Introduction
In 2024, the National Association of Realtors "NAR" reached a pivotal settlement in the Sitzer-Burnett antitrust class-action case, challenging longstanding brokerage compensation models and industry practices. This settlement has garnered considerable media attention and pushback—and may be the first of many suits targeting Realtor trade associations.
With the Department of Justice "DOJ" granting its final approval, the real estate industry is now operating under a new rulebook, moving away from the status quo when buy-side agents could show properties without a representation agreement in place. If the plaintiffs' claims hold true, decoupling commissions and placing the onus on buyers' agents to negotiate their fees directly with buyers will address concerns about alleged anti-competitive practices that, they argue, propped up brokerage compensation models. However, I'm not entirely convinced commission rates will deviate from where they were pre-settlement.
My Background, Bias & Motivation
I'm a licensed real estate broker in New York with nearly a decade of experience in the industry. As the co-founder of Byson Real Estate Co., I sponsor a team of agents and have sold millions in residential and commercial property, representing clients on both sides of the table.
I’m also a member of NAR through the Long Island Board of Realtors “LIBOR” and the Real Estate Board of New York “REBNY,” a similar trade organization for New York City. This has given me a direct view into how these organizations have responded on behalf of their members and how we’ve been instructed to conduct business going forward.
As an entrepreneur, I’m also part of several proptech communities where founders like myself savor moments like these in the market—times that could open the door to new business opportunities. These startup communities serve as think tanks, challenging me to consider alternatives to how I’m hardwired to approach and problem-solve as a broker.
I’m writing this article because many people remain confused about what’s changed. Even for me, a broker who follows these developments closely, keeping pace with the suit and its implications has been challenging. And because any commission-related changes impact my bottom line, I want to acknowledge my inherent bias. Nevertheless, I firmly believe we need to have more dialogue around this matter and around commissions in general. A lack of open discussion is what got us here in the first place—and what these lawsuits seek to upend.
Pre-Settlement
The Sitzer-Burnett lawsuit named NAR as its key defendant, largely because NAR sets the rules of engagement for brokers through its code of ethics and the policies it passes down to local boards and MLSs. The lawsuit alleged that the following practices inflated buy-side commissions and violated antitrust laws by:
- Concealing buy-side commission fees from buyers, making them visible only to MLS members.
- Allowing agents to filter listings by compensation in the MLS, enabling agents representing buyers to steer clients toward higher-commission properties.
- Requiring the Seller to make blanket buy-side offers of compensation when listing.
All of these stem from how the Seller has historically agreed to and set compensation for agents on both sides of the deal.
How Commission Models Were Structured Pre-Settlement
Sell-Side (Listing Agent)
Before posting a property to the MLS or other like-kind platforms, a listing agent (aka seller’s broker) signs a listing agreement with a Seller. This document covers the following:
- Start and End Date
- Listing Price
- Services
- Exclusivity (e.g., exclusive right to sell)
- Commission Rate (percentage of sale)
- Cooperating Agent's Compensation (aka buyer’s agent compensation).
The listing agent would, therefore, negotiate the cooperating agent's compensation directly with the Seller—commonly set as either a 50% share of the listing broker's fee or a percentage of the final sale price (e.g., 3%). The listing agent would then make this offer of compensation public when the listing was posted to the MLS, making it available for all buyer's agents to see. This was a requirement of the MLS, which falls under the umbrella of Co-Brokering and its Clear Cooperation Policy “CCP,” the latter of which now finds itself in the crosshairs of the DOJ.
These agreements also outline how the listing agent’s compensation would be structured if the buyer is unrepresented (Scenario B) or the listing agent serves as a dual agent (Scenario C). Below is a table with boilerplate language from a listing agreement pre-settlement:
| Scenario | Representation | Seller's Agent Compensation | Buyer’s Agent Compensation | Example Agreement Clauses |
|---|---|---|---|---|
| Scenario A Buyer & Seller Represented [Most Common] |
Seller's Agent & Buyer's Agent | 2.5% | 2.5% |
"Listing/Seller's Agent Compensation: The Seller hereby agrees to pay the Listing Agent a total commission in the amount of 2.5% of Property's final sales price." "Buyer's Agent Compensation: 2.5% of the Property's final sales price shall be paid to the brokerage firm representing the Buyer." |
| Scenario B Unrepresented Buyer |
Seller's Agent & No Buyer's Agent | 4% | 0% | "Listing/Seller's Agent Compensation: Where the Buyer chooses to be unrepresented by a brokerage firm, the Listing Agent compensation shall be 4% of the Property's final sales price." |
| Scenario C Dual Agency |
Same Agent Represents Seller & Buyer | 2.5% | 2.5% | "Dual-Agency Compensation: If the Listing Agent is a disclosed dual agent, representing both Seller and Buyer, and both Seller and Buyer accept the Listing Broker as a dual agent, compensation to the Listing Broker shall be 5% of the property's final sales price." |
Buy-Side (Buyer’s Agent)
On the buy side, no formal representation agreement existed between buyers and their agents; these relationships were built mainly on trust and a handshake. In New York, the only required document was the New York State Agency Disclosure form, which simply discloses the agent’s relationship to the buyer. It even explicitly states, “THIS IS NOT A CONTRACT”.
Because buy-side compensation was negotiated between the listing agent and Seller, a buyer’s agent didn’t look to their buyer for a fee; they looked to the MLS, a broker/member-only database where a fee offered by the Seller would be published, and only earned should a broker bring a ready, willing and able buyer, one who successfully purchases the subject property.
An Imperfect Model
No one claimed the model was perfect. But in its defense, it has worked in practice since 1913.
When I first learned of these changes, like many other agents, my knee-jerk reaction was, “But that’s how it’s always been done.” And while this elicited response may carry historical weight, that alone doesn’t justify preserving the status quo. With more time to reflect, I began questioning why the industry did things a certain way. I can’t think of another service-based business where professionals perform work before having a signed contract or an established fee—yet that was our norm.
This created issues for all participants, agents included. Absent representation agreements discussions around fees rarely came up with buyers. It’s easy to jump to conclusions here and feel this was for the agent's benefit, but agents also experienced issues in this construct. Foregoing the autonomy to negotiate their own fees, they were left to accept what the Seller offered. Sometimes, it resulted in an above “market-rate commission,” a tactic developers used frequently to incentivize agents, and other times, it was less. Pre-settlement, buyers also wielded flexibility in who they worked with and could change representation at any time—right up until they signed a purchase agreement. And while this may also seem like a glaring issue for buyers, the lack of an agreement served as consumer protection in many ways. It also created an environment where buyers frequently engaged multiple buy-side agents, sometimes unknowingly. This was the other downside for buyers agents: there was no exclusivity, and many times, free work was performed.
Regardless of how you see it, there was a lack of disclosure and transparency around buy-side agent compensation, and clearly, there was room for improvement.
What’s Changed?
The settlement brings two key changes:
- MLSs are to remove buy-side compensation data from the MLS.
- Buy-side agents must now enter into written agreements with their buyers before they tour properties.
A Broker’s Perspective and Outlook
I’ve taken a lot of time to digest these changes and hear the opinions of other industry professionals. Here’s my perspective:
MLS & Buy-Side Compensation
A Seller should never be required to offer buy-side compensation, and the amount should be at their discretion. The discussion around what to do is one a Seller will continue having with the listing agent they hire. From my perspective, Sellers should retain the right to advertise offers of compensation to buyer’s agents. And it appears this ability to do so will remain the case, as the MLS now captures and categorizes these offers under “Seller’s Concessions,” an optional field.
At the end of the day, Sellers care most about their net proceeds (what they take home), and they will continue to advertise their property in a manner that optimizes the transaction for the best possible outcome, one that guarantees them getting to the closing table within their desired timeline and at their desired exit price. If offering compensation helps close deals more quickly, ensures smoother transactions, and attracts a larger pool of buyers, many sellers will continue to take this path.
Steering & Influence
It’s alleged that buy-side agents steered buyers to higher-commission listings by filtering out properties offering low or no compensation. Now, as a preventative measure, MLSs have removed the ability for agents to filter listings by commission. But with the flexibility for a buyer to change agents at any time pre-settlement and access to virtually all MLS listings through consumer-facing platforms like Zillow, where most searches occur, I think you’d be hard-pressed to find instances where this “Steering” took place.
My bigger concern post-settlement is that some buyers may forgo representation altogether, creating a different set of risks. Skilled buyer agents safeguard their clients’ interests by helping buyers understand a property’s actual market value, steering them clear of costly pitfalls, and providing access to a trusted network that can save them time and money. What Buyers must ask themselves is, “What value do you place on a professional agent?” This question is now front and center, with them negotiating the fee directly.
Financing Implications
Another key consideration is how financing factors into all of this. If buyers must shoulder 100% of the agent’s commission at closing, they may face increased capital requirements, creating real hurdles in today’s marketplace.
Representation Agreements
Representation agreements aren’t revolutionary. What this will do is open the conversation between agents and buyers around their services and require buyers to exercise more thought and consideration before making a commitment to an agent and starting their search. Even if non-exclusive representation agreements become the norm, buyers must still disclose who they’re engaging to represent them, a departure from pre–settlement and one that zeroes in on disclosure from both parties, not just agents.
However, questions remain here, such as who will govern whether representation agreements are signed. The Listing Agent? The Bank?
Moving Forward: Predictions for the Industry
Although the settlement imposes new practices, it leaves questions about transparency, buyer protection, and how commission negotiations will unfold.
Looking ahead, these are my predictions.
Varying Buy-Side Commission Fees & Models
Time is an agent’s most valuable resource. The buy side, inherently, comes with a higher degree of risk than the sell side for agents. Buyer agents are signing up for an indeterminable amount of time when it comes to the search, and the transaction carries a higher chance that their buyer may not purchase at all. Whereas, the sell-side has a clear start and end date. For this reason, I wouldn’t be surprised if buyer agents increased their fees. Outside of the time period, it could be due to a challenging budget, the location a client is searching for, the agent's proximity to that area, etc. Agents no longer need to ‘accept’ whatever the seller offers and can now exercise some autonomy around their fees.
I also anticipate that new companies performing ancillary buy-side services, such as preparing a comp analysis or constructing offer terms on behalf of a buyer, for flat rate fees will continue to flood the market. The question for these businesses is whether they can build a profitable business model at a fraction of the cost. If history is an indicator, it’s not as easy as slashing fees; look at a company like PurpleBricks, which attempted to disrupt the market with its discount model.
Buyers also need to acknowledge and weigh the risks of being advised by an AI bot or an individual who’s never seen the actual physical property.
A Larger Fraction of Full-Time Agents
These changes will weed out part-time agents. Full-time agents who clearly articulate their value and services will take up more market share from agents who perform 1-2 deals yearly for friends and family.
Referral Sites/Programs Will Struggle
Sites like Zillow, StreetEasy, or Realtor.com rely on referral fees from connecting buyers to agents. They benefitted from the blanketed offers of compensation to the buy-side, as this made their hand-off of a buyer to an agent frictionless. Written buyer agreements will add a layer of complexity and create headwinds for them.
Final Thoughts
As the industry navigates the post-settlement era, buyers, sellers, and agents must adjust their expectations and practices. Though these changes introduce some uncertainty, they also open the door to clearer, more transparent relationships between agents and their clients. As the dust settles, I’m eager to see how traditional brokerages and new entrants adapt. After all, change in real estate is inevitable—but how we innovate and who best meets the clients’ interests will win out.
