Why the Buyer Agent Commission Model Was Never Defended on Merit
The inherited compensation structure that avoided scrutiny for decades — and can't anymore
Remember when investors paid commissions on every individual stock trade?
$7 here. $10 there. Sometimes more.
The fees weren't widely debated. An annoyance, maybe. But they were understood as ‘the cost of doing business’ — or at least that’s how your broker explained it.
Then in 2019, Robinhood launched with a simple premise: zero-commission trading.
Within weeks, firms like Charles Schwab and TD Ameritrade followed suit. A pricing structure that had persisted for decades disappeared almost overnight.
Not because investing became less valuable. Not because financial advice became obsolete. But because once an alternative model exposed the old structure, the legacy model had to justify itself on its merits.
And under scrutiny, the justification wasn’t as durable as the industry had long assumed.
Today, the traditional buyer agent commission model is facing the same reckoning.
A warning light worth heeding
There’s an old saying in mechanics: a check engine light is designed to come on miles before the car stops running.
The lawsuits, regulatory changes, negative headlines, and declining consumer sentiment directed at real estate commissions are the industry’s version of that warning light. Yes, the traditional system is still running. Most agents will tell you it’s running just fine. But a check engine light isn’t a sign that the car is broken — it’s a signal that something under the hood warrants a closer look before it becomes worse.
In the spirit of popping the hood, the first place we need to look is to the past so we can understand how we got here.
How did we get here?
Buyer agency is a relatively new concept in the 250-year history of American real estate. Prior to the late 1980s, it didn’t exist. Sellers hired listing agents, and listing agents had cooperating brokers whose job was to bring a buyer to the transaction. These cooperating brokers were called sub-agents.
Despite showing the buyer properties, writing the contract, and guiding them through the process, sub-agents had no official agency relationship with the buyer. Their fiduciary duties ran exclusively to the seller.
Buyers had help. But they didn’t have a representative.
Cooperative compensation — the practice of listing agents splitting their commission with cooperating agents — made obvious sense under this model. All agents were working for the seller. All agents were paid by the seller. Simple.
Unsurprisingly, sub-agency produced significant complaints and lawsuits from buyers who felt misled. Out of that tumultuous period, formal buyer agency was born. For the first time, a buyer could have an agent whose fiduciary duties ran solely to them.
Representation evolved.
However, compensation did not.
Cooperative compensation carried over largely intact. Buyer agents were still functionally paid by the seller, at a percentage the seller had agreed upon with their listing agent. Giving the benefit of the doubt, the carryover was probably more pragmatic than malicious. But it had one very obvious benefit for buyer agents: the ability to tell clients, “My services are free to you.”
The free-to-you era (and why it avoided scrutiny)
From the dawn of buyer agency until August 17, 2024, negotiating your buyer agent’s commission was almost a nonsensical concept to most consumers. Agents were free to homebuyers. Sellers paid them. End of discussion.
And here’s the thing about free: you don’t interrogate the price of something that costs you nothing.
So for decades, most buyers were genuinely unaware of how much their agent earned when they bought a home. The compensation was irrelevant to them — they had no say in it anyway.
But there’s no such thing as a free lunch, especially not in real estate. The cost of buyer agent services was baked into the floor of what a seller was willing to accept. It was always there. It was just invisible.
As sellers began asking why they were on the hook for a commission owed to an agent whose fiduciary duty ran explicitly to the opposing party, and as buyers began realizing they had zero input into how their agent got paid, pressure built.
That pressure produced the Stitzer/Burnett litigation against NAR and the nation’s largest brokerages. The resulting settlement, effective August 17, 2024, did three things of note: sellers were no longer required to offer buyer broker compensation to list in the MLS, offers of buyer broker compensation were banned from being advertised in the MLS, and buyers were required to sign a buyer agency agreement with clearly stated compensation terms before an agent could show them homes.
It put the final nail in the coffin of buyer agents disguising their services as free to the buyer.
And yet — buyer agent commissions have barely moved. According to data from RISMedia and Redfin, commission levels have remained largely stable since the settlement, if not having edged up slightly.
Why? At least in part because listing agents are still anchoring seller expectations around customary offers of compensation. Buyer agents know the money is still being secured on the listing side. So they don’t need to compete on price — much less rethink the model entirely.
When clients ask what’s changed, most agents say something like, “Honestly, not much other than a bit more paperwork.”
Those agents are not wrong. At least not yet.
But that doesn’t mean consumers are content with this answer.
The merit questions
As an industry, here’s where I think we need to be honest with ourselves.
Consumers today are asking structural questions about buyer agent compensation that the industry has never had to answer before. Prior to August 2024, because of the ‘free-to-you’ framing, questions about buyer agent compensation felt irrelevant.
Today, they’re highly relevant.
Consumers are wondering:
Why does my agent get paid a percentage of the purchase price? Is that the right unit of measurement to value their work?
Why does compensation scale automatically with price? Isn’t it a little backwards that my agent earns less when they help me negotiate a better deal?
Why does my agent’s compensation hinge entirely on closing? What does that incentivize?
Why aren’t services tiered by complexity? I’m not a buyer who needs nine months, forty showings, and three failed contracts before buying a home. I move quickly and decisively. Should I pay the same, and in some cases more, as someone who is a lot more work for my agent?
I hear versions of these questions from buyers across the country every week. They’re not accusations. They’re architectural questions.
And, at least from what I’ve heard in response, most of our industry currently lacks satisfying answers.
Where we are now
Longevity often masquerades as legitimacy. The fact that a system has worked for a long time does not mean it is a good system, much less beyond questioning.
In 2026, buyers have more powerful tools and information at their disposal than ever before. MLS access isn’t the competitive advantage it was in 1996. Public records, market data, school ratings, neighborhood demographics, and granular property research are available to any buyer with a $20 ChatGPT subscription. Services like Showami let buyers tour homes nearly on-demand.
I’m not saying homebuyers necessarily need agents less today. But they need them differently.
The previous generation of agents did something genuinely important when they created buyer agency in the late 1980s. But they handed us an unfinished project. The representation model evolved. The compensation model didn’t. That gap is now impossible to ignore.
So here’s the question I keep coming back to: if we were building buyer agent compensation from scratch today — without inherited rails, without the gravitational pull of “how it’s always been done” — what would it actually look like?
Would we default to a percentage of purchase price? Would we unbundle services, build in tiers, charge retainers? Would we structure performance incentives differently — rewarding agents who negotiate savings rather than penalizing them for it?
The system may not be actively imploding. But the check engine light is on. And the honest, responsible thing to do — for agents and brokerages alike — is to open the hood and see what needs to be rebuilt.
Nick Aufenkamp is a licensed real estate broker in Washington, founder of DIY Homebuyer Academy, and one of the few agents in America offering transparent, unbundled representation options for buyers. His work has been featured in The New York Times and Wall Street Journal.