Big Changes Coming? Fed Proposal Could Slash Agent Commissions

A new proposal from Federal Reserve economists could dramatically cut real estate agent commissions, potentially slashing about $30 billion from what homebuyers and sellers currently pay. The suggested model would change how agents are compensated, making commissions more competitive and aligning them with international standards, where fees are often much lower.

Currently, U.S. homebuyers and sellers pay some of the highest real estate commissions in the world, averaging around 5.5 percent of a home’s sale price. By comparison, countries like the UK and Sweden have commission rates below 2 percent. The proposed changes would move towards an "à la carte" system, where buyers and sellers would pay separately for agent services rather than a fixed percentage of the sale price. This could lead to lower costs, more transparency, and less incentive for agents to steer buyers toward higher-commission properties.

The idea comes at a time when the real estate industry is already under scrutiny, with lawsuits alleging that commission structures have been inflated through industry practices. If the proposal gains traction, it could reshape how homes are bought and sold in the U.S., potentially making the process more affordable for buyers while challenging how agents earn their income.

While some argue that reducing commissions will make homeownership more accessible, others worry it could lead to lower service quality and fewer incentives for agents to help buyers navigate complex transactions. The debate is heating up, and any major changes could have lasting effects on the housing market.