A significant transformation in the real estate commission landscape is causing ripples throughout the industry, with homebuilders and consumers emerging as the primary beneficiaries.
In response to antitrust claims, Compass has agreed to a $57.5 million settlement, marking a pivotal moment in the brokerage sector following the National Association of Realtors’ (NAR) $418 million settlement over alleged commission inflation.
Experts affirm that the NAR settlement, which untangles buyer and seller agent fees, stands to empower consumers by fostering transparency in commission practices and ultimately driving costs down.
According to KBW analyst Ryan Tomasello, the ramifications of this shift are profound, potentially reshaping the housing market in unprecedented ways.
Traditionally hovering between 5% to 6% since the 1950s, US Realtor commissions have typically been divided between seller and buyer agents, with sellers bearing the full expense.
Enhanced transparency is expected to facilitate fee negotiation for buyers or even encourage them to forgo agent assistance altogether. In contrast to the nearly 90% rate in the US, buyer agent utilization remains relatively low globally, averaging at 33%.
Advocates predict a significant decline in fee costs for buyers opting to engage agents. Currently, US commission rates rank among the highest worldwide, with fees for a $500,000 home sale ranging from $25,000 to $30,000, compared to approximately $6,500 in the UK.
Consequently, KBW’s analysis suggests that the national commission pool, currently standing at $100 billion, could shrink to $70 billion as a result of these changes.
