In a nationwide poll of active homebuyers, fewer than 5% of shoppers now listing their current home said they didn't realize that they could decline to pay buyer-side commissions.
Clients are increasingly seeking to negotiate a lower commission rate with their buyer’s agent, even as listing agents have persuaded most seller clients to not take a hardline stance against covering the buyer-side commission.
Since the settlement-driven changes went into effect in August, most clients continue to take a traditional approach to compensating their agents.
More than 81 percent of active homebuyers surveyed in early October said they either failed to negotiate a lower fee with their agent, or did not attempt to negotiate at all, according to the latest Inman-Dig Insights consumer survey.
More than 89 percent of active sellers said they are not taking a firm stance against covering the buyer’s commission — although many said they were withholding the fee as a starting point in negotiations with buyers.
But even as the vast majority of clients continue to adopt traditional practices, the industry is already experiencing downward pressure on commissions from multiple angles, Intel surveys suggest. And the long-term consequences of this pressure remain unknown.
Intel sought to cut through the fog surrounding the new business environment, surveying hundreds of real estate professionals and active homebuyers across the nation in late September and early October.
Their responses paint the clearest picture yet of how clients, agents and brokerages are doing business in the months following the August deadline.
Read more about the new landscape in the full report.
Coming into focus
As soon as the NAR settlement rules went into effect in August, the Inman Intel Index survey immediately went out to test the waters of how the real estate industry was reacting.
And in the first few weeks, many agents understandably said it was too early to gauge the impact.
But more than a month later, fewer agents were still in a wait-and-see mode.
The share of agent respondents who believe it’s “too early to say” what effect the August deadline has had on commissions declined from 37 percent in late August to 26 percent in September, according to the latest Intel Index survey results.
As the outlook becomes less hazy, more agents say that they’re not yet seeing any reduction in commissions. This group rose from 35 percent of agent respondents in August to 45 percent in September.
Still, that leaves nearly 3 in 10 agent respondents who say they have observed a reduction in commissions as a percentage of the purchase price since the August deadline — roughly the same share as the month before.
For most agents who reported a dip in commission rates, the difference may have been notable, but it did not yet make a significant impact on their bottom line.
Fewer than 4 percent of agent respondents told Intel they had observed commissions “decrease significantly” as a percentage of the purchase price.
So what has this downward pressure on commissions actually looked like in practice? And why has it not led to a steeper drop thus far?
Listing agents are holding the line — for now
It’s not for lack of awareness.
On the seller side, the vast majority of clients now understand that they are not strictly expected to cover the buyer’s agent commission.
In a nationwide poll of 399 active homebuyers in early October — part of the quarterly Inman-Dig Insights consumer survey — fewer than 5 percent of active shoppers who are also listing their current home for sale said they were not aware they could decline to cover the buyer-side commission.
By comparison, nearly seven times this share of active homebuyers — 31 percent — said they were unaware they could negotiate their fee with their buyer’s agent.
So it’s apparent that sellers are ahead of the curve on understanding their options under the new rules.
But even as seller awareness has grown, their agents have been largely successful at convincing them that taking a hardline stance could hurt their listing.
58 percent of active home-shoppers who are also listing a home for sale said their agent advised them that declining to cover the buyer’s fee might put their listing at a disadvantage.
Fewer than 11 percent of active homesellers in early October told Intel they were taking a firm stance against covering the buyer’s fee.
This picture largely lines up with the story told by agents themselves.
49 percent of agents told Intel in late September that a significant share of their clients — no fewer than 1 in 10 — are now asking whether they are obligated to cover the buyer’s commission. That’s up from 35 percent of agents in the weeks immediately after the changes went into effect.
Still, only 9 percent of agents say a significant share of sellers are taking a hardline approach against covering the buyer’s agent fee — roughly the same share as the 11 percent who said the same the month before.
In other words, sellers are heeding their agents’ advice, for now. And it’s limiting the impact that the new rules might otherwise have on commissions.
Slippage on the buyer side
Despite the limited number of sellers taking full advantage of the new rules, Intel has found clear signs that some clients are successfully negotiating compensation in their buyer agency agreements.
Nearly 1 in 5 active homebuyers in early October said their signed agreement with their buyer’s agent stipulated they would pay only 1.5 percent of the purchase price or less, according to the Inman-Dig Insights consumer survey.
A similar share of active buyers — just under 19 percent — told Intel that they negotiated their buyer-side commission and were successful at bringing it down. Another 9 percent said they tried to negotiate but failed to bring down the fee.
About 40 percent of active buyers said they did not try to negotiate, even though they knew they were within their right to do so. And another 31 percent said that they were unaware that negotiation was an option.
Agent responses to the Inman Intel Index, a monthly survey, suggest that buyer negotiation may be on an active upward trajectory.
In late August, just days after the changes went into effect, only 24 percent of agent respondents reported that any of their buyers were trying to negotiate a lower commission.
By late September, that share had jumped to 36 percent of agent respondents reporting at least some negotiation was taking place.
Still, only 8 percent of agents in September said that more than half of their clients had successfully brought down the commission below the level that is typical for their market.
Taken in total, these results suggest that as more buyers learn their rights, agents may feel a stronger downward tug on commission rates than they have to date.
Intel will continue to track these trends in the months to come.
About the Inman-Dig Insights consumer survey
The Inman-Dig Insights consumer survey was conducted from Oct. 4-6, 2024, to gauge the opinions and behaviors of Americans related to homebuying.
The survey sampled a diverse group of 3,000 American adults, ranging in age from 24 to 65 and employed either full-time or part-time. The participants were selected to produce a broadly representative breakdown by age, gender and region.
Statistical rigor was maintained throughout the study, and the results should be largely representative of attitudes held by U.S. adults in this age group with full- or part-time jobs. Both Inman and Dig Insights are majority-owned by Toronto-based Beringer Capital.
By Daniel Houston
Source: https://www.inman.com/2024/
Image: Freepik.com
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