Average broker compensation remains nearly unchanged since NAR settlement

Buyer agents continue to make an average of 2.37% in commission

Average broker compensation remains nearly unchanged since NAR settlement

Buyer agents continue to make an average of 2.37% in commission
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Commissions for real estate buyer agents haven’t changed much since the National Association of Realtors (NAR) settled a federal case last year over broker fees, according to a new analysis from Redfin. 

Buyer agents were earning an average of 2.37% in commission to end the year, which is essentially the same as last August when NAR’s rule changes went into effect, the online brokerage reported, based on sales data from its agents and partners.

NAR and several real estate brokerages agreed to pay millions in damages to settle federal lawsuits alleging that longstanding practices in how agent fees were paid inflated homebuying costs.

The trade group agreed to scrub any offers of compensation from the trade group’s affiliated multiple listing services. Agents were also required to have written agreements of compensation with clients.

The changes were intended to spur more negotiations that would theoretically bring down broker fees. Commissions tend to average around 5% of the sales price split among the agents for the buyer and seller.

There was some variation in compensation by price of the home, Redfin reported. The average buyer’s agent commission for $1 million-plus homes decreased 5 basis points to 2.17%, since the rules took effect. For homes that sold for under $500,000, the commission increased 4 basis points to 2.46%.

The Seattle-based company also commissioned a survey by Ipsos to determine trends in compensation.

Roughly half of 500 agents surveyed in December and early January said the average commissions in their area have remained about the same.

Some 43% of the agents said commissions declined, while 4% said they have increased. About 54% said that their clients were putting in more effort to negotiate, and more than half believe commissions will fall over the next year. Redfin also reported that most home sellers are still choosing to pay the buyer’s agent compensation, with some exceptions. 

Author

  • Victor Whitman

    Victor Whitman is a contributing writer for Scotsman Guide and a former editor of the publication’s commercial magazine. 

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