New NAR Rules Are a Bargaining Chip, Putting Pressure on Commissions in Competitive Markets, But Redfin Agents Say Most Sellers Are Willing to Cover Some Fees
A few weeks after the new industry rules went into effect, some homebuyers are confused about fee agreements and who is responsible for paying the buyer’s agent.
Most sellers are still willing to cover the buyside commission–but negotiation has become more common in some markets and at higher price points, which could put pressure on fees
The report focuses on interviews with dozens of Redfin agents around the country about how buyers and sellers are responding to the reforms. While consumers and agents are still adjusting to the new rules, Redfin agents are seeing different impacts in different parts of the country. In some areas, negotiations over fees are becoming more common, while other markets have not experienced much change at all.
“We've found a tale of two markets," said Redfin Chief Economist
A Redfin analysis in July found the typical buyer's agent commission was 2.55%, down slightly from before the settlement was announced. The new rules have made it harder to track fees by removing them from the MLS.
Under the new requirements, which took effect
Buyers are confused about signing an agreement before a home tour.
The requirement that agents and buyers agree on fees before they tour is intended to make fees more transparent. But buyers are understandably wary about signing paperwork to tour homes.
Redfin’s approach is to ask house hunters to sign a simple fee agreement–which can be signed online with one click–before their first home tour. The agreement doesn’t obligate the customer to use Redfin; its purpose is to tell prospective clients what Redfin would charge if a Redfin agent were to represent them. Once a prospective client has met a Redfin agent, they can decide whether to continue working with them and take advantage of Redfin's best pricing with its Sign & Save program. Redfin offers competitive buyer agent fees as low as 1.75% depending on the market.
Many agents at other brokerages are taking a more heavy-handed approach, requiring buyers to sign a full buyer agency agreement to tour. These agreements typically obligate the buyer to work exclusively with that agent for their home purchase for a certain period of time.
The biggest change: Buyers and sellers are negotiating over who pays the buyer’s agent, and how much they’re paid. This is especially true in the luxury market.
The NAR settlement has led more sellers torealize commissions are negotiable, and that they might be able to get the buyer to cover some or all of the buyside commission. The consensus from agents: Like most parts of a real estate deal, how much a buyer or seller can negotiate depends on demand for the listing.
"While I’ve always let my sellers know they can offer whatever commission they want and don’t have to offer anything at all, my sellers are having the conversation with me in more depth than ever before,” explained
Las Vegas Redfin Premier agent
Agents are reporting there’s 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
But even though negotiations are becoming more common, most sellers are still willing to help cover the buyer’s agent fees.
Before, sellers proactively advertised a commission in the MLS that they were willing to pay any agent who represented the buyer. And often the buyer’s agent accepted the commission offered. Now sellers are evaluating their options and deciding on a strategy based on the housing market and the competition they expect for their home. By and large, most are still willing to cover the buyer agent fee as long as they still net their desired amount.
In
Removing the offer of compensation from the MLS has resulted in more back and forth between agents when scheduling a showing, with more buyers’ agents contacting listing agents to ask if the seller is offering compensation or open to it. Redfin agents report some listing agents are communicating what the seller is willing to pay buyer’s agents in creative ways. In
To read the full report with additional agent anecdotes, visit: https://www.redfin.com/news/redfin-agents-report-nar-rules-negotiation
View source version on businesswire.com: https://www.businesswire.com/news/home/20240909960359/en/
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Source: Redfin