AI poised to ‘break’ agent commission model, report says
A new Alloy Advisors report suggests consumers are overpaying for about half of the costs involved in selling a home as AI streamlines the transaction process.
Key points:
- Real estate agents clearly outperform AI on just three of 23 tasks involved in a home sale, according to a new report from Alloy Advisors.
- As AI automation streamlines many parts of the transaction process, the report estimates that about half of the costs involved in selling a home are “overpriced.”
- But this doesn’t mean agents don’t still provide value — just that “the commission standard is likely to break” and business modifications are needed as AI use expands.
There are only three services that real estate agents provide during a home sale where human performance clearly beats artificial intelligence — and, while valuable, those services are worth thousands of dollars less than consumers currently pay, according to a new report from Alloy Advisors.
Moreover, the 32-page report found that about half of home sale transaction costs are "overpriced," largely due to AI automation.
Titled "The Home Sale Transaction, Reconsidered" and authored by consultants and industry veterans Amit Kulkarni and Russ Cofano, the report emphasized that the rise of AI is poised to disrupt a model in which valuable tasks are priced identically for every agent, regardless of skill or outcome.
"The commission standard is likely to break within 5 to 7 years — meaning 5.44% stops being the default assumption, not that full-service agency disappears," the report said.
A gap in trust
Citing a December 2025 YouGov survey, the report noted that while 65% of people trust AI to compare prices, only 14% trust it to act on their behalf — shares that have stayed roughly the same over the past two years even as AI capabilities have grown.
The opportunity "is not with the pure-AI platforms" betting on consumer trust "they do not yet have" or with "the incumbents betting nothing will change," the report said. "It is in the middle — products and advisory relationships that use AI to make human judgment better and more transparent."
Task-by-task audit
The sale of a typical $400,000 home costs $39,660, the report calculated, with most of that cost ($30,200) borne by the seller and the rest by the buyer. The study's authors estimated that $17,000-$22,000 of the total cost — most of which is agent commissions — is "overpriced."
"The 3% listing commission was priced when agents controlled scarce information: access to listings, buyers, and valuations," the report said. "AI has collapsed the market rate for most of that work to near-zero."
The report broke down the typical home sale into 23 agent tasks. From there, it assessed whether humans tend to tackle each task better than AI or vice versa, and estimated the fair market value for those services.
AI beats humans on 10 tasks, most of which involve low-skilled clerical work such as MLS listing entry, listing descriptions and showing scheduling. Both humans and AI "contribute meaningfully" to six tasks, including home valuations, staging recommendations, and offer review and strategy. Human presence is required for two tasks by law, including licensed fiduciary accountability.
The report was inconclusive on the winner for repair priority guidance and disclosure document review.
Where the best agents beat AI
Only three of the 23 tasks have a clear human advantage. But those tasks — negotiation execution, hyperlocal tacit knowledge, and emotional support and crisis management — are among the most valuable, the report noted.
In a phone interview with Real Estate News, Kulkarni and Cofano emphasized that the quality of the agent matters in regards to whether AI or humans ultimately win in these three areas. "You've got to really know your business," Kulkarni said.
If an agent completes three deals a year, AI wins, according to Cofano. But "highly-trained negotiators will win out over AI for some period of time, if not forever," he added.
Fantasy versus reality
Still, the fair market value for these and two other "human core" services (licensed accountability and on-site judgment) ranges from $2,000-$6,500, the report found — but consumers are paying more.
"On a $400,000 home, sellers pay $12,000 for that work. On a $1.5M home, they pay $45,000 for the same work," it said.
The analysis is not a "knock" on the real estate industry or a "scare tactic," Cofano explained. Instead, it seeks to illustrate what he described as a "fantasy" in thinking AI won't have a downward pressure on compensation — and "to let folks know change is coming — and here are some monetary implications," Kulkarni added.
Analysis limitations
While the report cited dozens of sources, its authors noted that the included service valuations were "constructed bottom-up estimates from freelance and professional market rates," not from empirical survey data. There were "no controlled studies" available comparing final sale price of AI-assisted versus traditionally-assisted transactions at the time of publication, they added.
Even if the report is just "marginally accurate," Cofano said, its findings represent a significant impact on the industry — and both agents and brokers should be "modifying their businesses to be sustainable" in the face of change.
Free tool explores 7 ways to sell
A press release about the report highlighted The Home Seller's Reality Check, a free public tool from Alloy Advisors that aims to help future sellers understand their options by showing what they would net if they sold under each of seven specific approaches: traditional full-service, exclusive preview, private off-MLS, discount broker, flat-fee MLS, full FSBO and iBuyer cash offers.
The tool considers carrying costs, as well as market conditions and real-time updates, as a user enters a series of home details that includes the address, square footage, their mortgage balance and more.
"Most home sellers think they have two choices: hire a full-service agent or list it themselves," Cofano said in a statement. Until consumers can explore each of the "seven viable paths" open to them, he added, "the commission standard isn't going anywhere."