It’s been almost a year since changes hit the residential real estate world, changing the way agents are compensated by homebuyers and sellers.
The new rules prevent listing agents from advertising compensation for a buyer’s broker on the multiple listing service, the online platform where agents share their houses for sale — a shift many in the industry suspected could put downward pressure on the commissions agents made from their sales.
But some of the nation’s largest brokerages say that has yet to materialize.
In reporting their financial results from the second quarter, both Anywhere Real Estate and Compass reported that agent commissions were flat compared to the same time a year earlier.
“We’ve seen it up in a few markets and down in a few, but on average, kind of flat to very slightly down or up,” Kalani Reelitz, Compass’ chief financial officer, said on a Wednesday call to discuss the New York-based brokerage’s earnings. “Overall, we have not seen degradation.”
New rules change how agents are compensated by buyers and sellers
The new rules were the result of a settlement reached last year after home sellers filed class-action lawsuits against the National Association of Realtors trade group. They took effect last August.
Before then, listing agents could offer and advertise compensation for buyer-brokers on the multiple listing service. It was a strategy used to incentivize buyer agents to bring clients to see their properties, and it has resulted in sellers typically paying fees to their agent and the buyer's agent — splitting a 5% or 6% commission, for example.
Initial reports in the immediate aftermath of the new rules revealed a dip in commissions.
Trade publication RISMedia, for example, published a survey of more than 1,300 real estate agents in October. The results suggested that between the implementation of the new rules and Oct. 7, the average commission rate fell by roughly 0.68 percentage points, and buyer agents were bearing the brunt of the decrease.
Major brokerages report commission stability
This week, though, executives at Anywhere and Compass said things have been mostly stable.
“Following last year's industry changes, we have seen changes in how and when negotiation of commission occurs,” Charlotte Simonelli, executive vice president and chief financial officer at Madison, New Jersey-based Anywhere, said in a call with investors on Tuesday. She noted that commission rates have “been sequentially stable for the last 12 months, highlighting the value that agents bring to the transaction.”
The firm reported the average home sale broker commission rate across its brands at 2.41% in the three months ended June 30 this year. During the same period last year, the average commission rate stood at 2.42%.
To be sure, the full implications of last year’s rule changes have yet to be seen. Anywhere, for example, did report a downturn in commission rate at the end of last year. In the quarter ended Dec. 31, the average rate was 2.39%, down from the start of the year when it was 2.43%.
It’s a similar story at Compass. Though the brokerage did not disclose its average commission rates, executives acknowledged that commissions were stable.
“We’re seeing some ebbs and flows in markets, but even that is very, very stable,” Reelitz said during Wednesday’s call. “As we chart the kind of five-, 10-year history … it kind of looks like the same ebb and flow. We haven’t seen a lot of difference.”
