In the past year, the residential real estate industry has undergone significant changes in how agents are compensated, particularly affecting the way commissions are handled between homebuyers and sellers. These changes stem from a settlement following class action lawsuits against the National Association of Realtors, which led to new rules implemented last August. The rules now prevent listing agents from advertising compensation for a buyer’s broker on the multiple listing service, a move that many thought would reduce the commissions agents earn from sales.

Despite initial reports suggesting a dip in commissions, major brokerages like Anywhere Real Estate and Compass have reported stability in agent commissions. In their recent financial results for the second quarter, both companies noted that commissions remained flat compared to the previous year. Kalani Reelitz, Compass’ chief financial officer, mentioned that while there have been slight variations in different markets, overall, there hasn't been a significant decline in commissions.

The changes in commission practices were initially expected to impact the industry more drastically. Before the new rules, listing agents could offer compensation to buyer-brokers as an incentive, leading sellers to typically split a 5% or 6% commission between their agent and the buyer's agent. However, a survey by trade publication RISMedia indicated a slight decrease in average commission rates shortly after the rules took effect.

Executives at Anywhere and Compass have observed that the negotiation of commissions has evolved, but the rates have remained stable over the past year. Charlotte Simonelli, Anywhere’s executive vice president and chief financial officer, highlighted that the average home sale broker commission rate was 2.41% in the recent quarter, only slightly down from 2.42% the previous year. Compass also reported stability, with Reelitz noting that the market's ebb and flow has remained consistent over the years.

In my opinion, while the full impact of last year’s rule changes is still unfolding, the anticipated drastic drop in commissions has not yet occurred and I doubt it will! I believe this stability underscores the enduring value that agents bring to real estate transactions, even amidst regulatory changes.

Source Inspiration: Realtor.com