Agents say business as usual since Aug. 17 — but signs of strain ahead

The Aug. 17 deadline has come and gone, and on the surface, real estate professionals report it’s been mostly business as usual — even if there have been a few more headaches for everyone involved.

Listing clients are still overwhelmingly agreeing to cover the buyer’s agent commission. And few homebuyers are negotiating lower-than-usual commission rates with their buyer’s agent.

But under the surface, some agents and brokers were already reporting interactions with clients that — if they continue to play out — could place downward pressure on commissions in the months and years ahead. 

• 70 percent of real estate agent respondents to the latest Inman Intel Index survey either said that commissions have stayed the same as a percentage of the purchase price since the Aug. 17 deadline, or that it’s too early to tell. 
• But another 28 percent of agents say they’re already observing a downward trend in commissions as a percentage of the purchase price since the deadline, compared to fewer than 3 percent who said commissions had gone up.

What’s been behind this rising sense of angst over commissions? Intel sought to find out.

From Aug. 19-30, Intel asked 779 real estate agents, brokers and other professionals a series of detailed questions about their interactions with buyers and sellers, how their local MLS has handled the switch, and other topics related to the post-deadline environment.

Their responses suggested there has been little change so far. But a growing number of buyers and sellers are seriously inquiring about their options. And the agents who field these questions the most lately have seen their seller clients increasingly take a hardline stance.

Intel explores the effect this may have on the future of the industry.

Expectation game

When more than 1 in 4 respondents to a survey of this size say they’re seeing commissions dropping already, it’s not immediately clear what specifically that looks like.

Some of these responses were submitted mere days after the change, when many agents had likely not conducted a new transaction themselves.

In some cases, these respondents may be talking with fellow agents, reading accounts of buyer negotiations, or taking in other information that appears to confirm their prior expectations.

• In the weeks immediately prior to the deadline, 42 percent of agents told Intel they expected real estate commissions to drop at least slightly as a result of the change.

With so many agents expecting a drop in commissions from the start, it would make sense if some responded overly strongly to signs of falling commissions now.

That’s why Intel asked a more detailed series of questions to get to the bottom of how agent client relations — in the form of buyer contracts, listing strategies, and more — have shifted in recent weeks.

Nuts and bolts

First off, Intel wanted to know: Now that the compensation field has been removed from the MLS, have agents been provided with a seller-concession field?

The answer, for most agents, is no.

• Only 28 percent of agent respondents told Intel that their MLS now offers a field in which listing clients can signal their willingness to cover the buyer-side commission.
• Of that group, fewer than half — amounting to a mere 12 percent of all agent respondents — say that they see these fields used frequently.

So how are buyer’s agents confirming whether a listing covers the buyer-side fee or not? Mostly, by placing a lot of extra calls, Intel found.

• 63 percent of agents say they have been reaching out to their listing counterpart to confirm the seller’s position on the buyer-side commission, when possible.
• 21 percent of agents say they have not reached out to the listing agent in advance and instead have encouraged their clients to submit an offer that entails the seller will cover their commission, then learning the seller’s position as a part of normal negotiations.
• Only 5 percent said they were still primarily relying on the MLS — including any potential seller-concession field — for signs of the seller’s willingness to cover the buyer fee.

The result? Agents are overwhelmingly still taking steps to confirm these details. Those conversations are just no longer happening on the MLS. And it’s leading to extra calls, texts and emails between agents that otherwise might not have been necessary.

More interesting, perhaps, is what Intel learned about how the changes are affecting conversations with clients.

A relationship altered

Beginning in August, Intel introduced a list of recurring questions to its survey that will help track the evolution of the agent-client relationship in this new environment.

The new questions are designed to track how quickly — if at all — clients are changing their behavior to react to some of the provisions of the settlement.

Through these questions, Intel also hopes to track how much downward pressure real estate commissions undergo from month to month.

• Over the three-month period ending in August, 76 percent of agents told Intel that none of their prospective buyer clients tried to negotiate a lower commission than what is typical for their market.
• A greater share, 79 percent, said that none of their signed agreements with buyer clients featured a commission below what’s typical for their market over the same period.

Still, a small number of agents did report a significant chunk of clients had negotiated below-market commissions in recent months.

• Just over 10 percent of agent respondents said that more than 1 in 10 of their signed buyer contracts in the last three months were at below-market commission. 
• About 6 percent of all agents said that more than half of their buyer contracts came in at below-market commission.

On the other side of the transaction, agents are already fielding tons of questions from potential seller clients.

In most cases, agents are successfully talking their sellers into covering the buyer-side commission as a means of making the listing attractive to buyers.

But already, there are signs of cracks in this longstanding practice.

• Only 36 percent of agents told Intel that none of their prospective seller clients have inquired whether they are obligated to cover the buyer commission over the past three months.
• Another 35 percent of agents say that at least 1 in 10 of their seller clients have asked about this, including 21 percent of all agents who said at least half of their sellers are asking these questions.

This means most agents aren’t yet dealing with this in a majority of their conversations with seller clients. And for this group, most are able to convince clients to take the traditional approach of covering the buyer’s fee.

• Over the last three months, 73 percent of agents told Intel that none of their seller clients actually took a hard-line approach against covering the buyer’s agent commission.
• 11 percent of agents said at least 1 in 10 of their sellers took such a hard-line approach, including 5 percent of all agents who said this made up more than half of their seller clients.

But when an agent is bombarded with questions from a majority of their sellers, the results start to look quite different.

• Of the agents who reported “more than half” of their recent sellers have inquired about whether they are required to cover the buyer-side commission, only 38 percent said that none of their sellers actually went forward with a hard-line approach. 
• 34 percent of this group that has been bombarded with client questions said at least 1 in 10 sellers took the hard-line approach, including 22 percent of all agents who said more than half of their sellers actually went forward with this position.

Clearly a small number of agents are dealing with more questions from listing clients, and potentially having a harder time convincing sellers to stick with the traditional approach.

Intel will continue to track these trends in the months to come.

Methodology notes: This month’s Inman Intel Index survey was conducted Aug. 19-30, 2024, and had received 779 responses. The entire Inman reader community was invited to participate, and a rotating, randomized selection of community members was prompted to participate by email. Users responded to a series of questions related to their self-identified corner of the real estate industry — including real estate agents, brokerage leaders, lenders and proptech entrepreneurs. Results reflect the opinions of the engaged Inman community, which may not always match those of the broader real estate industry. This survey is conducted monthly.

Email Daniel Houston