PHOTO: Real-estate agents are taking a smaller cut, percentage-wise, of the sales price for the homes they negotiate deals on.
With so many sellers facing bidding wars for their homes, many Americans are finding they can negotiate the fees they pay to real-estate agents
It’s a seller’s market. And that might be bad news for real-estate agents who represent home buyers.
A new report from real-estate brokerage company Redfin RDFN, -4.41% shows that buyers’ agent fees changing have dropped considerably. The average commission rate for these agents was 2.63% of the sales price of a home as of the three-month period ending Nov. 30, down from 2.69% a year earlier.
The commission rate was the lowest on record, according to Redfin. The company, which boasts about its own low fees for prospective home sellers, began tracking the compensation data in 2017.
Real-estate agents aren’t leaving empty-handed, of course. Home prices have increased so fast that it has offset the declining commission rate. In dollar terms, the average seller was paying a buyer’s agent $12,415; up from $11,609 in 2020.
Sellers are calling the shots
This fall in buyers’ agent fees is a reflection of sellers’ power, given that they’re the ones who pay these fees.
The inventory of homes for sale has hovered near record lows over the past year. This is largely a by-product of years of under-building following the Great Recession. Homes were buying built at a far slower pace than households were forming. So when a generation of millennials suddenly began reaching the phase in life where buying a home made sense, they were left competing for the scraps.
Sellers are well aware of this, and using it to their advantage. “Sellers know their home is a hot commodity and will likely attract multiple offers no matter what, so they’ve started offering the buyer’s agents a 2% or 2.5% fee instead of 3%,” Joe Hunt, Redfin’s market manager in Phoenix, said in the report.
As Hunt put it, “why would you offer 3% when you know you could offer less, and sell your home for the same price?”
The real-estate industry is becoming more transparent
Another factor behind the dwindling commission rate that buyers’ agents charge is the growing transparency regarding these fees.
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