The commission changes were expected to occur with the National Association of Realtors’ (NAR) historic settlement have not come to pass in many markets, according to a new report by Redfin (NASDAQ: RDFN).
The new report, which is based on interviews with dozens of Redfin agents, found the typical buyer’s agent commission was 2.55%, down slightly from before the settlement was announced. Redfin’s report noted more sellers now that realize commissions are negotiable and seek to get the buyer to cover some or all of the buyside commission. As a result, how much a buyer or seller negotiates will depend on demand for the listing.
“We’ve found a tale of two markets,” said Redfin Chief Economist Daryl Fairweather. “In slow markets where there’s less demand from homebuyers, like Austin, agents report that most sellers are still willing to pay the buyer’s agent commission to attract buyers, and agent fees are mostly the same as before. In markets with low inventory and robust demand, like San Francisco and Boston, agents report more instances of negotiation around fees, with sellers asking buyers to make their best offer rather than preemptively deciding what they want to offer a buyer’s agent.”
Fairweather added, “Now, like the amount of earnest money deposit or including an inspection contingency, the amount the buyer is asking the seller to pay her agent is a term that impacts the strength of the offer. That will likely drive fees down over time.”
Redfin’s agents reported there was more downward pressure on buyer’s agent commissions for high-end listings.
“Buyers and sellers of luxury homes are more likely to negotiate agent fees, which makes sense because on a $5 million home every half a percent is $25,000,” says Mimi Trieu, a Redfin Premier agent in Silicon Valley. “They want to make sure they are getting value from their agent. My luxury listings aren’t offering a certain buyside commission. If the buyer makes a great offer, they’ll consider paying the buyer’s agent.”
And the NAR settlement’s requirement for removing the offer of compensation from the MLS has been replaced with other forms of communications. Redfin found some of its agents in the Dallas and Portland markets have seen instances of “3%” written on a lockbox.
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The Buyer has always paid the compensation fees for both sides and it is has always been included in the price.
If it is not included in the price then the price should be lowered by the respective fees and the buyer will still pay it, they are the buyer.
The seller had never paid the fees.
This applies to houses, food, transportation etc etc
The Buyer always pays.
And Corporations do not pay taxes it is paid by the buyer, ie, the consumer always pays the taxes in the price.
And Tarrifs are not paid by the importing country they are paid by the buyer.
The Buyer always pays.
Not the Seller.
THANK YOU!!!!! It amazes me how few people get that.
Well before the NAR settlement, I’ve written offerors with my compensation to be less than posted in MLS. It has NEVER been seller paid nor even seller or agent controlled other than thru negotiation. The buyer & the eventual contract stemming from a buyer’s offer have always ruled, no mater what was advertised prior to contract and aways will no matter what is or isn’t advertised in MLS or elsewhere. This whole thing is an exercise in stupidity.
What happened to transparency??? It seems as though when everyone was making decisions on compensation/commission they took transparency out of the picture. Now it’s a conversation between brokerages without disclosure on the MLS?!?!
New world … commission / compensation is one of the first conversations we have about properties — when a buyer broker calls about a property one of the first things I’m ask is ….Is the seller paying buyer broker compensation???
Instead of transparency on the MLS, the discussion about the property and compensation is discussed with other agents via other forms of communication.
Commission has always been negotiated with transparency it seems as though people making the decisions forgot about the transaction and transparency portion of the negotiations.
Very interesting the first lawsuit about commissions opens a new start up … ala cart fees.
This a quote from Sitzer after the lawsuit…now he’s in the real estate industry and is a a real estate broker now making money off buyers???
“Our hard-won settlement paved the way for a new era,” said Josh Sitzer, whose company offers flat-fee home tour and offer preparation services for buyers.
Here, here!!
When will the idiots ever understand?
Perhaps there should be a major requirement that ALL people should study ECONOMICS.
Thank you
Well said, Bob Knight. I’ve been preaching that the buyer has always paid the commission but that has mostly fallen on deaf ears. The buyer is only one to bring cash to the table.
I’m counseling my listings to offer compensation to the buyer’s agent.
What perplexes me the most is how our NAR ended up in a lawsuit and our lawyers went along with so many untruths. Commissions have always been negotiable but a weak agent may not have realized that. When I started the business in 1992, 7% was common. Now 5% commission is the norm. And banning sellers from publishing buyer’s broker commission seems to be even less transparent than before. Very disappointed in our leadership.
In reality, the commission is paid by neither the buyer nor the seller. It is paid from the proceeds of the transaction. That has always been the case.
Also, commissions have ALWAYS been negotiable since I have been in the business – 1978! And, for clarification, discussion of commissions in terms of what is “common” or what is “standard” has always been prohibited in all the time I have been a real estate broker. The reason commissions by percentage are no longer set out in MLS is to avoid the appearance of “price fixing.” While it is certainly more transparent, by putting a number in MLS, the implication is that this is a “standard” fee and not negotiable.
In Massachusetts, before agency disclosure became a reality, we always informed unrepresented buyers (which wasn’t even a thing in those days) that our fiduciary duty was to the seller and that they should never tell us anything they dd not want to get back to the Seller. They should never say, “I’m offering X, but will go up to Y, if necessary” because we would have to disclose that. Agency Disclosure did clarify the roles and responsibilities so that most buyers knew what they could and could not say to the broker – depending on their agency relationship.
Bottom line – we are all going to need a lot more education if we are going to be able to avoid the landmines that got us here in the first place.
All of this stems from a belief that because seller’s have to relinquish 3% of their gain that it keeps sales prices high. If buyer is expected to pay we should be seeing prices dropping across the country by 3%. Seller’s aren’t dropping their prices for no buyer agent because most listing agents I’m seeing now charge more for the increase in work/liability if there’s no buyer agent.
Every seller is a buyer. You pay both agents when you sell, but you pay no agents when you buy, so the commission lawsuits really helped the 6% of buyers who wish to buy without representation. However, even most of those buyers want some sort of assistance either by locating, accessing, contract work, inspections, guidance through potential complex issues, and coordination from an agent. In other words, even those who CLAIM they don’t need an agent really rely on an agent to do some parts for them.
So all of this pretty much screwed up the industry and real estate litigation will increase as buyers who go at it alone look to point fingers at listing agents and sellers when things go bad for them.
just put it on the internet what seller is paying as the start like sellers compensation is 3% to buyers broker. Just not in the MLS, so that is so stupid you can put the sellers agency a fee anywhere but the mls. What the hell after 30 years of doing this.
More like 100 years.
Just because N.A.R. and major brokerage firms settled and created new forms, does not mean buyers all of a sudden have the money to pay their agents commission. The only difference we are seeing is that commissions are no longer in the MLS. How transparent is that?
Buyers have always paid brokerage compensation – for both sides. It’s all factored into the price and all funds distributed come from the funds the buyer brings to closing.
Come on now, think about it.. Sitzler all of a sudden after settlement decides to open fee for service brokerage…
Flat fee anf fee for service brokers have been complaining for decades that agents have been avoiding their listings because they weren’t paying a buyer fee.
They faught it in California and made bank for having a crappy busineds model in addition to taking any transparency off the MLS.
You are so correct Bob Knight! That’s the way it works.
This was an orchestrated takeover of Buyer Agents by the current DOJ and lawyers who don’t like agents getting paid for our services. An undercover recording of a lawyer admitting this is floating around. And it also supports all of the Build to Rent Single Family Homes and Biden’s plans for only the wealthy to be able to afford a home. Pushing buyers to pay out of pocket makes them eternally renters, who vote for free government handouts because renters are not as invested in their communities or neighborhoods to keep up property values. This further divides the Haves and Have Nots, it’s class warfare.
This didn’t benefit anyone but the attorneys who made millions on this class action lawsuit. SITZER’S neighbor is a lawyer, and he suggested to Sitzer to sue NAR.
You are correct Jennifer Ferguson.
Have You noticed Every time The Government sticks their Nose into ANYTHING They Totally Screw it Up!!
Since When has BIDEN & the DOJ done our JOB.
Are they Realtors or Brokers? They Know ZIP Of what this Business entails.
Commissions have Always Been Negotiable. Also, the MLS made it Transparent.
They Act like they Just made it easier when all they REALLY WANT is to CONTROL US!
I’m Not FALLING FOR Your Stupidity.
BYE-BYE NAR & MLS.
I refuse to Pay Your FEES.
Then Where Will you find the $$ to pay off these frivolous lawsuits??
I REFUSE TO BE CONTROLLED By a Communist Party.
With the Internet, We can ADVERTISE OURSELVES & disclose whatever we Want.
I’ve been a Realtor for 25 years & a Broker for 20 years.
I’m SO DONE!!!
#Trump/Vance2024
Wouldn’t it be easier to put the commission on the public side and a buyer can decide if they want to see the home or not? THAT would be transparency!
I agree with this article. In our MLS (WNYREIS) the listing agreement, under compensation lists total compensation, this would include the listing fee and a figure the seller would pay to a buyers agent, and then spells out the listing side and the buyer agent side. The problem with this is that the seller would be liable for the total compensation, say 6%, 3% to listing side and 3% to buyer side. If the buyer agent brought in an acceptable contract and was asking for 2% buyer agent fee, and the seller gets billed for the total compensation, according to the contract, what happens to the extra 1%. This is why my wife and I went to the New York State association of realtors form, where under compensation there is a fee for the seller agent and in addition that to a fee for the buyers agent, which we enter negotiable upon submitted contract.
They took the transparency out of commissions by omitting it in the MLS. This entire matter was not thought out in particular by NAR. Now one of the main plaintiffs Sitzer of the Sitzer/burnett case who brought NAR to its knees is starting up a biz catering to buyers w no brokerage – WTF?
$49 to show a house, pay 15% Social Security, 20% income tax, gas, business insurance, printer, Paper Computer, and MLS fees. Might as well work at Dollar Tree…. and the buyers are not really getting good representation. They forget that we do comparables, work with lenders to find buyers best financing to suit their situation, help them figure the payments, negotiate problems from home inspections and all other things that come up in every transaction.
Jay, Totally agree with you!!!
What is not being considered is that when an Appraiser has been asked to determine the value of a property, the price of the commission/compensation is already in the price of the comparables being used to establish value. What was a simple transaction, has now become more confusing to the Sellers and Buyers. Why did we have to fix that which was not broken???
The Buyer’s Lender has always had the Fair Market Value Appraised. Unlike an Automobile Auction, where the price is agreed upon and THEN the Commission is added ON TOP of that price and paid by the Buyer, Real Estate Commissions, negotiable always, have been paid from the Seller’s proceeds. Now Buyers will be less represented and Sellers may become greedy and no party benefits. The Average Real Estate Agent earns $52,000 per year. That does not include the cost of Membership in their Local MLS Board, their State RE Board or the NAR Membership, or their E & O Insurance or business licenses and more expenses. This never presented or voted on by NAR Member Realtors “Settlement” is basically bad for Buyers and proper representation with such protracted (long term) liabilities and should be struck down by the courts. Of course those who think the Buyers paid more than appraised value, they do not, must be car auction oriented buyers. This settlement has more holes in it than swiss cheese!
The DOJ under Biden/Kamala administration wrecked everything, made things far worse and yet they are never held accountable for this. All Realtors must stand together and vote them out. I heard this situation is fully on Trump’s radar to try and fix if he is elected. He gets it.
When this first started, I discussed it with a realtor who had been in the business 40 years. He said he would encourage his sellers to offer buyer’s agent something, otherwise they would have fewer (or no) showings. He also said he would consider turning down the listing.