For Commissions to Decrease, Compensation Must Increase

A paradox and a proposal to reduce commissions while assuring reasonable professional compensation.

Last week Brendan Wallace asked on LinkedIn, “What important truth about real estate do you believe that very few others do?”

I’m a perpetual sucker for these kinds of questions, so naturally I had to reply. Here’s what I said:

“High commissions make for great headlines.

But the real issue in real estate is misaligned incentives — particularly between buyers and their agents.

Reducing commissions without fixing the incentive structure built into percentage-based buyer compensation won’t help consumers.

It’ll make things worse.”

We’ve all seen the headlines I’m talking about, from national outlets like the New York Times and the Wall Street Journal, to real estate specific sites like Real Estate News, RISMedia, and Inman, with countless local stories that have run in markets all across America.

And the reports are backed by legit data. Just this past week the Consumer Federation of America and National Urban League put out a 17-page joint report, in which one of their key findings in their survey of housing counselors is that real estate commissions have not fallen compared to the last survey a year ago. Clever’s survey of over 500 agents revealed that total commissions are up year-over-year from 5.57% in 2025 to 5.7% in 2026. Then there’s the Redfin report from December 2025 that lands my point beautifully with the headline, “The Average Buyer’s Agent Commission has Risen Slightly Since New NAR Rules Went Into Effect.“ A Federal Reserve analysis last May reached the same conclusion.

Consumer advocates, journalists on this beat, and dialed-in homebuyers and sellers who expected things to be different post-NAR Settlement say, “See! Nothing has changed!” To them, commissions remain artificially inflated, consumers (especially homebuyers) don’t have sufficient knowledge or power to effectively negotiate lower compensation, and there’s still too much ambiguity in where exactly all that commission money is going because, God knows, in many cases not even the majority of it is going into the pocket of the agent.

On the other side, industry people — brokerages, agents, real estate coaches — are saying the same thing, but to very different ends: “Exactly! Nothing has changed! All those lawsuits and all it did was create a bit of extra paperwork and a giant headache for everyone involved.” They contend that consumers have continued to pay roughly the same 6% total commissions (still largely viewed as a seller cost) because agents are worth it. According to NAR, the number of buyers and sellers using agents has only gone up in the past few years, with 91% of sellers (matching an all-time high) and 88% of homebuyers using an agent in 2025. They would contend that agents are providing more value than ever and are compensated accordingly.

So where do I stand? Well, never having been any good at baseball, I currently find myself committing the cardinal sin of batting for both teams.

Stepping up for the consumer

I consider myself a consumer advocate first and a REALTOR second. Mostly because I’m a human first, and my profession is more like the shirt I put on in the morning than it is who I am. Lest we get into any existential crises here, suffice to say: I have no problem admitting that in many (most?) cases, REALTORs make too much money per transaction.

Why? Well, let’s use my market, Camas, WA, where the median home price is $860,000. On most transactions in Camas, a buyer’s agent can reasonably expect the seller will be willing to give a 2.5% concession toward buyer agent compensation. That’s $21,500 — on just the buy side — as an agent’s commission.

If you’re in the industry, I’m going to ask you to put yourself in the shoes of an average member of your community — an elementary teacher, nurse, or the manager of your local Starbucks — and consider that headline number: $21,500 in commission for selling one house. That’s a big number. For most members of the community, it’s a fifth to a third of their annual income.

It gets worse when you consider how many hours the buyer’s agent likely put into that transaction. Each transaction can be unpredictable, and there are always outliers, but on average agents spend about 47.5 hours on a single transaction. That includes showings, paperwork and compliance, negotiations and inspections, escrow and closing.

Going back to the median Camas property, if that transaction took the buyer’s agent 47.5 hours of dedicated work, that $21,500 commission breaks down to over $450 an hour. Money like that is right up there with the best of the best doctors and lawyers. Sure, some transactions will take much longer, significantly reducing that hourly rate. But by the same token, some transactions will take half that time, nearly doubling it. And regardless, that $21,500 is real money that adds a very objective cost to the transaction.

With numbers like this, especially when housing affordability is at historic lows, is it any wonder why journalists, consumer advocates, and even some consumers are saying, “Wait. That’s a ton of money in commission. Is the service an agent renders really worth that?”

If agents are honest, it’s not an easy question to answer. A simple yes or no won’t do. It depends.

Now batting for the agent

Switching sides and stepping into the batter’s box for the real estate agents (some of whom I can hear from the dugout begging me to please hand in my jersey and just go home), I can appreciate the industry’s knee-jerk response to accusations that agents are overpaid.

We’ve all seen the Facebook posts breaking down the math:

“Of my $21,500 commission, it was a referral, so 25% goes to the referring agent, then 20% goes to my brokerage, then 35% from what’s left goes to taxes, leaving me with just $8,385. Of that, I need to pay my association dues, licensing fees, healthcare, business expenses, and still cover my living expenses just like you.”

I’ll be the first to tell you, the math on those posts isn’t wrong. Consumers need to realize that their agent typically only sees a fraction of the five-figure number on the closing statement.

The other aspect that consumers don’t fully appreciate is how much risk agents take on and how much work they do not just for free, but at a loss, regularly.

Talk to any agent who has been in the business for more than five minutes, and they’ll tell you the story of the buyer who took them on a six-month journey, touring 47 homes across all four corners of the county, submitting nine low-ball offers, backing out of three contracts, then finally deciding ‘to move to Manitoba to be closer to his brother.’ (Not that I’m speaking from any experience in my earlier years . . .)

What was the hourly rate for the agent working with that client? If you include the required therapy sessions afterward, it’s probably somewhere close to negative $250 an hour.

From the agents’ perspective, they are criminally underpaid in these scenarios. And the possibility that a transaction falls through or a client changes their mind after a few months is not just plausible, it’s likely. So the risk for agents, at least under the traditional model, is real.

In their mind, it all comes out in the wash. They make hay on the transactions that close. They lose precious time, energy, money, and opportunity on the transactions that don’t. Which is why you can have agents making an average of $450 an hour on a single transaction, but the typical full-time agent still barely clears $100,000 annually.

So agents see the headlines about being overpaid and — understandably — they get defensive. Especially if they read them at the end of a long Saturday they just wasted touring several homes that ‘weren’t quite right’ for a particularly cantankerous buyer client.

If you’re a consumer, you can probably put yourself in the shoes of a real estate agent enough to appreciate the “yeah, that would suck” factor.

Calling balls and strikes

Now, as if it hasn’t been an impossible enough task to play for both teams, let me complete my act by removing my player’s jersey and replacing it with a baby blue umpire’s polo to see if I can’t help bring two disparate sides together.

I’ll start by talking directly to the agents — and brokers, MLS leaders, and real estate coaches reading this.

By this point, I trust I’ve earned the standing to be blunt with you: we’ve created a terrible business model, and it has not served us or the consumers we seek to serve well. We must take responsibility for this.

What is this, exactly? Allowing ourselves to be used and abused by bad clients at an operational loss, then making up for it by charging our best clients through the nose in commissions.

Honestly — do not our best clients subsidize our worst ones?

Or if that question is too abstract, imagine for a minute that you got paid for every client you worked with, regardless of whether they closed on a home or not. Pretty nice to envision, right? Now, if you were assured reasonable compensation — somewhere in the range of $100 to $200 an hour — for every hour you spent working for each client, you’d say yes to that, right? What if the trade was: you’re guaranteed reasonable compensation for every client, but your commission on each closed deal will be half of what it is currently?

My bet is that most full-time agents would still gladly make that trade.

But as things currently stand in the traditional model, we overcharge the clients who close to compensate for the clients who don’t. While that makes sense from a business perspective, it hardly feels fair to the client who is ultimately footing the bill. Why should they have to pay more because some other clients flaked out?

To the whole agent and brokerage community, I ask you to sit with that — at least for a moment — before resorting to cliched defenses.

Now to the consumers and consumer advocates, with the same candor:

It is not good practice to expect professionals to work for free.

We all know this. And I fully realize it is agents who have set the precedent that we are all too happy to take on the risk of potentially working for free in exchange for the possibility of a bigger payday in the end. But, especially as a homebuyer, this should not be an acceptable arrangement.

To make this argument, I’m not even appealing to the goodness of your heart or generosity toward the poor agents busting their asses to serve you. I’m appealing to your own self-interest.

Why would you want someone working for you — representing you — whose entire financial incentives are contingent upon you buying any house? Really think about that. Your agent only gets paid if you buy a home. So no matter how much you like and trust them, what is their ultimate goal in the advisory relationship? It’s to get you to buy a home. Because if you don’t, well, candidly, you are wasting their time.

I know it’s uncomfortable to think like that about the agents who have helped us in the past. And I’m not saying there aren’t incredible agents who consistently act in unselfish ways to the benefit of their clients. I know many of them. But let’s not pretend they are ditching their families on evenings and weekends at your beck and call to tour you around simply because it’s their idea of a good time. In these moments, they are working for you. As such, they expect to get paid. Unfortunately, the only mechanism they have for getting paid is you successfully buying a home.

So if, after several weeks or months of looking, you decide not to buy a home. . . or you’ve found a home that could work but isn’t quite right. . . or you’re under contract but are starting to get cold feet during the inspection period. . . these are the moments where the relationship with your agent can start to get weird.

All of a sudden, you begin to feel like your agent is trying to convince you why now is the best time to buy. They start to push you toward that home that something in your gut just feels wrong about. They downplay or minimize your inspection concerns. And you can’t help but wonder, why are they doing that? Aren’t they supposed to be helping me? Why does it feel like there’s pressure now?

Well, at least one highly likely possibility is that it’s because they want to get paid for their time. Which, again, requires you to buy a home.

Under the traditional model, it’s not a good arrangement. Your incentives with your trusted real estate advisor are not aligned.

And the only way I can think to align those incentives and eliminate the pressure is to guarantee agents are compensated fairly for serving you — whether you buy or not. If you want them to give you honest, expert advice that you can wholly trust, they should be financially incentivized to do so.

The proposal

If I may call both teams out of their dugouts and to join me in the middle of the diamond, I have a proposal that I think will solve these issues. It’s not a particularly radical or novel idea. Nevertheless, I anticipate it will be uncomfortable.

The idea is this: Retainer-Based Buyer Representation.

Buyer agents should normalize collecting an upfront, non-refundable retainer from clients at the time of signing a buyer agency agreement. The retainer should be substantial enough to adequately compensate the agent for upfront services rendered, thereby eliminating the financial and emotional sting should the client decide ultimately not to purchase a home or to move on to working with another agent in the future. The retainer should be run through the brokerage, counted appropriately toward the agent’s dues, and the remaining funds should be available to the agent to be used toward business or personal expenses. At closing, the retainer should be credited toward the total compensation owed to the agent.

The framing for the retainer is not as a punishment, burdensome additional expense, or junk fee for the consumer to absorb. Instead, it’s a form of security and expressed alignment. With the retainer in place, both the agent and the client have skin in the game and are committed to the process of working together. There’s a higher level of trust in both directions.

Also — while I cannot prescribe it as such — I strongly urge that agents who collect retainers also charge lower overall compensation as a show of good faith to their clients. After all, part of the rationale for retainers is that they eliminate the category of “bad clients.” Since a buyer’s agent is now never working for free and is making money from every client, they should be able to reduce the amount they charge per closed transaction proportionally.

Just imagine those headlines: In 2026, real estate agents had a record year in their personal incomes, while also reducing commissions for consumers by a significant margin.

That, my friends, is what we call a win-win.

A reframing for consumer advocates

Consumers — and especially consumer advocates — Retainer-Based Buyer Representation is what you should be demanding.

Right now, all real estate professionals hear is that you think they’re overpaid. Which, naturally, makes them defensive and shuts down any chance of productive conversation.

If you want them to listen, start saying, “We want to increase agent compensation while reducing overall commissions.” That’s a position that has the power to bring the industry to the table. And as I’ve argued, it’s the right move. Not just because it’s the right thing to do — call me crazy, but I still believe professionals should be compensated for professional work — but because it’s also in the best interest of consumers.

Homebuyers want to be able to trust their agent’s advice. They want to know that through hell and high water, their agent is going to advocate for them. And if at some point advocacy means their agent affirming their decision to hold off on buying, or to wait for the right home, or to back out because of inspection issues, the client should want their agent to be rewarded for that counsel — not financially punished for it.

Fair Play

I’ve been running this thesis at the scale of one. Me. One agent in Washington State, serving Clark County. But, encouragingly, a handful of other firms around the country are running versions of it too — flat-fee brokerages, retainer-based buyer representation, structures that reward agents for the real work they do rather than just for closing transactions.

But we are small. We are early. And we’ve got a long way to go if we’re going to establish new industry norms.

Nevertheless, I think we’re headed in the right direction. Push back on me here, but so far as I can tell, the structural logic to my proposal is sound. The consumer pressure is sustained. The diagnostic work of CFA and the Urban League and the Fed and the journalists on this beat is a real foundation to build on.

The next phase is figuring out, together, the particulars that make compensation fair for all parties.

My proposal, at least on the buy side: we must first increase upfront compensation in order to reduce overall commissions.

That’s the pitch.

Now, who’s willing to swing?

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Wanna connect further?
Connect with me on socials (I’m most active on LinkedIn) @NickAufenkamp
Tiered & Flat Fee Real Estate Services in SW Washington: The Tartan Team
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Advisory & Consulting
I advise a select number of proptech founders, MLS leaders, and real estate organizations navigating industry change. My work focuses on stress-testing assumptions, identifying second-order effects, and helping teams think more clearly about strategy, policy, and implementation.