What buyer-side commission assumption belongs in a model built out to 2027

Question

Rebuilding acquisition cost assumptions out to 2027, the buyer-side fee is one of the harder inputs to defend with data right now. Recent averages sit near 2.4 percent, essentially flat against pre-settlement levels. A Federal Reserve note suggested commissions may have slipped some while staying high, crediting part of that to sellers' agents sharing compensation outside the MLS. At least one industry survey has combined commissions ticking up through 2025. Against all of that sits a longer-run forecast of fees falling as much as 30 percent over time, affecting a large share of the roughly 1.6 million agents in the industry, which hasn't shown up in the near-term numbers yet. The honest range for 2027 is something like 1.7 to 2.5 percent, and that spread is real money, roughly 24 basis points of purchase price, which on a 300k deal is about 2,400 dollars, and on a five-deal pipeline becomes meaningful reserve. The case for holding near 2.4 is structural: buyers are typically out of cash after down payment and closing costs, so sellers keep covering the fee to stay competitive, and no rule change fixes buyer liquidity by itself. The case for modeling lower is that transparency compounds. Every buyer who now signs a number knows exactly what that number is up front, and agent headcount pressure points toward consolidation over time. A reasonable working assumption for a 2027 model is closer to the middle of that range, weighted slightly toward the lower end as transparency effects accumulate.

megan_doyle15 · Accepted Answer

Dumb question, is 2.4 percent the buyer side alone or both sides added together? I keep mixing those two up.

paulgrant17 · Answer

Rigging, the 2.4 figure is the buyer side by itself. Combined with the listing side you land somewhere near 5, which is why the survey Sextant mentions about combined commissions is a different number from the Redfin one. Sextant, I would model 2.4 and hold a separate line for the gap you might have to fund yourself, because the risk on a single deal is not the average drifting, it is one seller who offers 1.5 when you signed 2.5.

hannah_west29 · Answer

Your range is doing something odd. Treating 1.7 and 2.5 as symmetric possibilities isn't accurate, because the distribution of what sellers actually offer is clumpy. It sits at 2.5, 2.4 and 2.0 with very little between, since those are the numbers brokerages have printed on forms for thirty years. Averages drift smoothly, individual deals do not. For a five-deal pipeline the safer model is 2.5, treating anything under it as upside rather than running the mean and getting surprised on the specific house. The other thing a model like this can hide is that the fee is a percentage of a number that gets negotiated. Getting 8k off the price does more than 20 basis points off the fee, and the fee argument eats attention out of proportion to its size.

karen_whitfield · Answer

On land the whole framing shifts. Fewer comps, fewer agents who know the parcel, and I have paid flat fees above 2.4 equivalent happily because the work was survey and access questions rather than showings.

gregpowell66 · Answer

The clumpy distribution point matches a pattern that shows up on the construction side. Everybody quotes the same number until one firm breaks ranks, and then a whole market resets in a season. Sub trade pricing has moved that way in plenty of regions. If it happens to buyer side fees it will not be a slow slide to 1.7, it will be one large brokerage in a metro publishing a flat fee and the rest matching within a year. Sextant, that argues for modeling the current number and keeping the flexibility to reprice, since a step change you can respond to hurts less than an average you guessed wrong.

What buyer-side commission assumption belongs in a model built out to 2027

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