Stephen Brobeck: Why decoupling commissions failed to lower housing costs

Joe Ventrone’s April 17 opinion piece comments on decoupling real estate commissions based on a recent Consumer Federation of America/Urban League report, on past research by me as a CFA senior fellow, and on my more recent research as a senior fellow at the Consumer Policy Center, among other consumer sources. 

The article suggests that settlement of the Sitzer-Burnett lawsuit two years ago has not lowered housing costs or created a more competitive marketplace.  To his credit, at the time, Ventrone warned me and others that this would occur.

In 2024, I expected that the settlement would encourage more buyers to try negotiating commissions and more agents to be willing to do so since sellers and their agents would no longer be setting these commissions. By early 2025, however, it became evident that commission rates were not budging. In retrospect, there are compelling reasons for the persistence of the old pricing.

What happened?

Importantly, the industry was highly motivated to maintain 5% to 6% rates.  The sale of about 4 million homes each year by about 2 million licensed agents provided the latter with a huge incentive to maintain relatively high rates.  Agents succeeded in doing so by persuading buyers that, despite buyer contractual obligations, sellers would continue to compensate buyer agents. Listing agents, also buyer agents for other clients, agreed to persuade sellers to provide this compensation.

Buyers lack knowledge

Just as importantly, buyers and sellers lack the ability (i.e., lack of knowledge) and motivation (e.g., preoccupation with the timing and price of the sale) to negotiate rates effectively. The minority who try to do so face the legitimate concern that if they employ discount agents, their agent may be discriminated against by traditional agents determined to maintain the old pricing. Sellers, in particular, may fear that if they do not offer buyer agents traditional rates, these agents will favor other sellers.

As recognized by the U.S. Department of Justice and others, the settlement only partially decoupled rates.  If commissions were completely uncoupled – sellers and buyers negotiated and paid compensation only to their own agent – would there be more competitive pricing? Not necessarily – each agent would retain the ability to set their own rates. Yet, sellers and buyers would have a much greater opportunity and ability to negotiate the commission rates of their own agent. 

Would negotiated commission rates lower housing costs? 

This issue is obscured by the widespread agreement that buyer commissions are currently included in home sale prices, where they can be easily financed. 

However, the undeniable fact is that if commissions were to decline from 6% to 4%, housing costs would be lower —$8,000 less on the sale of a $400,000 home. This potential cost saving makes it worthwhile to continue working toward a more price competitive housing marketplace – one where rates are not uniform but reflect the competence and efforts of individual agents.

Stephen Brobeck is a senior fellow with the Consumer Federation of American and has researched brokerage issues for three decades.  Since early 2025, he has undertaken this research as a senior fellow at the Consumer Policy Center, a consumer think tank.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

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