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Buyer’s Agent Commissions Hold Steady Despite Recent Real Estate Industry Shift
- Buyer's agent commissions have remained stable despite the antitrust suits against the National Association of Realtors (NAR) that home sellers filed in 2019. Early findings reveal that the average buyer's commission was 2.34% as of October 1, 2024, according to a discount real estate brokerage Redfin.
- Before the change, the typical commission ranged from 5% to 6% of a home's sale price, with the buyer's agent traditionally receiving a portion of the listing agent's total commission. But the new settlement rule now prohibits broker compensation offers being included on the Multiple Listing Services (MLS).
- Despite the modest overall decrease in commission rates between August and October 2024, many buyer agents fear these changes could negatively affect their earnings. Commissions have already been trending downward years before the settlement rules took effect.
- Buyer agents working with homes priced under $500k experienced an average commission increase from 2.41% to 2.43%. In contrast, for homes above $1m, the average commission fell from 2.24% to 2.11%.
- The new rules prompt agents to reinforce the practices they already have in place, with many being transparent with their clients for years. The greater transparency around negotiating commissions has actually helped to increase commissions since the new rules went into effect.
- Many buyers are now more aware that commissions are negotiable, allowing for open conversations about the level of service they're receiving. However, the real estate industry is watching closely to see if these initial trends hold.
- The National Association of Realtors (NAR) agreed to pay $418m to settle a series of high-profile antitrust lawsuits filed in 2019 on behalf of home sellers. The settlement is subject to final court approval, with a final hearing scheduled for November 26, 2024.
- The lawsuit plaintiffs contended that commission offers on the MLS were part of a collusion scheme to maximize the earnings of real estate agents. They argued that selling homes required buyers to pay broker commissions that added hefty amounts to the sellers' costs.
- NAR denies any wrongdoing related to the MLS cooperative compensation model rule targeted by the litigation. The organization has pointed out that commissions have always been negotiable.
- With buyers now more aware that commissions are negotiable, it's important to keep these strategies in mind when shopping for a home.
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