Decoupled: How the Commission Settlement Made First Homes Harder to Buy
Photo by Alexander Grey on Unsplash
In February 2024 I wrote that the Department of Justice's push to “decouple commissions” was manufactured outrage.
A month later, NAR settled. In August 2024 the new rules took effect: no more offers of buyer-agent compensation on the MLS, and every buyer has to sign a written agreement with their agent before touring a home, with the agent's pay spelled out in it (VA News).
Two years later, the data is in. The settlement caused a portion of the housing affordability crisis. Rates and prices are still the biggest drivers. But a real, measurable piece of it was built in Washington, and it lands squarely on the hardest part of buying a first home: coming up with the cash.
The promise was lower costs. That didn't happen.
Hagens Berman's press release in March of 2024 stated the settlement “could save consumers billions of dollars a year in broker fees.” Reuters, that same month, said “Home buying costs could fall,” and that the deal was “likely to bring major changes and lower costs.” In February 2024, the Department of Justice pushed for full decoupling, warning a federal court that as long as sellers keep offering buyer-broker commissions, “commissions on home sales will remain inflated.”
The whole point of the lawsuits was that commissions were too high and decoupling would force them down. It didn't.
Redfin tracks this every quarter. The average buyer's agent commission dipped to 2.36% in the third quarter of 2024, right when the rules changed, then climbed back to 2.42% by the third quarter of 2025. That's “roughly the same level” it was when the settlement was announced.
On homes under $500,000, the starter-home end of the market, the average buyer's agent commission was 2.52%, up from 2.45% a year earlier. Redfin says that's the highest level for that price tier since the third quarter of 2023. The cheapest homes, bought by the people with the least money, now carry the highest rates.
Even the Consumer Federation of America, which supported decoupling, admits it. In its April 2026 survey of 223 HUD-backed housing counselors across 37 states, only 7% said their first-time buyer clients now pay smaller commissions than a year earlier.
So the price didn't go down. What changed is who pays it, and how.
The commission moved from the mortgage to the savings account
Here's the mechanism, and it's simple.
Before the settlement, the seller paid the whole commission. The buyer's agent got paid out of it, and the cost was built into the price of the home, which the buyer financed over 30 years like everything else in the price.
Now buyers are told to expect to pay their own agent. And when a buyer pays their agent, that money can't go into the mortgage. One California lender spelled it out as the rules took effect: buyers “cannot simply ‘finance’ commissions.” The only workaround is shrinking your down payment to free up cash, which raises your loan-to-value and can trigger mortgage insurance. For a buyer putting down 5% or less, the same lender says, that option “will usually not be viable.”
So the agent's fee becomes cash. Cash the buyer has to save, on top of the down payment, on top of closing costs.
And buyers can't count on the seller to cover it anymore. In the CFA survey, just 26% of counselors said sellers “often” or “always” cover the buyer's agent commission. Fifty-three percent said sellers “never,” “rarely,” or only “sometimes” do. Counselors told CFA they now have to educate clients on the need to save up additional funds to cover the buyer's agent fee.
Now look at what those same counselors named as the number one barrier for first-time buyers: saving up for a down payment, at 88%. Number three was paying out-of-pocket costs, at 70%.
Those two findings belong in the same sentence. The single hardest thing about buying a first home is saving the cash, and the settlement made the cash target bigger.
What that looks like in real dollars
Here's an example. Take a $300,000 home and Redfin's 2.52% average for homes under $500,000. That's $7,560 the buyer now has to plan on bringing in cash.
Realtor.com's economists put the typical U.S. down payment at $30,400 in the third quarter of 2025. In that example, the agent fee adds roughly a quarter on top of what a typical buyer already has to save for the down payment alone.
How long does that take to save? Realtor.com estimates what a median-income household saves per year at the 2025 national savings rate of 5.1%. For the Minneapolis–St. Paul metro, that's $5,149 a year. At that pace, $7,560 is close to a year and a half of extra saving. A year and a half of rent, a year and a half of rising prices, a year and a half more on the sidelines, for a fee that used to be rolled into the purchase.
Nationally, Realtor.com says it already takes the typical household 7 years to save for a typical down payment, roughly double the pre-pandemic norm. The settlement just added more time to that clock.
Veterans: the government had to patch its own mess
For decades, VA rules generally didn't let veterans using a VA loan pay real estate broker fees. When the settlement hit, the VA had to issue a temporary workaround, Circular 26-24-14, so veterans could pay their own agent. The catch: the fee can't be included in the loan amount, and lenders have to count it against the veteran's cash to close.
In its February 2026 report to Congress, the VA warned that some sellers “could refuse to accept bids from Veterans,” or veterans might give up representation to make their offers more competitive. It warned the added cost “might also lead to concerns regarding possible barriers to homeownership for certain categories of purchasers.”
That's the two-tier market I predicted. Those aren't my words. They're the VA's.
The cash buyer won
My biggest warning in 2024 was that decoupling would hand another advantage to wealthy and cash buyers. Look at who's buying.
NAR's 2025 Profile of Home Buyers and Sellers, covering the first full year under the new rules (July 2024 to June 2025), found first-time buyers fell to 21% of all purchases, the lowest since NAR started tracking in 1981. Their median age hit 40. Cash buyers reached 26% of sales, an all-time high.
The 2026 Profile, released November 5, shows first-time buyers barely recovering to 22%. A record 10% of first-time buyers paid all cash, and among them, 28% used an inheritance. The cash buyer never had to think about how to pay their agent. The first-time buyer saving out of a paycheck does.
What we actually got
High rates and high prices are the biggest part of this crisis, and the settlement didn't create them. But it took a cost that was financed, spread over 30 years, and built into the price of the home, and turned it into cash due at closing for the buyers least able to come up with it. In a market where a few thousand dollars decides who gets the house, that's not friction. That's a share of the affordability crisis, and Washington owns it.
The sky didn't fall the way I warned it might. It didn't have to. It just got a little higher for every first-time buyer trying to reach it.
The National Association of Realtors failed its members. The Department of Justice failed home buyers.
All of this because MLS rules required listing brokers to offer buyer brokers something, even as little as one cent. An eight-person jury in Kansas City, taught how the real estate industry works by trial lawyers over a two-week trial, deliberated for 2 hours and 28 minutes and handed down a verdict of $5.36 billion. That verdict reshaped how homes are bought and sold across the entire country.
The trial lawyers got their settlement. The DOJ got commissions off the MLS. NAR's leadership signed off on all of it. And the first-time buyer got a bigger number to save before they can make an offer.
Imagine that: let lawfare rewrite an industry, and the people with the least money end up paying for it. Our leaders are brilliant!
When all you see is numbers and don't understand the outcomes, you come up with bad ideas. Two years later, even the numbers aren't on their side.