Real estate agents are paying billions in excessive agent fees, the CPC report claims

Destroying low paying vendors?

Nadel wrote that the threat has led the industry to “thwart legal or administrative threats against the status quo,” to discourage agents from openly undercutting their prices, and to try to “destroy brokers who offer low prices by driving customers away from deals involving “low-paying” sellers or agents on the other side of the sale.

The report states that, in general, if a seller complains to a traditional agent that a lower-paid agent was only willing to charge 1% ($9,000) to sell a $900,000 house, the traditional agent would argue that the lower-paid agent should exceed the amount or quality of services offered.

According to Nadel, this alleged regulation is “still a problem,” and he says the industry has used it to protect “billions/year in fees against effective price competition.”

Additionally, Nadel asserts that while many people view real estate agents as commission salespeople, this assumption is incorrect. In the report, he notes that for many sellers, “the amount of goods or services they sell is adjusted to cover the employer’s expenses (including commission) and a certain profit margin.”

Based on this model, Nadel notes that if a salesperson doubles his sales, he doubles his employer’s sales revenue, which he says ensures their double commission.

In contrast, Nadel notes that the sale price of a home is not intended to recoup the seller’s costs and a margin of profit, arguing that it does not justify the agent’s commission doubling just because the sale price of the home doubles.

Nadel adds that an analysis of the specific activities performed by the agent during the sale of the home fails “to reveal a reason for the buyers to pay a fee based on the sale price of the home.”

“The majority of an agent’s income is compensation for their time. And while an experienced, professional agent may want and deserve a higher hourly rate than a new agent, basing payments on real estate prices does not accomplish that,” Nadel wrote.

“It simply encourages the best agents to compete to work with buyers and sellers of the highest value houses, even if their special expertise may not be needed. If, instead, agents with more knowledge and/or skills could advertise them and their higher fees – like lawyers, accountants, etc. – then those who would benefit the most from those qualities and could afford them, if they couldn’t afford their own houses.”

He practices under the microscope

While Nadel said many agents still discourage buyers from working with low-cost agents, he noted that in today’s slow real estate market, many traditional agents are willing to accept referrals from lower-fee firms. And he thinks they are more open to accepting a reduced commission for “moonlighting” through referral services like You are smart or Houzeo.

According to the report, the remaining significant barrier to lower agent fees for consumers is the “unfounded” assumption that lower commissions are associated with lower service quality. Nadel wrote that based on his analysis, these fears are “unfounded.” As a result, he and the CPC urge consumers to seriously consider low-paying agents.

The report cites a national survey from April 2025, which found that 82% of homeowners expressed concern that a low-cost realtor will not provide all the services they need to successfully sell their home. Of the consumers surveyed, only 42% said they would “probably” or “definitely” consider a retailer that charges 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 buyer and seller agent commissions. He asks that they keep any unused funds from the sales proceeds set aside to pay the buyer’s agent’s commission, and that buyers and their agents not skip viewing homes that do not openly offer buyer’s agent commissions.

Real estate agent commissions are constantly scrutinized by federal regulators, including Department of Justice (DOJ). Except for business changes authorized by National Association of Realtors‘ (NAR) Agreement to settle the commission case, agent commissions remain unchanged, with recent reports that they increased more than a year after the business changes took effect.