The National Association of Realtors’ (NAR) antitrust settlement has introduced new rules aimed at promoting more negotiations for buyer agent commissions. A month after the rules came into effect, there is evidence of increased discussions in this area.
Redfin conducted interviews with numerous agents to gather insights on the current state of buyer commission conversations. The feedback suggests that buyers in certain markets are more willing to share the cost of compensating their agents.
According to Redfin’s chief economist Daryl Fairweather, the amount the buyer requests the seller to pay their agent can impact the strength of the offer, similar to other terms like earnest money deposit or inspection contingency. This trend is expected to gradually reduce fees over time.
While negotiations on buyer commissions are becoming more common, the frequency varies across different markets. In markets with reduced buyer demand like Austin, sellers are more inclined to cover the cost of paying a buyer’s agent to enhance their property’s appeal.
In markets with limited inventory and high demand from buyers, sellers are leveraging this situation during commission negotiations. Nonetheless, Redfin agents observe that sellers generally remain willing to cover buyer commissions.
Redfin describes the current real estate landscape as a “tale of two markets,” with contrasting dynamics at play.
The NAR settlement rules also aimed to enhance transparency on commissions with home buyers and sellers, a goal that Redfin confirms is being achieved. Agents are now engaging in commission discussions through direct communication channels like phone calls and text messages instead of relying solely on the MLS.
Although Redfin previously reported a decline in buyer agent commission rates, the average rate of 2.55% just before the new rules took effect in August only slightly decreased from 2.62% in January. Different brokerages are experiencing varying impacts regarding commission rates.
Contrary to concerns, Compass reported on its second-quarter earnings call that there has been no significant change in buyer agent commissions, indicating that anticipated fears have not materialized.
The $418 million settlement by NAR, resolving multiple antitrust lawsuits related to agent compensation, includes provisions that prohibit listing agents from unilaterally offering compensation to buyer agents on the MLS. Additionally, home shoppers must now sign a compensation agreement with their agent before touring a property, although this requirement was already in place in some states.