A new report from Alloy Advisors estimates that a typical $400,000 home sale in the U.S. generates $39,660 in transaction costs, with real estate commissions absorbing the largest share. The research suggests artificial intelligence will accelerate downward pressure on the traditional 5%-plus commission model by exposing the gap between these fees and the actual value delivered.
On a $400,000 sale, combined "hard" costs reach roughly 9.92% of the sale price. Sellers pay about $30,200 of this total, while buyers pay around $9,460 at closing beyond their down payment. Real estate commissions account for $23,000 of that total, representing 5.75% of the sale price and 76% of seller-paid friction.
The remaining $16,660 covers transfer taxes, title insurance, settlement fees, loan origination, underwriting, appraisals, and home inspections. Researchers also point to an embedded "platform tax" within agent commissions, attributing this to portal referral programs and MLS fees that rarely appear as standalone charges to consumers.
Commissions remain sticky post-settlement
Despite the National Association of Realtors' commission lawsuit settlement, rates have not compressed. The national average commission rose to 5.44% in mid-2025, up from 5.32% the previous year. An April 2025 survey found that 58.8% of agents reported their buy-side commissions had not changed since the settlement took effect in August 2024, while 11.76% reported an increase.
Researchers attribute this to structural factors. The settlement did not practically remove seller-paid buyer commissions, 13 states and Washington, D.C., ban à la carte brokerage services, and the system only compensates agents when a deal closes. These factors help explain why overall commission levels remain high despite significant legal and regulatory changes.
How AI changes the value equation
The report argues that most tasks bundled into a standard 3% listing commission have been commoditized by software. The authors separate agent work into two tiers to illustrate this shift. Tier 1 tasks, such as comparative market analyses, MLS entry, listing descriptions, and transaction coordination, previously held a market value of $1,500 to $3,500.
With modern tools, the marginal cost of these services has fallen close to zero for a competent user. To remain competitive, professionals must adapt their workflows and focus on high-value human interactions, a shift that resources like an AI Learning Path for Real Estate Brokers are designed to support. Tier 2 tasks, including skilled negotiation, emotional coaching, and hyperlocal knowledge, hold an estimated value of $2,000 to $6,500 per transaction, regardless of the home price.
"The real estate industry thinks that AI is just here to serve the industry and real estate professionals, but that is not the case," Kulkarni said. "AI is here to serve whoever wants to use it and that could mean a variety of different things for different industries, but when it comes to the real estate transaction, I think it will mean that consumers will soon find it overpriced."
Consumer trust and negotiation
Buyers and sellers are already using these tools to evaluate proposed terms and line items. A 2025 Realtor.com report found that 82% of active or potential buyers and sellers used AI for housing insights. While consumers still perceive agents as more accurate overall, a December 2025 YouGov survey noted that 65% of Americans trust AI to compare prices on major purchases like homes.
The broader adoption of AI for Real Estate & Construction allows consumers to independently evaluate proposed terms, line items, and alternatives in real time. This information asymmetry is shifting, enabling clients to distinguish between the administrative work of an agent and their actual negotiation value.
"The more AI is used by consumers and the more information about a transaction it can provide them, becoming a real legitimate tool for them to process information as opposed to the human hand they are holding through the transaction," Cofano said. "For the industry to not expect that to impact the fundamental economics of this, is just fantasy."
"There is a reason consumers dislike buying cars and it is because, for most consumers, the stress around negotiating on their own behalf is something that's very unpleasant and they're not good at it," Cofano said. "So, it is important to highlight here that we believe that the role of the agent as active negotiator and trust companion in the transaction plays a meaningful role and is worth money. And I don't think that is going away anytime soon."
Why this matters for real estate and construction professionals
The traditional percentage-based commission model is increasingly difficult to defend as artificial intelligence automates routine transaction tasks. Professionals must pivot their business models to explicitly justify their fees through demonstrable performance in negotiation, local market insight, and client advocacy. Those who continue to charge premium rates for commoditized administrative work will face immediate competitive pressure from AI-assisted consumers and alternative pricing structures.
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