To:
National Association of Realtors (NAR),
State Real Estate Boards,
Real Estate Brokerage Firms,
Consumer Advocacy Groups

Subject: Reform Real Estate Commission Structures – Base Agent Commissions Solely on Seller’s Equity, Not on Total Sale Price

 
Background:
In current real estate transactions, real estate agents typically receive commissions calculated as a percentage of the total sale price of the property — including both the homeowner’s equity and the outstanding mortgage amount owed to the lender. This longstanding practice often results in an inequitable situation where agents benefit from mortgage amounts that sellers do not actually possess as wealth.

As property prices have soared and mortgage balances have increased, sellers are burdened by paying commissions on money they never truly own. This outdated model places undue financial strain on homeowners, particularly in times of high interest rates and economic uncertainty.

 
Petition Request:
We, the undersigned, respectfully request that real estate commissions be restructured so that agents' fees are calculated only on the seller’s equity portion — the true amount the seller owns and stands to gain from the sale — and not on the full property sale price including the mortgage balance.

 
Justification:

Fairness to Sellers:

Sellers should not pay commission on the lender's money. They should only pay fees on the proceeds they rightfully own.
Alignment of Interests:

Agents would be incentivized to help sellers maximize equity realization rather than simply pushing for higher sale prices regardless of the seller’s financial outcome.
Consumer Protection:

The current commission structure often penalizes financially vulnerable sellers (e.g., those with high mortgage balances or underwater mortgages), further deepening inequities.
Modernization of Practices:

The real estate industry must evolve to reflect financial realities in a modern economy, offering transparency and ethics-driven practices aligned with consumer rights movements.
Encouragement of Ethical Representation:

By focusing commission on actual seller gains, agents are more likely to act as trusted advisors rather than transaction maximizers.
 
Proposed Structure Example:

Instead of:

Sale Price: $500,000
Outstanding Mortgage: $400,000
Seller’s Equity: $100,000
Traditional 6% Commission: $30,000 (on $500,000)
We propose:

Agent’s Commission: 6% of Seller's Equity = 6% of $100,000 = $6,000
 
Call to Action:
We urge real estate regulatory bodies, associations, and brokerages to immediately review commission practices and advocate for a new industry standard based on equity-based commissions.

This reform will enhance fairness, rebuild trust in real estate transactions, and better protect American homeowners.

Signatures: