The typical home seller pays an average of 2.55% commission to the real estate agent hired by their home’s buyer, according to an analysis of MLS data by Redfin (NASDAQ:RDFN). That’s down from an average of 2.62% in January, two months before the National Association of Realtors (NAR) agreed to its settlement in the Sitzer/Burnett case.
In dollar terms, the average commission paid to a buyer’s agent is $15,377, up slightly from $15,124 in January. This uptick in the dollar amount was attributed to rising home prices.
Redfin noted commissions have been declining for the past decade, dropping from gradually declining over the past decade, from an average of 2.89% in 2013 to 2.66% in 2023.
Among the major metro markets, commission percentages have declined most in Detroit, where the average commission paid to a buyer’s agent there was 2.87% during the four weeks ending July 14, down from 3.18% in January. Commission percentages are highest in Austin (2.99%), Cincinnati (2.95%) and San Antonio (2.91%), while they are lowest in Nassau County, New York (1.95%), Providence, Rhode Island (2.05%), and Anaheim, California (2.11%).
In dollar terms, San Francisco had the highest average commission at $50,734 while Cleveland had the lowest (average of $5,280 per deal).
“Redfin agents are reporting that commissions have been top of mind for clients since the NAR settlement was announced, and some sellers are asking about what it would mean to offer no commission or a relatively low one,” said Redfin Chief Economist Daryl Fairweather. “Still, even before the blitz of publicity around the class-action lawsuits and NAR settlement, commissions were coming down. That’s partly because of the competitive housing market before and during the pandemic – which motivated some sellers to offer a low commission because they knew they could still attract buyers – and greater fee transparency.”
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Disaster waiting to happen. To all my fellow Realtors know your “Worth” simple math. In end Sellers will be begging crawling for your services. One thing that sticks out me is that I read a comment about hiring real estate attorney. Well lol 🤣 because only thing you going receive from them is 200-500 hr bill and a message email me copy of contract.
I’m going at sellers hard because they will realize mistake of trying to underestimate value of seasoned Realtor.
Attorney are not going to leave office and meet you to show a property even take step further how about multiple properties in a day in a week and perhaps months. Attorney are not going to do that.
Amen, and to all my fellow realtors, don’t sell yourself short. Buyers HAVE been paying the commissions all along, by paying a high price for a seller’s home.
The Seller does Not pay the Buyer’s Broker and never did. The Seller’s Broker ( Listing Broker) paid the Buyer’s Broker from their earned Commission, once he received the commission for his services rendered to the Seller. Once the commission/fee is received he is free to spend it as a cost of providing the service to his client, the Seller.
He shouldn’t need permission from anyone, as he doesn’t need their permission to pay other expenses of running his business.
100%. It will get ugly as everyone sorts this out. The bad realtors that cause issues with the commissions will be a headache as well. I do not know why we are all still working with the NAR. They stabbed us all in the back. Why not start a new one with our own rules.
Sellers should be reminded- the Buyer is bringing the MONEY!
GREAT Point, And EDUCATED Seller’s Will Get The Point! Yet This Is CONFFUSION Time and US Agents Time To Revisit Our Basics and Further ABC
We Certainly Didn’t Need This At The High Interest % Rate Environment (Though NOW Fortunately For EVER Buyer and Existing, Rates have Certainly Peak And NOW The Infamous “”6″”% Equilibrium Is basically Here, So Simple! At 6%-$600 per month P & I per Hundred K!
I agree. An experienced agent without a doubt should recognize their value as they are not “average.” I have seen the best and brightest agents using this as an opportunity to increase their pay honestly. Anyone can get cheap services and get similar results. Consumers will pay above average fees for the best service.
Hmmm… and NAR and all the brokerages were somehow successfully sued saying realtors all conspired to keep commissions high when the average commission has DROPPED nearly 1/4 point in the past 10 years? By dismantling the structure all these lawsuits have done is empowered listing agents to charge higher commissions now with burdening them with more work showing their listing way more to unrepped buyers and thrusting 10x more liability on them writing their offers and getting hit with advisement questions. Commissions were already being self-corrected from the market and these moves now task listing agents with more work and in turn, likely higher commissions on that side.
The irony of that story is they’re saying that average real estate commission is blah blah, blah, and someplace and blah blah blah and someplace else. What exactly proves is that real estate commissions were and have always been negotiable and sadly the lawsuit was just a waste of time and money and now it’s just going to make things messy For buyers, sellers and real estate brokers and sadly make it even harder for buyers to buy a home
Real DEAL Is, (Without Getting Into a Thesis of Some Well Said Comments) The PUBLIC “Our Clients” Believe and Think They NEED To Pay Out-of-Pocket@Closing to Be Represented By A Buyer’s Agent!! So The past Current Trend Of Buyers Going Directly to LISTING Agents Of The Past 7-9 Years Will ONLY Accelerate! Unfortunately/FORTENENTLY; Listing Agents WIll Be Kings & Emperors and Delegate Whom Can “”Graze On Their Listing FARMland””
Thank you for your comments. In all due respect attorneys really don’t make that much money on real estate closings.
You are correct in that as soon as the market turns sellers will better appreciate our value. Right now, convincing buyers to sign a contract will be challenging.
Don’t know where they’re getting this average commissions….our average sale is no where near $500,000! This article is very misleading and a huge disservice to Realtors!
In my Opinion, The NAR Attorneys threw us All under the bus.
They know we have always been able to negotiate compensation with the sellers, myself and my brokerage (In all my 40 + years from 2%, my side, to 10%, for vacant land).
They also know the best of us can explain our value in the home buying and selling arena.
Their poor explanations and arguments are why we are all going to do more work, for less pay if this downward trend continues.
There’s a reason variable rate compensation is on a listing form. If they aren’t in your area, it’s too late now.
Having settled for NO compensation information on the MLS should have been the hardest fought battle by these attorneys. Instead it appears they never considered more training and education for agents OR on other ways to inform the public that the option exists. Just because an agent said a percentage is ‘Standard’ in a geo area, still left a conversation that it isn’t ‘fixed’. The property itself, and the geograghic market dictated the compensation conversation.
We are all worth way more than what the NAR attorneys gave us credit for.
I have never had a buyer sign a Buyers Agent form.
If they want to work with me, and I with them, so be it. Have I lost out on big and small transactions, of course. The enforcement and bad taste that can, and will develope from forcing a buyer to sign a 3 to 5 page Contract before showing them a hot property just coming on the market … the fallout from that will be very predictable. More attorneys making more money from bad representation by a few … both attorneys and agents.
No Warning $1,000 to $3,000 Penalties from MLS are a 8/17/24 Reality.
Good Luck to All My Agent Partners.
I Agree with Bob, we and the buyers have been thrown under the bus. I would like to know why the buyers and buyer agents are paying for this, when it was suppose to be about commission charged to sellers. From what I understand there is some conspiracy in all this. I am very concerned for all those buyers who are faced with signing a contract and thinking they are going to have to pay for services… Why is no one fighting all thiS?????
Zillow is already rolling out a 7 day representation agreement in some markets for their lead program. I imagine we will start to see these become common in every market, like a try it before you buy it period for agents. Which I’m not against at all, but this next year is going to be extremely sloppy with agents trying to figure out what’s the new protocol and which forms to use. Everything is about perception and this period is important to help buyer’s understand that this doesn’t mean they have to be on their own because they can’t afford to pay an agent. They can still negotiate agent commission with sellers.
Commissions were being self-corrected by the market, but ultimately I believe sellers will now pay listing agents more as the workload has been increased 50%. There may even be an INCREASE in average commissions/concessions sellers pay now. So these lawsuits were ill-advised in dismantling the predictability of the structure. By dismantling some predictability it makes it harder for agents to give rebates/discounts because now they don’t know what’s coming.
Commissions will now be at the forefront of contract discussions and buyers will now factor it in choosing between houses. It is no different from pricing a house $10k more than another house, except worse as the buyer can’t finance it. If a seller won’t pay a commission (or part of it) and an appraisal can’t handle a price increase, then it’s coming out of buyer pocket and that will affect whether they select that house or the one who’s seller will happily pay it to get the deal done.
It’s a false narrative by the class action attorneys that sellers will reduce their prices if no agent involved. Everyone wants the most they can get and if there isn’t a buyer agent, sellers want financial benefit too. Especially as the seller and listing agent assume way more liability of not having a buyer agent involved. Buyers voluntarily assume their risk of “buyer beware” and going through negotiations, comparable sales, inspections, repairs, financing, etc on their own and that will certainly turn litigious as they look for someone to blame when they come up on the short end of the stick.
Fees brokers charge sellers a “fee” straight $ or % to list and get a property sold – this Fee is part of the cost the list broker incurs doing “business” marketing fees, ad fees, photo, association fees, fees brokers pay for referral, etc. Cost of doing business — Broker #1 using a Buyer Broker is another form used to market a property – the cost Broker #1 pays to Buyer broker is taken out of the total lump sum seller is paying that brokerage to get their property sold!!! I have always discuss/disclosed to sellers – fees, cost, etc. — Our industry is being wrongly targeted. So many businesses operate in this manner – I ran a construction company – with few employees – I subcontracted most all labor out to 1099’s – I charged the customer same amount – whether I used employees or subs.. I did a JOB, I got a certain amount of $$ for completion ( a percent of entire job) There is no difference really – there are so many business which operate in this manner – Lenders and loan officers included.. Real estate is being unfairly targeted.