Section 2:The Compensation Story

Despite all the many policy changes, the National Association of REALTORS® (NAR) continues to back the option of so-called “cooperative compensation,” where the listing agent offers part of their commission to a buyer agent who brings a buyer and successfully closes the transaction. 

At an even higher level, industry incumbents argue that homesellers have a strong motivation to pay buyer agents (directly or through their own agent), because attracting qualified buyers is the best way to get a good sale price and push through a complex, fraught sale process.

Outside the industry, though, there are many critics who argue that sellers should not be paying buyer agents at all—or at least that the practice is far too common. But with compensation removed from the MLS, and consumers increasingly aware that they don’t have to pay the agent on the other side of the deal, what is going to happen to the practice?

According to the data, cooperative compensation is becoming far less common—across region, brokerage model, experience level and age.

That overall drop of 14% is concerning, but it is also important to note that it is still very early in the process, and both consumers and real estate professionals are adjusting to new rules and practices. At the same time, a deeper look at the data provides some more potentially illuminating indications of what is happening to the industry.

The fact that experience appears to be the single largest factor in whether a transaction includes cooperative compensation is extremely telling. One interpretation is that less savvy agents are simply unable to negotiate their way to have a seller make that offer, potentially to their detriment—and the detriment of the buyer, who has to pay them out of pocket. Another interpretation is that newer agents are less resistant to shifting from the traditional compensation structure, and are simply accepting that they will be compensated by their own client.

Is the decrease in cooperative compensation contributing to the drop in commission rates? The data isn’t clear on that, as there are many, many disparate factors at play, but with buyers already facing major affordability concerns, it is reasonable to assume that they are negotiating real estate fees downward when the money is coming directly out of their pockets. 

The other significant change created by the settlement was mandatory buyer agreements. While NAR reported that 18 states already required some sort of written contract between buyers and their clients, all 1.4 million NAR members are required to sign an agreement before viewing a home with a buyer client as of August 17.

But the change did not appear to immediately create a huge shift. Only 57% of agents and brokers said they signed a buyer agreement with every client post-settlement, up from 47% in the previous year. The number of real estate professionals who said they didn’t sign a buyer contract with any client did not change at all after the settlement—at just under a quarter (23%).

This does not necessarily mean that agents and brokers are ignoring the new rule—though some almost certainly are, based on this result. Many real estate practitioners are not members of NAR, and are not bound by the new rules at all. MLSs have also made it clear that they are giving members time to adjust before levying fines and penalties for settlement violations. 

While the survey did not differentiate between NAR and non-NAR members, and the exact number of practicing real estate agents who are not NAR members is unclear, enforcing the buyer agreement requirement is likely going to be a challenge going forward.

One other postulation in the wake of the settlement would be that many agents and brokers would be working for a flat fee or providing some limited services, with buyers likely pressed to provide compensation for their agent out of their own pockets. That seemingly did not come to pass, at least in the first several weeks post-settlement, as the number of agents and brokers utilizing that business model actually shrank after August 17.

But that isn’t the whole story. Looking at the data for inexperienced agents and brokers (those with less than three years in the industry) showed that flat-fee services may be on the uptick—though not necessarily due to the settlement.

In 2023-24, 39% of inexperienced real estate professionals agreed to work for a flat fee or provide limited services in at least one transaction. That number did not change much post-settlement, shrinking slightly to 34%. By contrast, only 8% of agents with 10 or more years experience worked on that basis, both pre- and post-settlement.

Another notable blip: hybrid/self-employed agents were somewhat less likely to work for a flat fee or provide limited services after the settlement, with 19% getting half or more of their business from those sorts of arrangements pre-August 17, compared to 14% afterward.

Again, the reasons for these trends are unclear. But one notable, and potentially surprising revelation is that if there was any sort of movement toward flat fees or limited services, it was not tied directly to the settlement changes. And at a higher level, it appears that at least for now, the prediction that a significant number of agents would start offering flat-fee services due to the settlement was overstated.

Critics of the industry also used data showing that commissions cluster around certain rates as evidence of alleged price-fixing. Since the Burnett trial and the settlement changes, that clustering appears to be weakening.

In 2022-23, 70% of agents and brokers reported an average commission rate of exactly 5% or 6%. In 2023-24, that was down to 59%, and post-August 17, it fell to 52%.

This survey was conducted by a national market research firm on behalf of RISMedia. Invitations were sent to respondents by RISMedia from a database of more than 130,000 real estate professionals and data was collected from a sample of 1,331 individuals between September 17 and October 7, 2024. Broker/owners and other real estate professionals who do not work on a commission structure were terminated from the survey.