March 2025
The Impact of the 2024 NAR Settlement:
Why Real Estate Commissions Should Be Closer to 1%
The real estate industry is undergoing a significant transformation in the wake of the 2024 National Association of Realtors (NAR) settlement, which has reshaped the traditional commission structure that has long dominated the housing market. Historically, sellers have been expected to pay commissions of around 5% to 6%, with 2.5% to 3% going to both the listing and buyer's agents. However, the settlement has opened the door for a more competitive and transparent market, making a compelling case for reducing commissions to around 1% for both buyer and seller agents.
A Shift Toward Competitive Pricing
One of the most significant outcomes of the 2024 NAR settlement is the decoupling of commission structures, allowing homebuyers to negotiate their agent's fee separately rather than having sellers automatically cover the cost. This change fosters a more competitive market where agents must justify their fees based on the value they provide, rather than relying on industry norms that often lacked transparency.
As a result, sellers are no longer burdened with paying inflated commission fees that were previously baked into real estate transactions. Instead, they can negotiate fees that align with the actual level of service provided. With the proliferation of online marketing, digital transaction management tools, and discount brokerage models, many agents can effectively sell a home without the need for a 3% commission.
Technology is Reducing the Need for High Commissions
The real estate industry has seen a surge in technological advancements that have streamlined the home-buying and selling process. Platforms like Zillow, Redfin, and Realtor.com empower sellers to market their homes effectively without relying solely on traditional agent services. Additionally, digital tools enable buyers to search for homes, schedule viewings, and even make offers with minimal agent involvement.
With these tools reducing the workload of real estate professionals, it makes sense for commission rates to reflect this evolving landscape. A 1% commission structure for both listing and buyer’s agents would align more closely with the actual effort and expertise required in today's market.
More Money in the Pockets of Buyers and Sellers
Housing affordability remains a major concern across the U.S., and lower commission rates directly benefit both buyers and sellers. For sellers, reducing their commission expense from 6% to 2% (1% for each agent) means keeping more of their hard-earned equity. On a $500,000 home, for example, this shift would save the seller approximately $25,000 in commission fees.
For buyers, lower commissions mean that agents can offer a flat fee or an hourly-based model, ensuring that services are fairly priced and accessible. This change can lead to lower home prices overall, as sellers are no longer inflating listing prices to account for excessive commission fees.
A Call for Change in the Industry
The real estate industry is moving toward a fairer, more consumer-friendly model, and the 2024 NAR settlement is the catalyst for this long-overdue shift. By adjusting commission structures to reflect modern efficiencies and the true value of an agent’s service, buyers and sellers alike can benefit from a more transparent and cost-effective process.
As competition increases and more agents adopt flexible pricing models, it’s time to embrace a standard where 1% commissions for both buyer and seller agents become the new norm. The real estate market should work for the consumers it serves, not just the agents who facilitate transactions.
