This report is available exclusively to subscribers of Inman Intel, the data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
There’s no overstating it: A lot of focus has been placed on commissions in recent months.
Perhaps too much. According to new preliminary results from the latest Inman Intel Index survey, agents voiced concerns over commission compression and negotiation — but it’s not their top worry.
Lack of inventory remains the top concern for agents today, according to preliminary results from 350 agents.
TAKE THE INMAN INTEL INDEX SURVEY FOR MARCH
With just under 850 active listings in the U.S. in February, and on the tail of a 30-year low of 4.06 million homes sold, agents remain fixated on the number of homes for sale.
Fewer than one in three agents closed a home sale last year, and many appear to view inventory as a key to their success this year, according to the survey results. (Notably, the preliminary responses came from agents who have closed deals within the past year. Only 2 percent of respondents haven’t closed a deal in the past 12 months.)
The overall tone of agents who have responded to the survey remains fairly positive. Seventy percent say they aren’t contemplating leaving the industry. Still, signs are emerging that clients are focused on commissions and may be driving them lower.
The No. 1 concern
The percentage of agents who reported that commission negotiation or compression was their No. 1 business concern jumped to 14 percent, up from 8 percent last month.
That was a big leap, and it likely comes from the fact that more agents reported they had clients who tried to negotiate their commission.
- Lack of inventory remained the top concern in March, with 37 percent of agents calling it their No. 1 issue, unchanged from a month earlier.
- The number of agents who said mortgage rates were the top concern fell 10 percentage points, from 39 percent in February to 29 percent in March.
The drop in agents reporting mortgage rates being a top concern is notable, given that the typical 30-year fixed rate is 6.65 percent, according to Freddie Mac, down slightly from February.
Downward pressure on commissions
Nonetheless, most agents are still paid by commission, so it’s worth tracking changes in reported consumer behavior. That’s especially true as the industry waits to see what fallout might follow the landmark verdict and settlement that
Agents are having compensation conversations more often than they were before the settlement. Here’s what they’re saying.
- The number of agents who reported that their seller clients were taking a hard-line stance against paying a buy-side commission fell to 61 percent in March, down from 68 percent last month.
- 7 percent of agents said that more than half their seller clients refused to pay a buyer broker fee, up from 4 percent in February.
There are signs that buyers are negotiating commissions more than before. And there are signs that they may be succeeding at driving them lower.
- 37 percent of agents reported having a buyer client attempt to negotiate a lower commission in March, up from 32 percent in February.
- 10 percent said commissions decreased significantly, up from 6 percent last month.
- In February, 25 percent of agents said at least some of their clients agreed to pay a commission that was lower than what buyer’s agents were traditionally paid in their market. That rose to 32 percent in March.
The percentage of agents who said that more than half their clients agreed to pay a commission that was lower than the typical rate for their market ticked up a percentage point to 8 percent in March.
Is NAR good for the industry?
Agents appear to be making up their minds about the 1.5 million-member trade organization that leads their industry, and they remain split over whether the National Association of Realtors is good or bad for the industry.
And the news isn’t good for NAR.
- 37 percent of agents said NAR was not a positive for the industry. That was a jump from 29 percent in February.
- 25 percent of agents said that NAR was a positive for the industry. That, too, was a slight uptick from February, when 23 percent said NAR was a positive force.
The shift appeared to come from agents who said last month they weren’t sure if NAR was a positive for the industry. Whereas 39 percent of agents last month said they weren’t sure if NAR was a positive, just 32 percent remained unsure in March.
Methodology notes: This month’s Inman Intel Index survey is being conducted March 18-March 31, and had received 350 responses as of Friday morning. These results are preliminary and may be revised. 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.
