Commissions have been slowly declining over the past decade, but since the NAR settlement terms went into effect this summer, buyer’s agent commissions have seen little impact.
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Buyer’s agent commissions have largely remained unchanged since new industry practices went into effect on Aug. 17, much to agents’ relief, a Redfin study shows.
In August 2024, the average buyer’s agent commission for homes sold was 2.35 percent. By October 2024, that number had only decreased slightly, to 2.34 percent, which was also down from 2.45 percent in October 2023.
Credit: Redfin
The analysis is based on Redfin’s internal data from sales of Redfin agents’ listings, transactions closed by Redfin partner agents, or those in which buyers used the Redfin-owned Bay Equity Home Loans. It does not include data from deals in which Redfin agents represented buyers since the company offers lower fees for buyer services, which may be as low as 1.75 percent in certain markets.
Since January 2023, buyer’s agent commissions have dropped 17 basis points, down from an average of 2.51 percent. Following the National Association of Realtors (NAR) settlement, commissions also trended slightly downward, slipping from an average of 2.42 percent in March 2024 to 2.35 percent in August 2024. Commissions stayed at an average of 2.35 percent in September before dropping slightly in October. It is unclear at this point if declines since August are a continuation of a long-term trend, Redfin said.
“Redfin agents say the biggest difference since August 17 is the need to educate customers about rule changes and have conversations about agent fees with buyers at the start,” Redfin Chief Economist Daryl Fairweather said in a statement. “Our agents see that as a positive, as it encourages more communication upfront and increases transparency around fees.”
Fairweather added that most agents are continuing to see sellers cover the buyer’s agent commission, although some are not offering to do so upfront, but waiting to see if the buyer will ask for this in the offer.
In more competitive markets, however, agents are seeing more discussion about who will pay the buyer’s agent and just how much.
“Sellers are more and more wanting to pay 2 percent to a buyer’s agent,” Redfin Premier agent Jonathan Chvala, who is based in Chicago, said. “Now we’re negotiating commission more frequently.”
Many home sales that closed in September went under contract before the industry changes went into effect, Redfin noted, which may also be impacting the data. If the market becomes more competitive next year, that could also have a negative impact on commissions.
“Commissions may face more downward pressure next year if we see a resurgence of bidding wars,” Fairweather continued. “Sellers are becoming increasingly aware that commissions are negotiable and that if they have a desirable home, they may be able to get the buyer to cover some, or even all, of the buyer’s agent commission. Of course, as in all real estate deals, any negotiation is dependent on how much demand there is for a property. Sellers who are struggling to find a buyer may even offer more to help attract more interest.”
In other markets, like Austin, Texas, where sales have been slow, buyer’s agent commissions have not been much impacted since sellers are relying more on buyer’s agents.
“If you’re a seller, reducing the commission isn’t something you can save on right now,” said Andrew Vallejo, a Redfin Premier agent in Austin. “That’s because the buyer may not be able to afford your house if they have to pay their agent out of pocket as well.”
Commissions have been slowly declining over the last decade even as the dollar amount has increased as real estate values have grown. In certain price brackets, however, commissions have actually increased slightly in recent months.
On properties priced under $500,000, buyer’s agent commissions rose from an average of 2.41 percent in August to 2.43 percent in October.
Meanwhile, buyer’s agent commissions on higher-priced properties have felt downward pressure. Commissions on properties listed between $500,000 and $1 million decreased from an average of 2.25 percent in August to 2.24 percent in October.
Commissions for homes priced above $1 million fell from an average of 2.24 percent in August to 2.11 percent in October.
Please contact Lillian Dickerson for more information, as Redfin’s inventory in this price range is limited, and the data provided may not accurately represent the overall high-end market.