Do Buyer Agreements Lower Commissions? New Federal Reserve Report Says No

A new report from the Federal Reserve may finally answer one of the biggest questions agents and clients have been asking since the NAR settlement and rule changes: Will mandatory buyer representation agreements lead to lower commissions?

Short answer: Not likely.

The Fed's May 2025 paper titled “Commissions and Omissions: Trends in Real Estate Broker Compensation” analyzed commission trends in 15 states that have had buyer agreement requirements in place since the 1990s. Their conclusion? There is no evidence that buyer agreements themselves drive down commissions.

Commissions Are Down Over Time, But Not Because of Buyer Agreements

The data shows a gradual decline in buy-side commission rates over the past three decades — from around 3% in the 1990s to about 2.7% in the 2020s. But the Fed attributes that to:

• Rising home prices (agents are still earning more per deal, even at lower percentages)

• Improvements in technology and market efficiency

• Greater consumer access to information

In fact, the report emphasizes that buyer agreements did not trigger the drop. Instead, the value of real estate commissions tends to track with home values. As the Fed put it:

“When house prices are higher relative to consumer prices or prevailing incomes, real estate agents may be more willing to work for lower commission rates, since the higher selling price offsets the lower rate.”

So, What’s Happening Since the NAR Rule Changes?

Since August 2024, when the National Association of Realtors began requiring written buyer representation agreements nationwide, the buy-side commission rate has stayed relatively stable.

According to a May 2025 Redfin report, average buyer agent compensation in Q1 2025 was:

• 2.4% overall (up slightly from 2.36% in Q3 2024)

• 2.17% on $1M+ homes (down slightly from 2.22%)

• 2.49% on homes under $500,000 (up from 2.42%)

• 2.29% for mid-range homes between $500K–$999K (up from 2.27%)

This reflects a slight compression at the top of the market and a slight increase for entry-level and move-up homes, but no dramatic shift that would suggest buyer agreements are causing a widespread drop.

Will Sellers Continue to Pay Buy-Side Commissions?

In most current transactions, sellers are still paying the buyer's agent commission, often through the MLS offer of compensation.

Redfin Premier agent Charley McVay told Real Estate News:

“Sellers don’t seem to have any issue paying a buyer’s agent commission.”

However, he added a cautionary note: if we return to a hyper-competitive seller’s market like we saw in 2021–2022, sellers may begin to offer reduced or no commission to buyer agents, forcing buyers to pay directly out-of-pocket.

This would disproportionately impact first-time buyers and lower-income families — the ones who can least afford it.

What Does This Mean for Agents and Clients?

As a PLACE Partner with eXp Realty, we’ve been preparing our team for these shifts for months. Here's what it means for you:

If You're a Buyer:

• Expect to sign a Buyer Representation and Broker Compensation Agreement (BRBC) with your agent.

• Most of the time, the seller will still pay your agent’s fee, but this must now be negotiated upfront.

• Your agent should clearly explain how they’re compensated — and how they deliver value.

If You're a Seller:

• You're still likely to offer a competitive buyer commission to maximize buyer pool.

• However, you now have more flexibility about what to offer and how to structure it.

• Strategic pricing and presentation are more important than ever — we help guide that process.

If You’re an Agent:

• Know your local market data and commission trends — especially by price tier.

• Build strong buyer consultation scripts around value, negotiation, and transparency.

• Embrace the written buyer agreement as a tool for professional clarity, not a barrier.

Bottom Line: The Sky Isn’t Falling

The Federal Reserve’s report supports what we’ve already seen on the ground:
✅ Commissions are stable
✅ Buyer agreements are not driving down rates
✅ Sellers are still paying, for now
✅ Buyer agents are still essential to the transaction

But that doesn’t mean change isn’t coming. Market dynamics, seller leverage, and buyer behavior could all shift again — and agents who adapt quickly will win.

Need Help Navigating Buyer Agreements or Seller Strategies?

Whether you're a client with questions or an agent looking for support, our team at the Michael Devlin Group, brokered by eXp Realty and powered by PLACE, is here to help.