It sent shockwaves through the real estate industry.
Fast-forward nearly one year after the National Association of Realtors (NAR) historic $418 million lawsuit settlement and home buyer agent commissions decreased slightly, according to Redfin.
See what the first full quarter of data shows.
Check your home buying options. Start hereInitial commissions decrease post-NAR settlement
When news broke on March 15, 2024 about NAR’s $418 million settlement, home buyers and sellers alike wondered what the ramifications would be.
Amongst the changes that took effect Aug. 17, 2024, the nationwide class-action lawsuit resulted in sellers no longer being required to pay buyer agent commissions. Prospective home buyers will need a written buyer agreement and negotiate their agent’s commission fees. Those were both optional prior to the settlement.
“When news of the settlement first came out, some sellers thought they were going to pay nothing to the buyer’s agent, said Redfin agent Desiree Bourgeois. “That’s not happening; sellers are realizing most buyers are requesting the seller pay for their agent as part of the offer. It’s an ongoing conversation, but people are starting to understand and asking more pointed questions.”
Early results showed small commission changes in the first full quarter of data, according to Redfin. The average buyer agent took home a 2.36% commission in the fourth quarter of 2024. They stayed flat quarterly, while falling from 2.45% year-over-year.
Quarter | Average buyer agent commission |
Q1 2023 | 2.51% |
Q2 2023 | 2.49% |
Q3 2023 | 2.48% |
Q4 2023 | 2.45% |
Q1 2024 | 2.43% |
Q2 2024 | 2.38% |
Q3 2024* | 2.36% |
Q4 2024** | 2.36% |
However, the average commissions and how they changed varied by home price tier. Properties below $500,000 had the highest percentage at 2.46% in Q4 and were the only tier to grow from Q3. Middle-tiered homes merely inched down, while those over $1 million decreased the most (both quarterly and annually).
Check your home buying options. Start herePrice tier | Q4 2023 | Q3 2024 | Q4 2024 |
Below $500,000 | 2.50% | 2.42% | 2.46% |
$500,000-$999,999 | 2.36% | 2.27% | 2.26% |
$1 million+ | 2.33% | 2.22% | 2.17% |
This development makes sense from an agent’s perspective, as the new commission shares align accordingly to make the juice worth the squeeze.
“Luxury sellers typically expect buyers to want them to cover 2% in buyer’s agent commission. That’s different from what we’re seeing for more affordable homes; buyers of those homes are often asking sellers to cover a 2.5% or 2.7% commission,” said Redfin agent Stayce Mayfield. “Buyer’s agents expect a lower commission for luxury homes, and they’re mostly okay with it. They’re still earning more money; 2% of a million-dollar home sale is a lot more than 2.7% of a $300,000 sale.”
Looking ahead
Like any massive industrial shift, NAR’s settlement agreement comes with mixed opinions. Some say it will improve home buying conditions, others think the changes added complexity onto the consumer.
Though, real estate professionals appear pessimistic about their prospects. Three quarters of agents are concerned about falling commission rates in the next five years. In the shorter term, 51% believe they will decline in the next 12 months, while only 5% think they will grow.
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While the first series of results are in, this situation will likely be fluid as home buyers, sellers, and agents become more familiar and comfortable with the latest regulations.
“Buyers and sellers are still asking about commissions, and sellers are still navigating what the new rules mean for how much they should offer or agree to pay the buyer’s agent,” Bourgeois said.
If you’re ready to buy or sell a home, speak with a local lender or real estate professional today — especially if you have questions about negotiating commissions.