Why Are Realtor Fees So High in NYC?
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Realtor fees stay so high because the commission is a fixed percentage, anyone can become an agent, and both sides are paid from one pot. When house prices rise, the fee rises too, and the money attracts more agents rather than lowering the rate. In 2024, the US total ran about 5% to 6%.
Georges founded NestApple over this exact question, and his stockbroker charges him $4.95, which he has never let go of. This page is his argument, updated with what the Federal Reserve and the academic literature have since measured.
The short answer: the percentage never got the memo that the internet happened.
| Country | Typical total agent commission |
|---|---|
| United States | ~5% to 6% |
| France | ~4.5% to 8%, sliding by price |
| Netherlands, Belgium, Ireland, Japan | ~3% or less |
| United Kingdom | ~1% to 2% + VAT |
| Central / prime London | often ~1.2% to 1.7% + VAT |
Directional figures, from Delcoure and Miller (2002) and more recent UK sources. Rates and the way buyer-side fees are counted vary.
Why are realtor fees so high?
Three things lock the rate in place.
First, it’s a percentage rather than a price for the work. Selling a $2 million home isn’t twice the effort of selling a $1 million home, but the fee doubles.
Second, entry is nearly free. Getting a license takes weeks. So when prices rise and commissions rise with them, the reward attracts more agents rather than triggering price competition.
Third, the two sides are coupled. The seller pays a total that covers both agents. Historically, a buyer had little reason to pay their own agent’s fee because the seller was paying it.
The rate that never moved
Mostly true, with a correction. The FTC’s 1983 Butters Report found that more than half of home sales in 1977 carried a 6% commission. It found 6% to 7% clustering in 15 of 16 cities studied. A number that outlasted the fax machine and most of the fax companies.
A 2022 Consumer Federation of America study of 17,805 sales found near-uniform rates: in 10 cities, 87% or more of sales carried an identical commission rate.
The correction comes from the Federal Reserve. Its 2026 study measured a real but modest drift, from about 3.0% per side in the late 1990s to about 2.7% in 2023. So “unchanged for 40 years” overstates it. “Barely changed while prices doubled” is closer.
What the economists found: why don’t commissions fall?
Because competition in this market burns off as effort, not as lower prices.
Hsieh and Moretti modeled it in 2003. When local house prices rise, the share of workers who are agents rises too, and the number of houses each one sells falls.
The average agent’s real income stays flat. The competition is real, but it’s wasted.
Barwick and Pathak measured it in Boston in 2015. Halve commissions, they found, and you get roughly 40% fewer agents, each handling about 73% more transactions. Cut the fee in half, and you get half the agents, not half the service.
A 2017 study by Barwick, Pathak, and Wong found that the coupling has a sharper edge. Across 653,475 Massachusetts listings, homes offering a below-standard buyer-agent commission were 5% less likely to sell. They took 12% longer because buyer agents steered around them.
How the US compares to other countries
Poorly, if you’re a seller. Delcoure and Miller set US resale commissions at 6% to 7% and UK commissions at 1% to 2%. Belgium, Ireland, Japan, and the Netherlands sit at roughly 3% or less. The same house sold in London costs a fifth of the fee.
The scale is large. The Federal Reserve estimated that 2024 US commissions and related transaction costs totaled about $170 billion, roughly 0.6% of GDP. Our closing-cost calculators let you see your slice of it.
Why the 2024 settlement barely moved the needle
The NAR settlement was a courtroom loss and a rounding error, at least so far. NAR paid $418 million and changed how the fee is disclosed and agreed.
But the Federal Reserve found that buyer-representation agreements and rebate bans had “no material or statistically significant effects” on advertised commission rates. A year in, the national average had barely moved off 2.7% on the buyer side. The mechanism that keeps the rate high, coupling plus free entry, is still there.
Our page on whether the NAR settlement lowered commissions has the numbers.
Georges’s original argument
He wrote it in 2017, and it still reads straight.
“When I place an order to buy Microsoft stocks, my broker charges me $4.95. I can choose and compare thousands of options when I shop for a hotel, insurance, or plane ticket. The internet has reduced the role of inefficient intermediaries in most industries. Why haven’t real estate brokers in New York been affected?”
He argues as an outsider. “As a Frenchman, I am particularly shocked by the high 6% real estate fees paid in New York City.” He isn’t an agent complaining about peers. He’s someone who traded on Wall Street for 16 years, looking at a market that skipped the disintermediation that everything else went through.
The position he stakes: the role of the broker has changed, and the fee should have changed with it.
What does a rebate do about it?
If the market won’t lower the fee, hand back part of it. That’s the NestApple model. New York law allows it: Real Property Law ยง 442 permits a broker to rebate part of its commission to the buyer.
The seller still pays the full commission. We keep a working share and rebate the rest, averaging about $22,000 per closing, more than $11 million since 2017. It doesn’t fix the rate. It moves some of the money to the person who did the searching.
See what NestApple returns to buyers, read whether commission rebates are legal where you are, and price a real deal in our closing-cost calculators. This page is part of our guide to NYC commissions and rebates.
Common questions
Have realtor commissions ever gone down? Slightly. The Federal Reserve measured a drift from about 3.0% per side in the late 1990s to about 2.7% in 2023, while house prices roughly doubled. Rates are much lower abroad.
Why don’t real estate commissions fall with competition? Because entry is easy and the rate is fixed. New agents compete for the same deals rather than on price. Competition shows up as more agents earning less each, not as a lower fee.
Are realtor fees negotiable? Yes. Commission rates are not set by law anywhere in the US. New York’s license law says so directly, and the 2024 rules made the number an explicitly negotiated term.
Did the NAR settlement lower fees? Not measurably yet. The Federal Reserve found no significant effect on advertised rates a year after the changes took effect.
Nicole Fishman Benoliel co-founded NestApple in 2017. She's a lawyer admitted to the New York bar - her law degree is from La Escuela Libre de Derecho in Costa Rica, with further study at IE Business School in Madrid and an LLM from Fordham in New York. She does not act in a legal capacity at NestApple; every client is referred to an attorney who handles real estate deals full time.
