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edfin has provided insight into how real estate agents negotiate commissions in different regions. Market dynamics play a significant role in this process, as sellers have an advantage in strong markets where they may be less likely to offer larger commissions to buyer agents. However, most sellers still pay some percentage of the commission. Buyer agreements have been a point of confusion for some buyers, who are concerned about what they're committing to. Following the March settlement by NAR, agents were concerned about their survival and how commissions would be affected. While industry leaders have asserted that buyer agency is here to stay, there has been evidence that commission percentages have fallen since the beginning of the year.
Redfin's report found that anecdotal evidence suggests that most sellers are still willing to pay buyer agent fees, but there's notable variation by market. In slow markets, agents report that most sellers are still willing to pay the buyer's agent commission to attract buyers, and agent fees remain mostly the same as before. However, in active markets like San Francisco or Boston, agents report more instances of negotiation around fees, with sellers asking buyers to make their best offer rather than preemptively deciding what they want to offer a buyer's agent.
In these active markets, sellers may view buy-side compensation requests as contingencies of a sort, which means they can make an offer less attractive. This could drive fees down over time. Buyers need help understanding agreements, as some clients are confused about buyer agreements, which are now required before an agent can show a home. The agreements vary widely, which may come as no surprise given the variance in agreements.
Redfin agents report that some buyers are confused at first and have canceled tours out of concern that they'll be required to sign an exclusive agency agreement. Redfin CEO Glenn Kelman announced on Aug. 15 that buyers working with the brokerage's agents would only need to sign a simple, non-binding fee agreement in order to view homes. If they decide to continue working with the agent, they would then be asked to sign a more formal agreement. Zillow has also introduced a touring agreement for buyers not ready to commit to an agent.
More sellers are now aware that commissions are negotiable, Redfin found, and they are more likely to ask their agents about buy-side compensation — and whether they still need to pay all or part of it. This decision often comes down to the market and the popularity of the listing. While sellers have always had the option to offer whatever commission they want or not offer anything at all, they are now having this conversation with their agents in more depth than ever before.
Most sellers in D.C. agent Mary Bazargan's market are offering to pay the buyer agent, but she's concerned that when the market heats up, a lot more buyers will be paying their own agents and that will put first-time homebuyers at more of a disadvantage. Ultimately, the amount of compensation offered is price-specific and seller-specific. After laying out the options for his sellers, most are still choosing to offer a set amount of compensation because it sets them apart from listings that aren't proactively offering buy-side commission.
Sellers are welcoming the idea of having flexibility in how much they're willing to pay, as they feel they're in the driver's seat. Portland agent Michelle Palmquist agrees that things haven't changed much since the new rules went into effect. However, sellers are now more willing to discuss and negotiate commissions, which is beneficial for both parties.
