A recent survey of real estate agents indicates that the practice of “steering” based on commissions used to be uncommon. However, with new NAR settlement rules coming into effect, it may become more prevalent, with buyers taking control.
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Despite the difficulty of getting a large group of real estate agents to agree on a topic, the survey found a consistent story regarding “steering.” Before the NAR settlement, agents rarely steered buyers away from listings with low buyer commissions, as it was deemed not worth their time, regardless of ethics.
With the new NAR settlement rules set to roll out in MLSs nationwide, it is predicted that “steering” may become more common, driven by buyers rather than agents.
- Less than 13 percent of agents surveyed in late July by Inman Intel Index said that the MLS disclosure of a listing’s buyer-side compensation offer had “occasionally influenced” their advice to clients.
- Of that group, more than half stated that they simply shared the commission information with their buyers and let them decide.
- Only 5 percent of agents admitted to engaging in activities resembling covert “steering,” such as not sharing a listing with a client or discouraging them from making an offer based on commission information.
In a survey of 611 real estate professionals, Intel aimed to explore the prevalence of steering, its impact on agent-client relationships, and how agents believe the practice will evolve under the new NAR settlement rules.
For further insights, read the full analysis below.
Understanding “Steering”
With MLSs removing the compensation field on listings, agents will no longer have access to buyer-side commission information after Saturday. This change prompts a closer look at the value agents derived from this field.
Have you regularly checked the MLS for a listing’s buyer-side compensation while working with buyers?
- 61 percent — Yes, but it has never influenced how I advise my clients
- 23 percent — No, I have felt there is no need to check
- 13 percent — Yes, and it has occasionally influenced how I advise my clients
- 3 percent — No, I have felt that it would be wrong to check
A majority of agents regularly checked the compensation field, with only a small percentage using this information to steer clients without their knowledge.
Agents listed various benefits of having an MLS compensation field, including reducing the need to contact listing agents for the same information, understanding different brokerage approaches to commissions, tracking market changes, and forecasting business revenue.
For agents who do not routinely check the MLS for commission info, reasons included believing it does not help serve clients, indifference to commission percentages, or standard commission amounts in their market.
Interestingly, agents who refrained from checking for ethical reasons anticipate an increase in steering under the new NAR settlement rules.
Agents and brokers foresee buyer agency agreements becoming the norm post-change, with buyers bearing the impact if sellers opt not to cover the buyer-side fee.
Questions remain about the future implications of these changes.
To address the absence of an MLS compensation field, agents are adopting different approaches to confirm the seller’s willingness to cover commissions. According to a survey, 43% of brokerage leaders suggest buyer’s agents reaching out to listing agents before making an offer, while 24% recommend submitting an offer stipulating full commission coverage and negotiating seller’s position later. However, nearly 1 in 5 brokerage leaders are still awaiting more information to establish guidelines on confirming seller concessions.
Some MLSs have discussed introducing a “seller-concession field” to indicate seller openness to covering commissions. Despite this potential solution, most agents surveyed are not banking on its viability at present.
In light of the upcoming changes, a significant majority of agents intend to verify buyer-side commission details through direct communication with listing agents, rather than relying on the MLS or a seller-concession field. This shift indicates a trend towards off-MLS interactions for commission confirmation.
Overall, the industry is adapting to the new rules by prioritizing communication between agents to clarify commission arrangements, highlighting the importance of proactive engagement in negotiations.