The United States residential real estate industry is undergoing a fundamental transformation, with traditional brokerage models experiencing a notable decline in prevalence among the nation's largest firms. This shift highlights a growing competition from newer models, including Capped, Fee-based, and Business Generation brokerages, which are reshaping how real estate agents and firms conduct business and earn revenue.
Key Takeaways
- Traditional brokerage models declined from 72% to 53% among top 100 brokerages since 2018.
- Despite the decline in numbers, Traditional models still offer higher average revenue margin for brokerages and agents.
- Average price point for Traditional model transactions is significantly higher at nearly $900,000.
- Newer models like Capped, Fee-based, and Business Generation are gaining ground.
Traditional Model's Evolving Footprint
For decades, the Traditional brokerage model dominated the real estate landscape. In this structure, brokerages share transaction commissions with agents, typically on splits ranging from 90-10 to 60-40, depending on the services provided. However, recent analysis reveals a clear trend of this model becoming less common among the largest real estate firms in the U.S.
In 2018, nearly three-quarters of the nation's 100 largest brokerages, specifically 72%, operated under the Traditional model. By 2025, this figure had dropped to just over half, standing at 53%. This represents a significant change in how the industry's biggest players are structured and compensated.
Key Statistic
The share of Traditional brokerage models among the top 100 U.S. brokerages fell by 19 percentage points between 2018 and 2025.
New Models Gain Traction
The decline in Traditional models is not happening in a vacuum. It is a direct result of the rise and increasing adoption of alternative brokerage structures. These include Capped models, where agents pay a brokerage a set fee after reaching a certain commission cap; Fee-based models, where agents pay a fixed fee per transaction or on a regular basis; and Business Generation models, which focus on providing leads and support in exchange for a share of commissions.
These newer models are actively competing for agents and market share, particularly among the largest firms. Their growth reflects an industry adapting to new technologies, changing agent demands, and evolving consumer expectations.
"The real estate industry is undergoing foundational changes going into 2026. Brokerage models are shifting, AI is becoming more sophisticated, and litigation continues to loom over several key players."
Revenue and Agent Earnings: A Deeper Look
Despite the decrease in the number of Traditional brokerages, they still hold a strong position in terms of revenue generation. Analysis shows that Traditional models generally provide more absolute revenue margin to brokerages. They also tend to generate more revenue for individual agents compared to Capped and Fee-based models.
This higher earning potential for agents in Traditional brokerages is largely attributed to the significantly higher average price points of their transactions. For instance, among the nation's 100 largest brokerages, Traditional firms boast an average transaction price of $892,242. This figure is substantially higher than those seen in other models, with Business Generation models recording the lowest average price point.
Understanding Brokerage Models
- Traditional: Commission split with brokerage (e.g., 70/30).
- Capped: Agent pays fees until a cap is reached, then keeps 100% of commission.
- Fee-based: Agent pays a flat fee per transaction or monthly/annually.
- Business Generation: Brokerage provides leads and support for a share of commission.
Agent Compensation and Transaction Value
When factoring in both the average price point and the average number of sides per agent, Traditional firms demonstrate higher revenue capture from each agent. Consequently, agents working under Traditional models typically take home more income than their counterparts at Capped and Fee-Based brokerages. This calculation excludes Business Generation models due to their distinct compensation plans involving significant in-house operations.
It is important to note that while agents might keep a relatively high percentage of gross commission income (GCI) at Fee-Based brokerages, the overall higher transaction values in Traditional models often translate to greater absolute earnings for agents.
Agent Take-Home Pay
Agents at Traditional brokerages typically earn more annually per transaction than those at Capped and Fee-Based models, primarily due to higher average property values.
Profitability Versus Gross Earnings
While Traditional brokerages may show higher gross earnings, their profitability rates might be closer to those of newer models. This is because Traditional firms often incur higher operational expenses. The detailed analysis involved identifying the business model of every brokerage within the top 100 of the 2025 Mega 1000 list and then applying economic factors such as average price point and average number of sides per agent for each model.
The industry is clearly in flux. As technology evolves and new leaders bring fresh visions, the landscape of residential real estate brokerage models will likely continue to diversify. Understanding these shifts is crucial for both brokerages aiming to remain competitive and agents seeking the most lucrative and supportive environments for their careers.
