Do home sellers lose billions to high agent commissions?

A report released Tuesday by the Consumer Policy Center (CPC) claims that Americans are overlooking thousands of dollars in savings on home sales, which they attribute to consumers “grossly overpaying” agents for their services. 

According to Mark Nadel, the author of the report and a senior fellow at the CPC, these overpayments are due to “a lack of effective price competition among agents.” In total, Nadel estimates that the typical consumer overpays by roughly $6,000 on a $400,000 home — and by at least $12,000 on a home priced at $800,000 or higher.

According to the report, expert analyses show that the introduction of price competition among agents could transfer an estimated $30 billion or more annually from brokers to consumers.

Sabotaging low-fee brokers?

Nadel wrote that this threat has led the industry to “thwart legislative or administrative threats to the status quo,” to discourage agents from openly declassing their rates, and to attempt to “sabotage brokers offering lower prices by steering clients away from deals that involve “low-fee” brokers or agents on the other end of the sale.”

The report alleges that, typically, if a seller complained to a traditional agent that a low-fee agent was willing to charge only 1% ($9,000) to sell a $900,000 home, the traditional agent would argue that the low-fee agent has to skimp on the quantity or quality of services being offering.

According to Nadel, this alleged steering “remains a problem,” and he argues that the industry has used this to protect “many billions/year in excess fees against effective price competition.”

Additionally, Nadel argues that while many people view real estate agents as salespeople working for a commission, this assumption is incorrect. In the report, he notes that for most salespeople, “the price of the goods or services they sell is set to recover the employer’s costs (including a commission) plus a specific profit margin.”

Based on this model, Nadel notes that if a salesperson doubles their sales, they double sales revenue for their employer, which he said justifies their doubled commission.

In contrast, Nadel notes that a home’s sales price is not set to recover the seller’s cost plus an additional profit margin, which he argues does not justify an agent’s commission doubling only because the sales price of the home doubles.

Nadel adds that analyses of the specific tasks agents perform during a home sale transaction fail to “reveal a justification for consumers to pay fees based on the sale price of a home.” 

“Most of an agent’s fee is compensation for their time. And while an experienced, expert agent might demand and deserve a much higher hourly rate than a new agent, basing fees on sale prices of homes does not serve that end,” Nadel wrote.

“It merely encourages the best agents to compete to work with buyers and sellers of the highest-priced homes, even when their special expertise may be unneeded. If, instead, the agents with the most experience and/or skill were to advertise them and their higher fees — as do lawyers, accountants, etc. — then those who would benefit most from those attributes and could afford them would seek them, even if their homes were not the priciest.”

Practices under the microscope

Despite Nadel’s generalization that many agents still steer consumers away from working with low-fee agents, he noted that in today’s slower housing market, more traditional agents are willing to accept referrals from low-fee firms. And he thinks they’re more open to accepting a reduced net commission by “moonlighting” through referral services like Clever or Houzeo.

According to the report, the remaining key barrier to lower agent fees for consumers is a “generally unwarranted” suspicion that lower commissions are associated with lower service quality. Nadel wrote that based on his analyses, these fears are “generally unfounded.” As a result, he and the CPC are urging consumers to seriously consider low-fee agents. 

The report cites an April 2025 national survey, which found that 82% of homeowners expressed concern that a low-fee broker would not provide all of the services they needed to successfully sell their home. Of the consumers surveyed, only 42% said they would “probably” or “definitely” consider a broker charging 1% or 1.5%, rather than 2.5% to 3%.

Nadel closed the report by recommending that sellers retain control over the funds they allocate to pay for buyer and seller agent commissions. He request that they get to keep any unused funds from the sale proceeds that were earmarked to pay for a buyer’s agent commission, and that buyers and their agents don’t skip viewing homes that aren’t openly offering buyer agent commissions. 

Real estate agent commissions remain under scrutiny by federal regulators, including the Department of Justice (DOJ). Despite business practice changes mandated by the National Association of Realtors’ (NAR) commission lawsuit settlement agreement, agent commissions have remained steady, with some recent reports that they’re rising more than a year after the business practice changes went into effect.