Introduction to the Real Estate Commission Settlement
When Eric Itakura listed his Mountain View, California, condo last year, he hoped to save some money on commissions. The rules over how agents’ fees are set had recently been rewritten as part of a landmark settlement reached between the National Association of Realtors and a group of home sellers. For decades, sellers typically paid a fee between 5% or 6%, split between their own broker and the buyer’s. The new rules, industry watchers predicted, might finally chip away at that standard by forcing buyers and their agents to negotiate separately.
The Impact of the Settlement on Real Estate Commissions
But Itakura found that not much had changed. Two buyers made offers, both asking that he cover their agent’s fee. One wanted 2.5%, the other 3%. Itakura knew he could say no — but he also knew the buyers could walk. Across the country, sellers like Itakura are discovering that while the settlement changed the rules on paper, the practice of sellers paying commissions remains the same — and so have the fees. Nationwide, the average buyer’s agent commission in the second quarter of 2025 was 2.43 percent, according to Redfin — almost identical to a year earlier, before the rule change. On a median-priced Bay Area home of $1.3 million, that’s about $31,600 going to the buyer’s agent.
The Role of Buyer-Broker Representation Agreements
In the past, a buyer didn’t have to sign a contract with their agent — in fact, they may have been oblivious to their agent’s fee, given that the seller typically paid. The practice was enforced by an NAR rule that required a seller to communicate their commission split to the buyer’s agent for any listing uploaded to the NAR-affiliated multiple listing services, or MLS, the private databases where agents can see homes for sale. A group of home sellers in Missouri sued the NAR in 2019, arguing that the practice kept fees artificially inflated. A jury sided with them, and in a settlement, the Realtors association agreed to “decouple” the commissions. It instated a new rule requiring buyers to sign a buyer-broker representation agreement before making an offer, stating the agent’s fee and that the buyer will pay if a seller declines.
The Pressure on Sellers to Pay Commissions
The contracts have played a role in maintaining the industry’s fees, especially in a slow housing market. Even though a seller can always say no, they may feel that they have to cover a buyer’s agent, because if they don’t, the buyer would be locked into paying the agreed-to fee out-of-pocket — a cost many buyers can’t afford. “These contracts put sellers under great pressure to accept the agent’s normal rates, almost always either 2.5% or 3.0%,” said Stephen Brobeck, a senior fellow at the Consumer Policy Center in Washington, D.C. Eric Itakura stands at his home in Los Gatos, Calif., on Tuesday, Sept. 16, 2025. (Shae Hammond/Bay Area News Group)
The Industry’s Response to the Settlement
The National Association of Realtors says the contracts help define the relationship between a buyer and their agent, add transparency to the transaction and allows a buyer to negotiate their fee. “Written buyer agreements are pro-consumer and pro-competition,” the association wrote in statement. Realtors have enshrined the practice in law across several states, including California. In 2024, the California Association of Realtors sponsored a bill that requires buyers to sign these agreements. It passed easily, with bipartisan support.
The Standardization of Buyer-Broker Agreements
“Sellers understand that it’s to their benefit to pay the compensation,” said Janelle Boyenga, an agent based in Los Altos. “Especially since prices are so high, buyers don’t want to come up with extra money. It’s hard enough to buy a home in Silicon Valley.” The standard buyer-broker agreement form drafted by the California Association of Realtors even includes a box that agents can check to say “Buyer does not have sufficient funds to pay broker.” The message to the seller is clear: Don’t pay commission, and the buyer may walk.
Conclusion
Ultimately, the settlement between the National Association of Realtors and the group of home sellers has not led to a significant change in the practice of sellers paying commissions. The industry has adapted to the new rules, and the standard fees remain in place. Sellers like Eric Itakura are still feeling the pressure to pay commissions, and the contracts are playing a role in maintaining the industry’s fees. As the real estate market continues to evolve, it remains to be seen whether the settlement will have any lasting impact on the industry.
FAQs
Q: What was the landmark settlement between the National Association of Realtors and the group of home sellers about?
A: The settlement was about the practice of sellers paying commissions to buyers’ agents, and the requirement for buyers to sign a buyer-broker representation agreement before making an offer.
Q: Has the settlement led to a change in the standard fees paid to buyers’ agents?
A: No, the settlement has not led to a significant change in the standard fees paid to buyers’ agents, which remain around 2.5% to 3.0%.
Q: What is the role of the buyer-broker representation agreement in the real estate transaction?
A: The agreement requires buyers to sign a contract with their agent, stating the agent’s fee and that the buyer will pay if a seller declines.
Q: How do sellers feel about paying commissions to buyers’ agents?
A: Sellers may feel pressured to pay commissions to buyers’ agents, as they may be concerned that the buyer will walk if they don’t cover the fee.
Q: What is the industry’s response to the settlement?
A: The industry has adapted to the new rules, and the standard fees remain in place. The National Association of Realtors says the contracts help define the relationship between a buyer and their agent, add transparency to the transaction, and allow a buyer to negotiate their fee.
