How 2024's Real Estate Changes Are Shaping the 2025 Market

By Sean Zanganeh

The real estate industry experienced its most significant transformation in decades during 2024, and the ripple effects are fundamentally reshaping how we buy and sell homes in 2025. From mandatory buyer-agent agreements to revolutionary compensation structures, these changes aren't just regulatory adjustments—they're redefining the entire home-buying experience.

If you're planning to enter the market this year, understanding these shifts is crucial for making informed decisions and avoiding costly surprises. Let's dive into what changed, why it matters, and how it's affecting your 2025 real estate journey.

The 2024 Game-Changer: What Actually Happened?

In March 2024, the National Association of Realtors (NAR) reached a landmark settlement agreement following class-action lawsuits alleging anticompetitive practices in real estate commissions. The changes became effective August 17, 2024, and received final court approval on November 26, 2024.

The settlement addressed two core issues that had operated largely unchanged for decades:

1. Commission transparency and negotiation 2. Buyer representation agreements

These weren't minor tweaks to existing practices—they fundamentally altered how real estate professionals conduct business and how consumers navigate property transactions.

The Buyer-Agent Agreement Revolution

What Changed

Before August 2024: Buyer-agent agreements were encouraged but not required. Many buyers toured homes without any formal contract with their agent.

After August 2024: Agents must now have a written agreement with buyers before showing any property—whether in person or virtually. This agreement must clearly specify the agent's compensation amount or how it will be determined.

Why This Matters to You

This change brings transparency that protects both parties. As a buyer, you now know exactly what your agent will charge before you start looking at homes. The agreement must include:

• Specific compensation amount or percentage
• Services the agent will provide
• Duration of the agreement
• Conditions under which commission is paid

However, this also means you can't casually tour homes with different agents anymore. You're committed to working with the agent you sign with, making your initial choice more critical than ever.

Impact on Buyer Behavior

Early data from 2025 shows this change is making buyers more deliberate in their agent selection. Rather than working with the first agent they meet at an open house, savvy buyers are:

• Interviewing multiple agents before signing agreements
• Negotiating compensation terms upfront
• Seeking shorter-term agreements initially
• Asking for performance-based compensation structures

The Compensation Revolution: Who Pays What?

The Old System vs. The New Reality

Traditional Model: Sellers typically paid a total commission of 5-6% of the home's sale price, which was then split between the listing agent and buyer's agent (usually 2.5-3% each).

New Model: Listing agents can no longer advertise buyer-agent compensation on Multiple Listing Services (MLS). While sellers can still choose to pay buyer-agent commissions, it's no longer the default assumption.

What This Means for Buyers

The good news: You have more control over your representation costs and can potentially negotiate better rates.

The reality check: You may need to budget for your agent's compensation if the seller won't cover it. For a $500,000 home with a 2.5% buyer-agent commission, that's $12,500 you might need to bring to closing.

What This Means for Sellers

Potential savings: If you choose not to offer buyer-agent compensation, you could save thousands. On that same $500,000 home, paying only your listing agent's 2.5% commission saves you $12,500.

Competitive considerations: However, properties without buyer-agent compensation offers might receive fewer showings, as some buyers can't afford to pay their agent separately.

How These Changes Are Affecting the 2025 Market

Buyer Behavior Shifts

More Strategic Agent Selection: Buyers are no longer making impulse decisions about representation. They're interviewing agents, comparing compensation structures, and negotiating terms before committing.

Increased Price Sensitivity: With potential additional costs for buyer representation, affordability calculations have become more complex. Some buyers are:

• Seeking agents who offer flat fees or hourly rates
• Negotiating percentage-based commissions downward
• Requesting seller concessions to cover agent fees

Alternative Service Models: The market is seeing growth in discount brokerages, attorney-assisted transactions, and technology-driven platforms that offer unbundled services.

Market Dynamics in 2025

Inventory Growth: January 2025 marked the 15th straight month of inventory growth, with homes on the market 24.6% higher than a year earlier. This gives buyers more options and potentially more negotiating power.

Price Moderation: National home prices are expected to grow by just 1-3% in 2025, compared to 4-5% in 2024. The combination of increased inventory and new commission dynamics is contributing to more balanced market conditions.

Regional Variations: As of early 2025, the effects of commission changes look muted overall, but vary significantly by region. High-demand markets are adapting differently than areas with more inventory.

Navigating the New Landscape: Practical Strategies

For Buyers

1. Do Your Homework First

• Research agents thoroughly before signing any agreement
• Understand exactly what services you're paying for
• Compare commission structures and service levels

2. Negotiate Smartly

• Start with shorter-term agreements (30-60 days) to test the relationship
• Ask about performance incentives or flat-fee options
• Understand your exit clauses

3. Budget Realistically

• Factor potential agent costs into your affordability calculations
• Explore whether sellers are offering buyer-agent compensation
• Consider asking for seller concessions to cover your agent fees

For Sellers

1. Strategic Compensation Decisions

• Evaluate whether offering buyer-agent compensation increases your buyer pool
• Consider your local market conditions and competition
• Discuss strategy with your listing agent

2. Pricing Considerations

• Work with your agent to price competitively while accounting for compensation decisions
• Understand how your choices might affect showing activity
• Be prepared to adjust strategy based on market response

Looking Ahead: What to Expect

Short-Term Adjustments (2025)

The industry is still adapting to these changes. Expect continued regional variations as different markets develop their own practices around the new rules. Some areas may see more dramatic shifts in buyer behavior than others.

Long-Term Evolution

Industry experts predict commissions could drop below 4% overall as competition increases, but this will likely happen gradually. The changes are designed to increase transparency and competition, which typically benefits consumers over time.

Technology Integration: Expect continued growth in platforms that help buyers and sellers navigate these new waters more efficiently.

Service Specialization: Agents are likely to develop more specialized service offerings with corresponding pricing structures.

The Bottom Line

The 2024 real estate changes represent the most significant shift in industry practices in generations. While the transition creates some complexity, it ultimately puts more control and transparency in your hands as a consumer.

Key Takeaways:

• Plan ahead: Understand your representation costs before you start shopping
• Shop smart: Take time to select the right agent and negotiate appropriate terms
• Stay informed: Market conditions are evolving rapidly as these changes take effect
• Be flexible: What works in your market might be different from national trends

Whether you're buying or selling in 2025, success comes from understanding these new dynamics and working with professionals who can help you navigate them effectively. The transparency these changes bring ultimately benefits everyone—but only if you know how to use it to your advantage.

Ready to navigate the 2025 real estate market with confidence? Contact Sean Zanganeh for expert guidance on buying or selling in today's evolving landscape. Visit www.mysddreamhome.com to learn more about how these changes affect your specific situation.