(Photo Illustration by The Real Deal with Getty)
Numbers show little change, but agents say direct buyers are on the rise
In his most recent earnings call, Compass CEO Robert Reffkin cited a study revealing some pretty explosive statistics.
A contract and commission study by RISMedia recounted by Reffkin showed that the gap in income between experienced and inexperienced brokers is 20 percent larger after the National Association of Realtors enacted practice changes in accordance with its settlement on broker commissions on Aug. 17.
“The best agents are going to thrive in the new future,” he said.
The only problem? Industry observers don’t really believe the numbers.
“It’s just not right,” said industry analyst Mike DelPrete. “You try and dig into the methodology and it’s really hard to find out exactly how it’s done.”
Different reports have pointed in contradictory directions, and even some of the commentary around the effects can be confusing to untangle (Reffkin, for example, previously said “the fears many had about commissions going down or buyer compensation disappearing has simply not materialized.”)
At the same time, efforts to understand the effects through high-level commission numbers alone miss a larger shift in how buyers connect with agents and deals get done.
“The whole purpose of it was to create transparency and to open up the ability that, theoretically, an agent commission was a negotiable thing and not fixed,” said RLTYco CEO Briggs Elwell.
The armageddon that wasn’t
Before Aug. 17, 2024, when NAR ended the participation rule and implemented buyer agreements, doomsday predictions gripped the real estate industry. Some studies suggested buyer agent commissions could be cut by as much as half. The
Oppenheim Group’s Jason Oppenheim suggested it could be an “armageddon.”
But by the numbers, nothing of the sort has materialized
A summary from DelPrete, based on aggregated brokerage data, found buyer agent commissions unchanged since the changes went into effect. “It’s like a ruler,” he said of the flat trend line for commissions.
Outside of the RISMedia study cited by Reffkin, other analyses and data points have pointed in the same direction — that there has not been a substantial change in the industry.
An AccountTECH study found buyer agent commissions dropped 2 percent year-over-year after the changes went into effect, while a Redfin study found buyer agent commissions were unchanged during a similar time frame.
Anywhere Real Estate, the holding company for brands like Corcoran and Sotheby’s International Realty, reported average commission rates were down a little under 2 percent from 2023 to 2024.
“It’s like there’s a 30-mile-per-hour speed limit imposed everywhere,” DelPrete said. “If you took those down tomorrow, what would happen?”
Changes under the surface
The unchanged commission rates obscure the fact that, according to agents, the buying process has still fundamentally changed.
Compass agent Tali Berzak said buyers have been much more conscious during the buying process, often comparing and interviewing agents before making any long-term commitments.
“We’re getting a lot more direct coming through our open houses than ever before, because buyers are just taking their time,” Berzak said. “They’re interacting with a few different kinds of agents, whether it’s a StreetEasy expert or a listing agent on a listing or even a referral.”
Keller Williams’ William Krooss-Tadas said his firm has had half of its contracts signed come from direct buyers this year compared to 10 percent last year.
“We’ve already gotten more direct signs this year than we had all of last year,” he said.
Brokerages typically offer sellers a discounted commission when dealing with a direct buyer — 5 percent instead of a standard 6 percent, for example. Data focusing on buyer and seller commission rates might misleadingly show seller commission rates ticking up as buyer commission rates are unchanged, but the total commission pie for the industry would take a hit
in the long run.
“If we continue to do more and more of these deals, then our team will make more revenue for slightly less work, but we’re also taking commissions out of the overall pot,” Kroos-Tadas said. On the other hand, Berzak has seen instances where buyer agents secure higher commissions than they would have in the past.
“Their position is, either I’m going to present you a 3 percent commission, which is the agreement that I have signed with my client, or my client’s going to have to pay this half a point, and it’s going to come off the sale price,” she said.
She said this comes up the most in offers for under-construction homes, which typically offer buyer agents a 2 percent commission.
Sellers may just not be in a position to force anybody’s hand over 3 percent with the current market conditions, where buyers remain hemmed in by high interest rates. “For us to really understand whether there’s something to worry about or not, we have to go through the whole market cycle,” Berzak said.
https://therealdeal.com/national/2025/03/26/how-have-commissions-changed-after-nar-settlement/
