As the real estate industry undergoes major changes in fee structures, Redfin recently investigation A lack of knowledge about agent compensation among homebuyers has been identified. The survey results show that a significant portion of modern homebuyers are still unaware of important aspects of agent payments.
For example, 28% of recent homebuyers did not know the exact amount their agent received, 17% lacked knowledge about how that amount was determined, and 19% were unsure of their agent’s services. It was unclear who paid the bill.
Only 37% of respondents had a clear understanding of agency payments, and 38% knew who covered the costs. Meanwhile, 33% indicated an understanding of the methodology behind payment decisions.
The research commissioned by Redfin was conducted by: Qualtrics The report was sent to 2,995 U.S. homeowners and renters and focused on about 120 respondents who said they bought a home in the past year and used a broker.
Historically, commissions in real estate transactions were negotiable, and home sellers typically covered the costs of both the listing agent and the purchasing agent.
Darryl Fairweather, Redfin’s chief economist, said in a statement: “Many Americans make the biggest decisions in their lives without knowing exactly how the professionals they hire to guide them through their transactions are compensated. I’m shopping,” he said.
“Home sellers often openly discuss commissions with their agents before entering into a partnership agreement. Buyers could benefit from doing the same. People don’t talk about money anymore. Although it may feel awkward, it is important to understand how much your agent is charging and discuss whether you need to ask the seller to cover the agent’s fee as part of the offer negotiation, or whether you will need to pay it yourself. It is important.”
In March, National Association of Realtors (NAR) has agreed to pay $418 million in damages to resolve the Real Estate Commission lawsuit. The trade group also agreed to eliminate “participation rules” that require seller agents to offer compensation to buyer brokers.
In addition to awarding damages, the proposed settlement also prohibits the NAR from enacting rules that would allow seller’s agents to set compensation against buyer’s agents.
Additionally, all fields displaying broker compensation in the MLS must be removed, and the requirement for agents to join the MLS in order to offer or accept compensation for work is prohibited entirely.
The settlement agreement also requires MLS participants working with buyers to enter into a written buyer brokerage agreement. NAR said these changes will go into effect in mid-July 2024.