In 2025, the landscape of real estate agent compensation has evolved, influenced by recent legal settlements and industry reforms. For home sellers and buyers, it's essential to grasp how these changes impact agent payment structures.

Commission-Based Compensation

Traditionally, real estate agents earned their income through commissions, typically a percentage of the property's sale price. This commission was often split between the seller's agent and the buyer's agent. For example, a 6% total commission might be divided equally, with each agent receiving 3%.

However, a significant shift occurred following a 2024 settlement involving the National Association of Realtors (NAR). The settlement led to the elimination of the cooperative compensation rule, which previously mandated that sellers offer compensation to buyers' agents when listing a property on a Multiple Listing Service (MLS). As a result, buyers are now responsible for negotiating and paying their agent's commission directly.

Alternative Compensation Models

With the traditional commission structure under scrutiny, alternative compensation models have gained traction:

• Flat Fees: Agents charge a predetermined fee for their services, regardless of the property's sale price.

• Hourly Rates: Some agents bill clients based on the time spent assisting them, similar to consultants.

• Salaried Positions: In certain brokerages, agents receive a fixed salary, removing the direct link between sales and income.

• Referral Fees: Agents may earn fees by referring clients to other professionals, such as mortgage brokers or inspectors.

These models offer flexibility and can be tailored to clients' specific needs and preferences.

NAR Lawsuit Over Commissions

The 2024 lawsuit against the NAR brought significant changes to the real estate industry. The core issue was the allegation that the NAR's policies led to inflated commission rates, burdening home sellers. The settlement not only eliminated the cooperative compensation rule but also mandated that buyers sign agreements with their agents before viewing properties. This move aims to enhance transparency and ensure that buyers are fully aware of the costs associated with their agent's services.

For home sellers and buyers in 2025, understanding real estate agent compensation is more crucial than ever. The traditional commission-based model has been supplemented by alternative payment structures, offering more options and potentially reducing costs. However, these changes also place greater responsibility on clients to negotiate and understand the terms of their agreements with agents. As the industry continues to evolve, staying informed and seeking clarity on compensation arrangements will be key to successful real estate transactions.