Rather than buyer's real estate agent commissions plummeting after Aug. 17, the day the National Association of Realtors new rules went into effect, so far the changes have been muted.
In the fourth quarter, the average commission for a buyer's agent was 2.36%, a drop of 1 basis point from the third quarter and down from 2.45% versus the same period one year ago, according to data from Redfin.
Commissions had been edging down
For the third quarter of 2023, the average buyer's agent commission was 2.51%, the data found, which comes from transactions that a Redfin agent had listed, deals it referred and closed using Redfin partner agents, or from mortgage loan applications where its subsidiary Bay Equity Home Loans had been used.
However, it did not use Redfin buyer agent data because at a commission rate as low as 175 basis points, it could skew the results.
When reviewed on
Among the agents Redfin surveyed from mid-December through the first week of January, just shy of half, 48%, said the average commission in their area was unchanged since
If the intended effect of the settlement was to increase haggling over compensation, that is occurring, with 54% of the agents surveyed stating clients are putting more effort into negotiating fees post-Aug. 17. Approximately one-third said they found no change when it comes to negotiating, while 6% felt less negotiating was taking place.
Nor has the settlement necessarily changed which party is actually paying the buyer's agent commission, said Desiree Bourgeois, a Redfin agent in the Detroit area.
"When news of the settlement first came out, some sellers thought they were going to pay nothing to the buyer's agent," Bourgeois said in a press release. "That's not happening; sellers are realizing most buyers are requesting the seller pay for their agent as part of the offer."
It is an ongoing conversation in the process, but buyers and sellers are starting to understand the changes and are asking more pointed questions, Bourgeois added.
Commissions can vary by price point as well. Homes with sales prices over $1 million had the lowest commissions at an average of 2.17% in the fourth quarter. That compares with 2.22% in the third quarter and 2.33% one year prior. Even at the lower level, agents make more on these homes than they do lower priced ones.
In the $500,000 to $999,999 tier, the 226 basis point commission was flat with the 227 basis points paid one quarter prior, although down from 236 basis points during the fourth quarter of 2023.
But in the lowest tier, where the home sold for under $500,000, commissions increased 4 basis points from the third quarter to 2.46%. This was down from 2.5% one year ago.
"Luxury sellers typically expect buyers will want them to cover 2% in buyer's agent commission," said Stayce Mayfield, a Redfin agent in St. Louis. "That's different from what we're seeing for more affordable homes; buyers of those homes are often asking sellers to cover a 2.5% or 2.7% commission."
Going forward, over the next five years, three-quarters of the survey respondents said declining commissions will be a concern for them.
In the more immediate future, half of the agents said commissions will decline in the next 12 months, 38% think they will stay the same and 5% actually believe they will go higher.
A separate
On the five-month anniversary of the new rules taking effect, Jan. 17, seller commissions were 273 basis points, up 1 basis point from that time in 2024.
In the first month of the settlement, they went to 2.75% from 2.79%; by 90 days they were down to 2.69% before turning north again.
"This consistent upward trend over the past months suggests a modest recovery or stabilization in seller commissions, countering initial fears of significant rate declines," said Mark Blagden, Accounttech CEO.
Accounttech derived the results through an analysis of transactions from 1,290 real estate offices.
On the buyer's side, the average commission of 2.55% on Jan. 17 was the same as it was one year prior.
"The early declines in buyer commission rates suggested that the NAR Settlement might push these rates downward, aligning with predictions from industry analysts and legal professionals," Blagden said. "However, the reversal observed after 90 days indicates that market forces, rather than the settlement itself, may have a stronger influence on commission structures."
These results show the complexity of predicting the long-term impact of regulatory changes when it comes to market dynamics.
"While initial trends indicated potential downward pressure on buyer commissions, the recovery to prior-year levels suggests a more nuanced outcome," Blagden said. "Sellers, meanwhile, have seen a slight but consistent increase in commission rates, providing a degree of reassurance to real estate professionals concerned about shrinking revenue streams."
