Buyer’s Agent Commissions Rebound to Pre-Settlement Levels
The average commission paid to buyer’s agents in the U.S. has returned to the figures seen before the National Association of REALTORS® (NAR) agreed to new rules governing commissions in March 2024. This marks a significant shift after an initial dip following the implementation of the settlement.
Key Takeaways
- Average buyer’s agent commission rose to 2.43% in Q2, matching the pre-settlement rate.
- Commissions had fallen to 2.36% after the rule changes in September 2024 but have increased for three consecutive quarters.
- The settlement, stemming from the Burnett vs. NAR lawsuit, aimed to address concerns that seller-paid commissions inflated costs.
- Current market conditions, with more sellers than buyers, are empowering buyers to negotiate higher commissions for their agents.
- Commissions increased across all price brackets, with the highest percentage increases seen in transactions under $500,000.
The Settlement’s Impact and Market Dynamics
The settlement in Burnett vs. NAR, which involved a $418 million payout by NAR, prohibited the posting of buyer commissions on the Multiple Listing Service (MLS) and mandated signed buyer’s broker agreements before showings. While initial fears of a drastic change in agent compensation were widespread, the market has shown resilience.
Redfin data indicates that the current rise in buyer’s agent commissions is largely attributed to the negotiating power buyers currently hold. In June, there were 500,000 more sellers than buyers, the largest such disparity since 2013. This imbalance incentivizes sellers to offer higher commissions to attract buyer’s agents and facilitate sales.
Commission Trends Across Price Points
Commissions have seen an uptick across all property value segments. Notably, agents involved in transactions of $500,000 or less experienced the most significant percentage gains. In this bracket, buyer’s commissions increased from 2.50% in the first quarter to 2.52% in the second quarter. For properties valued between $500,000 and $999,999, commissions rose from 2.31% to 2.34%. Even sales of $1 million and above saw an increase, moving from an all-time low of 2.19% to 2.21%.