A federal court settlement finalized in November 2024 as reported by the New York Times has upended how residential real estate commissions are structured in the U.S. The ruling, which stems from a $1.8 billion antitrust verdict against the National Association of Realtors (NAR), eliminates long-standing rules that required sellers to offer commission payments to buyer agents through the Multiple Listing Service (MLS).

The shift is expected to alter pricing dynamics, agent behavior, and the way sellers approach listing agreements and negotiations. While some effects are already visible, others will take time to materialize.

A Legal Settlement with Industry-Wide Reach

The settlement concluded a high-profile legal battle brought by home sellers who argued that NAR’s rules inflated agent commissions and suppressed competition. Under the terms of the agreement, which also includes $418 million in damages, NAR is prohibited from requiring that commission offers to buyer agents be displayed on MLS platforms affiliated with the organization.

The case has drawn attention from federal regulators. The U.S. Department of Justice reserves the right to conduct additional reviews of the realtors group, signaling potential for further scrutiny of industry practices.

How the Traditional Model Worked

Under the previous model, sellers typically paid a total commission of 5% to 6% of the sale price, split between their own agent and the buyer’s agent. The commission came out of the seller’s proceeds at closing but was effectively priced into the listing. In practice, this meant buyers were indirectly paying these fees—while sellers bore the upfront cost.

The structure raised questions about fairness. In one firsthand account, Financial Samurai describes a seller experience of paying a 2.5% commission to a buyer’s agent who pushed to lower the seller’s price, highlighting the tension in the traditional model. Nonetheless, offering a buyer-agent commission was considered standard practice, and many listing agents warned clients that omitting it could reduce buyer interest.

What Changed—and What Didn’t

The new rules, effective August 17, 2024, prohibit listing agents from making offers of compensation to buyer agents through MLS listings. Buyers must now sign written agreements with their agents that clearly disclose fees before being shown properties. This formalizes a relationship that was previously more ambiguous and shifts the burden of negotiating agent compensation to buyers themselves.

Although commissions are no longer advertised on MLS, sellers are still permitted to offer buyer-agent compensation through other means—such as email, phone, or direct communication through brokerages. However, the settlement prohibits using indirect or coded methods to signal commission splits, including in listing photos or agent-only remarks.

The outcome is a more fragmented and opaque process. Sellers and buyers must now negotiate agent compensation independently, and there is no longer a centralized place to view what, if anything, is being offered.

What This Means for Home Sellers

Increased Flexibility—and Responsibility

Sellers can now decide whether, and how much, to offer a commission to a buyer’s agent. This flexibility allows sellers to question or negotiate commission rates more directly with their own agent.

In theory, sellers can save money by not offering compensation to the buyer’s side. In practice, that decision comes with tradeoffs. Some buyers may be unwilling—or unable—to pay their own agent directly, particularly in high-cost markets where closing costs and down payments already strain budgets. Buyers may respond by requesting that sellers cover those fees through other concessions, such as closing cost credits or purchase price adjustments.

Potential for Lower Commission Costs

Analysts expect average commission rates to fall over time. TD Cowen estimates a decline of 25% to 50%, which would bring total commissions down from 6% to a range of 3% to 4.5%. This would translate into meaningful savings for sellers.

However, data from national brokerages show only modest change so far. Redfin reports that buyer-agent commissions averaged 2.37% in the fourth quarter of 2024—only slightly down from 2.45% a year earlier. In many cases, sellers are still offering compensation off-MLS in order to attract buyer interest, maintaining the practical status quo despite the rule change.

New Complexity in Deal-Making

While the opportunity to reduce fees is real, sellers now face a less standardized process. Instead of relying on MLS-based norms, they must negotiate terms directly with their listing agent and consider whether offering a buyer-agent fee off-platform will increase buyer interest.

Some sellers may choose to take a firm stance and offer no compensation. Others may adopt a middle-ground approach: offering to pay if asked, or setting a lower fee than the previous standard. The result is more variability and potentially longer negotiations, especially if buyers are unfamiliar with the new structure.

Shifting Market Behavior

Despite widespread discussion of disruption, the real estate industry has not changed overnight. Many sellers continue to follow pre-settlement patterns, offering buyer-agent commissions informally through brokerage networks or in one-on-one discussions.

Discount brokers and flat-fee services are gaining attention but remain a small share of the overall market. Likewise, FSBO (for-sale-by-owner) transactions accounted for just 6% of sales between mid-2023 and mid-2024, according to NAR data. These alternatives offer commission savings but require more effort and expertise from the seller, which may not appeal to all homeowners.

Legal Enforcement and Ongoing Oversight

Agents and sellers attempting to circumvent the new rules face increased legal exposure. The settlement prohibits “workarounds” that replicate prior practices outside the MLS, and plaintiffs have indicated they are prepared to enforce compliance.

The Department of Justice’s continued interest in NAR’s practices adds another layer of risk. While the current settlement resolves the immediate lawsuit, it does not insulate NAR—or industry participants—from further regulation or litigation.

Future Buyer Agent Commissions

Over time, the new rules may reduce transaction costs and apply downward pressure on home prices, particularly in markets with high turnover and competition. They may also accelerate the adoption of alternative brokerage models and increase consumer awareness of how real estate fees are structured.

For now, sellers must adapt to a more open but less predictable environment. The ability to negotiate commissions is real, but so is the need to understand market expectations and navigate a more fragmented system. Whether this shift results in broad cost savings or simply changes where those costs appear remains to be seen.