In the wake of Burnett vs. NAR, the topic of agent commission is all over the news. Many buyers and sellers, who aren’t in-the-know on all the ins and outs of real estate, are just now finding out how agent commission works.
A new report from Clever took a look at home buyer and seller misconceptions and opinions surrounding agent commissions. The report found that an astonishing 42% of home sellers didn’t know that they were expected to pay a buyer agent’s commission.
Key highlights:
- The No. 1 regret among 2022 and 2023 home sellers is that their realtor commission was too high.
- The percentage of respondents who cited this as their top regret surged 40% in just a year, from 20% in 2022 to 28% in 2023.
- 55% of sellers—including 42% who used an agent—think agents care more about making a deal than about their clients’ best interest.
- Nearly half of home sellers (48%) say that avoiding high realtor commission rates was a “very important” priority when selling their home.
- 42% of sellers say they’re less likely to work with an agent if they’re unwilling to negotiate commission.
- 55% of sellers say they shouldn’t be obligated to pay the buyer’s agent’s half of the commission at all.
- Nearly a third of homeowners (31%) would be willing to sell their home for less than the market rate just to avoid paying realtor commission.
- Just 1 in 9 Americans (11%) actually know that the average commission rate is about 6%.
- When informed that the average real estate commission is 5.5%, however, 69% said it was fair.
Major takeaway:
Luke Babich, co-founder and CEO of Clever Real Estate, discussed the implications of the NAR verdict:
“With the verdict being appealed, changes to the commission system aren’t imminent. The NAR believes the appeal will take several years. But if the verdict is upheld, big changes could be on the way.
“U.S. sellers already pay quite a bit more commission than sellers in other countries. In the U.K. and Australia, commission is closer to 2%. A reduction in average commission down to that level would be a big win for sellers because they’d pocket more profit from their home sale.
“Presumably, sellers would also no longer be responsible for paying the buyer’s agent’s commission. This change is trickier. If buyers suddenly have to pay their agent a 2-3% commission, many might stay out of the market because of affordability concerns. Fewer buyers means fewer offers, which could lead to declining home prices.
“There’s a plausible future in which the American commission system blows up, commission and home prices both fall, and sellers end up basically where they started, pocketing a slightly higher percentage of a slightly lower home sale. Like most complex systems, the American real estate market is inclined to maintain equilibrium.
“In the meantime, sellers can save on commission right now by using discount agent services like those offered by Clever Real Estate, which can cut the listing commission by nearly half. Similarly, home rebate programs like the ones Clever offers could be the wave of the future if buyers have to add a 3% commission on top of their dream home’s purchase price.
“No matter how much the commission system changes, the market will adapt.”
For the full report, click here.
What a scam this whole real estate law suit is regarding “commissions”. In actuality, the word commission is just a long word for “fee”. The “fee” charged by real estate firms is totally negotiable and not a set standard. When someone is charged a fee for service, you don’t generally tell the service provider how to spend it. If I am charging you a fee to sell your home and, to your benefit, I decide to legally split it, in any ratio I choose, with a cooperating agency, industry partner or agent, how is anyone harmed? The fee was initially negotiated, agreed to and signatures applied to show that agreement. This law suit is saying nothing more, as is usual in today’s cultural of dumbing down, that the American people are plain stupid and that lawyers should get the largest return on what they are attempting to convince consumers they deserve for the consumer being wronged. What’s wrong with this picture? You know.