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The US ranks around the 3rd highest for real estate commissions globally, while the US has relatively high real estate commission rates compared to many other countries, it does not have the highest rates globally. The typical commission rate in the US is around 5-6%, usually split between the buyer’s and seller’s agents.

The recent settlement by the National Association of Realtors (NAR) to change its commission rules is expected to bring significant changes to the real estate market and commission structure. Here are some key points on how the market may change: more competition and transparency in commissions. Sellers will no longer be required to make blanket offers of compensation to buyers’ agents on the MLS listings. This will probably lead to more negotiation of commission rates between sellers and their agents, as well as between buyers and their agents. The lack of publicly advertised commission rates could foster more competition among agents to offer lower rates. Lower overall commission rates, analysts predict commission rates could drop by 25-50%, with some estimates of the typical 5-6% rate falling to 3-4%. This could save home sellers and buyers tens of billions annually in reduced commission costs. Rates are expected to vary more widely based on negotiation rather than sticking to traditional percentages. Impact on housing affordability and prices. Lower commissions could make homes more affordable for buyers by reducing transaction costs. Some experts believe lower seller costs could put downward pressure on home prices, as sellers have more equity after paying commissions. The overall impact on home prices is debated, as prices are driven more by supply/demand and economic factors. Changes for real estate professionals. Up to 1.6 million real estate agents might leave the industry if commissions drop significantly, per some estimates. Agents may need to more actively show their value to justify commission rates. The settlement could drive a rise in discount models, flat fees, or revised service packages from brokerages. Potential challenges for buyers, buyers may face more upfront costs if they have to pay their agent’s commission out-of-pocket rather than it being covered by the seller. This could create affordability issues, especially for first-time and lower-income buyers. However, some provisions allow agents to still advertise commission rates to buyers off the MLS. While the full impacts are still uncertain, the settlement is expected to bring more transparency, competition, and likely lower commissions overall in the real estate market, benefiting many sellers and buyers but also creating challenges for the industry and some buyer groups.