Redfin’s brokerage website and mobile application will soon display the amount of compensation being offered to buyer’s agents on more than 700,000 listings. The data will be available in 65 markets where local multiple listing services (MLS) provide the data.
Redfin first began publishing buyer’s agent compensation in Seattle, then began publishing the compensation on its own listings in every market where allowed in 2019. With this recent change — one that RE/MAX is also undertaking — that data will be available on every listing.
“Homebuyers will finally see how much money their agent stands to earn on any home for sale, letting them evaluate whether they’re getting good value for their money,” Redfin CEO Glenn Kelman said in a statement.” On the other side of the deal, people listing their home will find out what other sellers are paying buyer’s agents, without having to take their agents’ word for it.
“This information could usher in a new era of price competition that saves consumers billions of dollars in fees.”
The decision follows an agreement between the National Association of Realtors (NAR) and the U.S. Department of Justice (DOJ), after the former was sued over allegations that certain rules of the trade group place illegal restraints on Realtor competition.
Although specific details are still being discussed, as part of the settlement, NAR promised to make buyer’s broker compensation public and so far 65 MLSs have followed.
The settlement also forbids agents from misrepresenting that buyer broker services are free, according to Redfin. The company commissioned a study in 2019 that found 61 percent of buyers did not fully understand how their agent was paid, the company said.
One consequence of the move could be that shedding light on buyer’s agent commission changes the average amount paid. Nick Bailey, the chief customer officer at RE/MAX said it was too early to tell the overall impact, but Redfin’s data showed that it actually pushed the average compensation down slightly in Seattle.
Prior to the agreement, Seattle was the only market where brokerage sites could publish all buyer’s agent compensation figures. In 2019, the typical buyer’s agent compensation was 2.8 percent, which declined to 2.7 percent in 2020. The average compensation stayed flat at 2.7 percent over the same time period nationally.
While both regulators and real estate companies begin to increase transparency around agent commission, there are multiple lawsuits over buyer’s broker commissions currently making their way through the courts. Redfin is not one of the defendants, but a many of its industry competitors are among the firms named in the suits.