Real Estate Commissions in 2025

In 2025, many homebuyers and sellers still feel that real estate commissions remain too high, even with recent shifts in the industry. If you're wondering why real estate fees are still high in 2025, you're not alone (and you're not wrong).

The recent real estate commission lawsuit, or Burnett V. National Association of Realtors (formerly Sitzer v. National Association of Realtors) class action lawsuit and its nearly half-billion-dollar settlement rocked the industry. The lawsuit challenged the fees charged by real estate agents in the United States. At the trial, a federal jury found that they violated antitrust law by conspiring to force home sellers to play inflated commissions to real estate agents. But, are consumers really paying those fees to their agents? Like most things on the surface, there's a lot more to it. We'll break that down shortly.

The National Association of REALTORS® has been labeled a “cartel” by some critics, and the case prompted changes to long-standing business practices. Yet even with all this disruption, one thing remains largely untouched: the hidden costs consumers face, driven in part by the influence of big tech.

Discount brokerages and “disruptive” startups have come and gone for years. But despite all the noise, real estate fees haven’t come down in a meaningful or transparent way.

So why are fees still high? Let’s pull back the curtain.

Behind the Scenes: How Big Tech Drives Up Costs

Tech giants and real estate platforms spend millions to dominate Google search results. Then they turn around and charge agents exorbitant fees just to have the contracted agent appear as the service provider in local ZIP codes — or take referral fees of 35% to 40% or more from each transaction.

These fees don’t reduce your costs as a buyer or seller — in fact, they may increase them.

The kicker? Most of these referral fees are invisible to you, the consumer. They’re paid behind the scenes and rarely, if ever, disclosed. The companies that collect them are often doing nothing more than forwarding a name and email address.

How the Real Estate Market Works Today

Most consumers don’t realize that the agent they’re referred to through a major website or lender might be paying up to 40% of their brokerage’s commission back to that company for the referral. These referral fees are the agent’s, or agency’s, cost of acquiring you as a lead — and they’re not disclosed. For an agent, or agency, it’s the cost of doing business; It’s the pay to play.

While legal under the Real Estate Settlement Procedures Act (RESPA), as long as both parties are licensed brokers, the hidden nature of these fees creates an issue of transparency. But that is debatable.

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Breaking it Down

People seem to think that if they pay $10,000, $20,000 or $50,000 in real estate commissions to buy or sell a property that their agent received all of those funds. But that’s not quite the way things work at all.

REALTORS® that are licensed agents, need to hang their sales license with, or under, a licensed broker’s broker license. Unfortunately, it’s become commonplace for both buyers and sellers to find the agent that they ultimately use by searching online. People think that’s free to do so (as if these large corporations are philanthropic and exist only to help people).

But that’s simply not true. In fact, these companies take a sizeable cut of the fees involved in a real estate transaction usually merely for providing a name, phone number and an email. Whatever is left over from that (maybe 60% or 70%), the agent splits with their broker. This accounting, though, is seen nowhere in any documents that are disclosed to the consumer.

How Big Tech Actually Increases Transaction Costs

While these realty-tech companies may position themselves as the solution to high real estate fees, the reality is that these fees are their bread and butter. Big platforms aren’t referring you out of goodwill — they’re running massive profit centers. The cost of those referral and monthly up-front fees often trickles down to you in various ways: less marketing budget for your home, fewer concessions, and potentially higher listing fees.

This business-to-business model puts more pressure on agents and certainly does not always align with what’s best for the client.

Knowing This Information, Here’s How You Can Save Money as a Buyer or Seller …

1. Ask if your agent is paying a referral fee and how it might impact your service or cost.

2. Interview multiple agents directly instead of relying on lead-generation platforms.

3. Choose full-service agents who aren’t paying for leads and can reinvest more into your success.

4. Work with professionals who understand both real estate and mortgage lending for a holistic view.

5. Negotiate your commission thoughtfully based on value and service, not just brand recognition.

What Should Be Disclosed (But Often Isn’t)

Despite the financial impact, referral fees are not shown on closing statements. RESPA only requires disclosure of fees between settlement service providers, not to the client. But ethical practice — and consumer advocacy — calls for transparency.

Always ask who’s getting paid and why.

Is the Referral Model Always Bad?

Not necessarily. Some platforms do vet agents for production and satisfaction, and good matches can be made.

But it's still important to understand the financial dynamics. Don’t assume a “preferred” agent is your best choice without doing your own research. Follow the money!

Here’s What I Think…

Coming from a banking and mortgage financing background and having experienced mortgage reform and Dodd Frank, in the past, I believe that full disclosure to consumers is a good thing. I'm not sure why any of the most recent litigation pertaining to the process of buying or selling a home did not address disclosure of referral fees and hidden costs that drive up the cost of doing business and the cost of the real estate transaction in general. As an individual agent and one of the best real estate agents in Studio City (I might add), I can only provide clarity and full disclosure to the clients I personally serve... and I'm always happy to do that!

If you're thinking about buying or selling a home in Los Angeles and want guidance from someone who understands both the front and back end of the real estate industry — without paying unnecessary referral premiums — I’d be honored to help.

Let’s have a real conversation about how to get you the best result – without hidden costs. As an expert in Studio City real estate, my office at Coldwell Banker is located right in the heart of the city. I’d love to help you!

You can check out all of the resources I have provided below if you'd like a lot more eye-opening information on these topics as well.

(This is an update to and full revision of an article I posted originally January 9th, 2023)