Two years ago, the real estate industry was preparing for what was widely described as a fundamental restructuring of residential real estate commissions. The National Association of Realtors had agreed to settle nationwide class action litigation alleging that its rules artificially inflated commissions paid to buyers’ agents, often referred to as the NAR Commission Settlement. News reports predicted falling commissions, an exodus of real estate agents, complete elimination of buyer representation in real estate, major savings for home sellers, lower home prices, and potentially even the disappearance of traditional buyer representation. We were skeptical.
When the Burnett jury rendered its nearly $1.8 billion verdict in October 2023, we predicted that the ultimate result would probably be considerably less dramatic. Instead, we expected greater transparency around commissions, written agreements between buyers and their representatives, and more negotiation over who would ultimately pay the buyer’s representative. Two years after the settlement rules took effect, there is enough evidence to begin evaluating those predictions.
And now there is another reason to revisit the issue. On August 19, 2026, the Eighth Circuit Court of Appeals affirmed the nationwide settlement, rejecting challenges to the district court’s approval of the agreement. The settlement appears likely to remain a defining feature of residential real estate for the foreseeable future. So what actually changed?
A Brief Refresher On The NAR Commission Settlement
The litigation began with allegations that rules governing Multiple Listing Services restrained competition in violation of federal antitrust law.
Under the former system, listing brokers participating in NAR-affiliated MLSs were generally required to make an offer of compensation to a buyer’s broker when placing a property on the MLS. In practice, a seller would typically negotiate an overall commission with the listing brokerage, and a portion of that commission would be offered through the MLS to the broker representing the eventual buyer.
A federal jury in the Burnett case found NAR and several major real estate companies liable in October 2023 and awarded approximately $1.785 billion in damages. Rather than continue litigating the verdict through years of post-trial proceedings and appeals, NAR reached a nationwide settlement in March 2024. The resulting practice changes took effect on August 17, 2024.
Among the most significant changes, offers of buyer-broker compensation can no longer be displayed through the MLS. Agents working with buyers must generally enter into written agreements with those buyers before touring properties, and those agreements must specify how the buyer’s representative will be compensated. Consumers must also be informed that broker compensation is negotiable.
Importantly, however, the settlement did not prohibit sellers from paying buyer-agent compensation. That distinction has turned out to matter a great deal.
The Predicted Commission Collapse Never Happened
One of the most common predictions following the settlement was that real estate commissions would fall sharply once buyers were required to negotiate directly with their representatives. So far, that has not happened.
According to Redfin’s national transaction data, the average buyer-agent commission fell to approximately 2.36% in the third quarter of 2024, when the new rules were implemented. But the decline proved temporary.
By the second quarter of 2025, the average had returned to approximately 2.43%—essentially the same level as in the first quarter of 2024, when NAR announced the settlement. Redfin subsequently reported an average of approximately 2.42% in the third quarter of 2025.
The Federal Reserve has offered another reason to be cautious about dramatic claims concerning commissions. In a 2025 analysis of decades of commission data, Federal Reserve researchers found that commission rates had already been declining gradually over a much longer period. They also found no statistically significant effect from earlier state requirements for buyer-representation agreements.
None of this means commissions cannot decline in the future. The structure created by the settlement may facilitate greater price competition over time. But the evidence to date does not support the idea that the settlement immediately destroyed the traditional commission model.
What Changed Instead: Compensation Became Part Of The Offer
The more significant change is subtler. Buyer-agent compensation is now much more frequently part of the negotiation surrounding the buyer’s offer.
Before August 2024, a buyer’s agent could generally see the cooperating compensation offered by the listing brokerage directly in the MLS. That compensation therefore existed largely outside the negotiation between buyer and seller over the purchase contract.
Today, the process can look very different. A buyer may agree to compensate his or her representative 2.5%, for example, and then submit an offer asking the seller to pay some or all of that amount. Another buyer may request a different amount. Yet another buyer may pay the representative directly.
The seller can evaluate those requests alongside price, contingencies, financing, closing date and every other economic term of the offer. This has been the most noticeable consequence of the settlement. The prevailing commission percentages have generally remained similar, but compensation is now more commonly another negotiable term when an offer is submitted.
Interestingly, this is very close to what we predicted in November 2023, months before the settlement existed. At the time, we wrote that instead of fundamentally eliminating seller-paid buyer commissions, buyer-representative compensation could simply be detailed in the buyer’s purchase offer.
That is increasingly what the marketplace looks like.
That Gives Buyers And Sellers More Flexibility—But Also More To Evaluate
The new structure can benefit consumers because it makes an economic term that was previously easy to overlook considerably more visible.
A buyer should understand what his or her representative is being paid before touring properties. A seller should understand that paying a buyer’s representative is not legally mandated and should evaluate any requested compensation based on the economics of the transaction. But consumers should resist turning that principle into another simplistic rule.
A seller is not necessarily better off refusing to pay a buyer’s agent. Consider two offers: One buyer offers $1 million and asks the seller to pay $25,000 toward buyer-agent compensation. Another offers $980,000 without requesting buyer-agent compensation. The second offer does not automatically save the seller money simply because the buyer is paying his own agent. The first offer still produces a higher gross amount to the seller before considering the other terms. Conversely, a buyer competing against multiple offers may sometimes improve the economics of an offer by paying some or all of the buyer-agent fee independently.
The important development is not that one party has suddenly been declared responsible for commissions. It is that consumers now have more reason to analyze compensation as part of the entire transaction.
What About The Prediction That Buyer Agents Would Disappear?
That prediction has also proved false.
Buyers still have strong reasons to obtain independent representation. A purchase can involve pricing analysis, disclosures, inspections, financing, appraisal issues, title problems, repair negotiations, contingencies and substantial contractual obligations. The settlement changed how that representation is paid for. It did not eliminate the value of the service.
We previously expressed concern that requiring buyers to confront their agent’s compensation more directly could encourage some buyers to forgo independent representation or seek dual representation from the listing agent. That concern remains, particularly for buyers already stretching financially to assemble a down payment and closing costs.
But two years is not enough to conclude that the settlement has caused the widespread disappearance of buyer representation that some commentators predicted. Nor should the industry manufacture a crisis where the evidence does not establish one.
The Appeals Court Has Now Left The New System In Place
On August 19, 2026, the Eighth Circuit affirmed the district court’s approval of the nationwide settlement. The objectors raised numerous challenges, including arguments concerning the breadth of the settlement class, standing, adequacy of the settlement and the claims released by the agreement. The appellate court rejected those challenges and affirmed the judgment.
That does not mean every debate about real estate commissions is over. Competition litigation involving the real estate industry continues to evolve, and consumer behavior may change gradually as buyers and sellers become more comfortable negotiating compensation. But the August decision makes it increasingly sensible to view the August 2024 changes not as a temporary experiment, but as the framework within which the industry will operate.
Two Years Later, The Biggest Change Is Transparency And Negotiation
The NAR commission settlement was significant. It simply was not significant in quite the way many people predicted. Real estate commissions have not collapsed. Buyer agents have not disappeared. Sellers frequently continue to fund buyer representation. What has changed is the process.
Buyers are more likely to discuss compensation with their representatives at the beginning of the relationship. Sellers have greater visibility into what they are being asked to contribute toward buyer representation. And compensation can now function as another economic variable when buyers and sellers negotiate an offer.
That is probably healthier than treating commissions as an invisible, predetermined component of every transaction. But it also means consumers need to look beyond slogans such as “the seller pays the commission” or “buyers now pay their own agents.” Neither statement adequately describes the market anymore.
The better approach is to evaluate the transaction as a whole: What services are being provided? What are they worth? Who is being asked to pay for them? How does that request affect the economics of the offer? Those are questions consumers should have been asking all along.
Please call or email us at 213-973-9439 or info@esquirereb.com to further discuss the NAR commission settlement, or how Esquire Real Estate Brokerage can help you in the Southern California real estate market.
