The article from Real Estate News titled: "Why lower commissions have never been the answer", Written by Jack Miller
With the recent access to AI tools available to everyone including agents,
they are automating some of their business systems, so they should reduce
their compensation reflecting that efficiency. Well, do we see that in other industries like banking, manufacturing, tech? I would say no, what’s your thought?
We’ve seen properties referred to as FISBOS For Sale By Owner, in 1985 that roughly 21% of home sellers chose that option. In 2025 it was at a record low of 5%. We’ve seen models like “Help U Sell’ launched in 1976 as a flat fee model were going to disrupt the industry, they have a small niche, but disappeared in most markets. Another model RedFin entered the market as a lower commission and consumer rebate model. In 2022, RedFin abandoned its consumer rebate model.
Why did these companies not get more market share or reshape the
industry as a whole? I think you can point at the fact that consumers were
not motivated by the savings they were offering.
Realtors and real estate agents are independent contractors, no base pay, no marketing budget, no company car, no medical insurance coverage, no 401K retirement package.
So like other industry professionals medical, law, dentistry, contractors we provide a service we get paid for. The one difference is we do not charge a retainer fee or get paid upfront. We get paid when a home sells. That could be 6-12 months from initial engagement with a client, whether that's a seller that you are helping get their home prepped for the market in advance of putting it for sale. Or a buyer helping them get their credit cleaned up, connecting them with a lender, showing properties, narrowing down to a city, then a neighborhood that will work for them. It might take
writing two to three offers before you get one accepted, then another 30 - 45
days before close of escrow. Or a probate sale that may take a year or two to get through the court system.
Even with the recent Sitzer/Burnett lawsuit and settlement(s), the plaintiffs’ attorneys predicted that if buyers agents had to disclose their fees up front, and sellers no longer felt obligated to pay those fees, a renaissance of price competition would occur lowering the cost of buyers agent services. Instead compensation has largely remained flat or increased since new industry rules took effect nearly two years ago.
Compensation is negotiable for the services provided. There’s always a cheaper option for consumers. Timex or Rolex, Rolls Royce or Yugo. The consumer needs to choose the level that fits their needs. Realtors come to the industry with a wide variety of backgrounds and those previous careers impact how they approach the profession. If you're just shopping for the compensation amount, it may cost you more than the perceived discount rate.
If you have questions or comments, please reach out.
