Clawbacks Are Killing the Spirit of Residential Real Estate

It’s time to rethink how we treat agents — and what loyalty really means.

Over the last 20 years, the NYC real estate industry has seen a quiet but powerful shift in how brokerages structure their agreements with agents. I'm talking about clawbacks.

Once a rare, eyebrow-raising clause, clawbacks have become commonplace. They started in slowly being included and have since snowballed, making their way into nearly every brokerage agreement. The reasoning? Brokerages don't want to be left vulnerable if an agent leaves after receiving commission advances, signing bonuses, or marketing support.

But here’s the real issue: clawbacks go against everything that makes the residential real estate community thrive.

This business has always been about relationships — real ones. Trust, respect, collaboration. Agents are independent contractors, yes. But they’re also salespeople, entrepreneurs, and brand ambassadors. They choose to affiliate with a brokerage because they believe in the vision, the support, and the opportunity. When you introduce clawbacks, that belief system starts to crumble.

Clawbacks create a false relationship between agent and brokerage. Instead of building partnerships based on performance and mutual respect, they shackle agents with financial penalties and fine print. It’s not loyalty. It’s leverage.

Even worse, they make it nearly impossible — or at least cost-prohibitive — for companies to recruit top talent. When agents are faced with paying back tens of thousands of dollars just to leave a company, they’re stuck. These are barbed wire handcuffs. Not motivation. Not support. Not partnership.

So, what if we did it differently?

What if brokerages focused on building strong, lasting relationships with their agents — based on true loyalty and shared business goals? What if agents stayed because they wanted to, not because they had to?

That kind of loyalty can’t be bought or enforced. It’s earned. And it’s the kind of loyalty that leads to real growth — for both agents and brokerages.

The industry has to ask itself: Are we building relationships worth staying for? Or just contracts too expensive to leave?