation agreements to get paid by their clients.
Redfin’s CEO and others have noted that in a strong seller’s market (like we saw in 2021-2022 with bidding wars), some sellers may feel they don’t need to incentivize buyer agents much. The home will sell regardless. If that becomes common, buyers will have to negotiate fees with their agents up front, potentially out of pocket.
We’re not broadly there yet. And importantly, in today’s market, many sellers are still offering standard commissions because they want maximum buyer traffic.
But agents should prepare for the possibility. This means clearly articulating your value to buyers (so they’d be willing to hire you and pay you even if the cost isn’t baked into the home price) and possibly exploring buyer broker fee agreements that outline what happens if the seller doesn’t cover your full commission.
The encouraging news from the Redfin data is that even post-settlement, most sellers are still covering buyer agent commissions. First-time buyers especially would struggle to pay an agent out-of-pocket on top of down payments and closing costs, so the traditional model persists for both practical and competitive reasons.
Continued Legal and Competitive Pressure
Keep an eye on the courts and the innovators. There are ongoing class-action lawsuits and DOJ actions aiming to reshape how commissions are done. At the same time, new brokerage models (from low-fee listing services to tech-driven matching platforms) continue to promise commission savings. While the timeline for any dramatic shift is uncertain (and many past predictions of the commission’s demise have fizzled), it’s wise to stay informed and be adaptable.
If you demonstrate and communicate your value, whether through market expertise, negotiation skills, or concierge-level service, you put yourself in the best position to justify your commission come what may. The fact that commissions have been relatively stable is a testament to the value agents continue to provide in a complex transaction. But as consumer expectations evolve, doubling down on service quality is the best insurance policy.
The Bottom Line for Agents
Despite all the buzz, the latest research indicates commissions aren’t undergoing radical changes, at least not yet. They’ve slipped a little over decades, but remain near historical norms. The U.S. market still heavily relies on the cooperative commission system, unlike many other countries. And early evidence post-rule changes suggests more of a steady evolution than a revolution.
For real estate agents, that means you likely don’t need to overhaul your business model tomorrow. However, you should prepare for gradual shifts and be ready to pivot if needed. Keep delivering top-notch service (that will never go out of style), stay educated on industry developments, and be prepared to justify your paycheck through clear value to your clients.
Change in real estate tends to come slowly… until it comes suddenly. Staying informed through continuing education (kudos to you for reading this far!) and keeping the conversation open with your clients about commissions means you’ll be positioned to succeed no matter how the compensation landscape evolves.
For now, take a bit of comfort that the “commission crunch” some have predicted is not showing up in the data in any big way. But don’t get complacent. Use this time to sharpen your value proposition. The best defense against commission pressure is a long line of happy clients who believe you’re worth every penny (whether those pennies come from the seller’s side or the buyer’s side of the table).
Sources
- Federal Reserve Board FEDS Note (May 12, 2025), “Commissions and Omissions: Trends in Real Estate Broker Compensation” by Rupkatha Banerjee & Andrew Paciorek.
- Andrea V. Brambila, Inman News (May 16, 2025), “Fed: Requiring buyer agreements has no effect on commissions.”
- Dave Gallagher, Real Estate News (May 16, 2025), “Buyer agreements don’t lead to lower commissions, Fed finds.”
- Lily Katz, Redfin News (May 16, 2025), “Real Estate Agent Commissions Haven’t Changed Much Since the NAR Settlement Took Effect.”
- Borys Grochulski & Zhu Wang, Richmond Fed Economic Brief (March 2024), “Real Estate Commissions and Home Search Efficiency.”