After a year of NAR’s new rules, commissions are … up? 

Last year at this time — Aug. 17, to be exact — the real estate industry was collectively fretting as new rules took effect, moving offers of agent compensation off MLSs and requiring agents to get signed agreements before showing homes to buyers.

The changes, mandated by the National Association of Realtors' $418 million deal to settle commissions lawsuits, had buyer agents concerned about how much of a commission they would get, and who would pay.

A year later, it's clear not a whole lot has changed when it comes to compensation. Buyer agents are still getting paid by the home seller and commission rates have actually increased, according to Redfin.

It appears that a market shift and an uptick in activity is going to be needed to determine whether the rule changes following the agent commissions lawsuits will have much impact.

Why have commissions gone up?

The rules have changed, but market conditions favor keeping things the same. It's been a slow year for home sales; meanwhile, inventory continues to build, so buyers can — for now — demand that sellers pay their agents' commissions.

"Buyers can walk away if the seller does not pay the buyer's agent commission, and they'll likely be able to find another home they like with a seller who is willing to pay what the buyer is asking for to offload their home," said Andrew Vallejo, a Redfin Premier agent in Austin, Texas, in a news release accompanying Redfin's data.

That leverage is something buyer agents are using as they negotiate commissions with their clients. The agent commission for the average U.S. buyer was 2.43% this spring — up from 2.38% a year before, according to Redfin. In recent months, commissions have increased across all home price tiers, now ranging from 2.52% for homes selling for under $500,000 to 2.21% for homes over $1 million.

Will it stay this way?

What remains unanswered is what will happen to commission rates when the market returns to favoring sellers. If sellers have leverage, will they tell buyers to pay for their own agent commission fees? If that happens, will buyers agents need to lower their rates?

In some markets where inventory is tighter, there is some room to negotiate on commissions — but not much.

"Most buyers in our market have been coming in with an expectation of a 2.7% commission to their agent," said Emily Olson, a Redfin Premier agent based in Minneapolis. "That said, I've been seeing some flexibility lately, and I've had success negotiating it down to 2.5% in a number of cases."

What has changed?

For now, the biggest changes in the first year are that buyer agent agreements are signed earlier in the homebuying process and more discussions about commission rates are taking place. Both shifts are positive, according to NAR.

"The practice changes have enhanced consumer choice and promoted increased transparency for home buyers and sellers alike," a NAR spokesperson said in an email to Real Estate News.

Another thing that is different — and something buyer agents were concerned about — is homebuyers are directly contacting listing agents. Matt Kuchar, founder and CEO of the agent service company Showami, said this is happening more often as buyers seek to "avoid two commissions."

That's not likely to lead to much of a commission discount for the agent handling both sides — and that's because the commission is already determined in the listing agreement, Kuchar said.

"A listing agent is just going to see this as an opportunity to make two commissions," Kuchar told Real Estate News via email. "And their argument is gonna be 'I have to do twice the work, so why would I take less?'"

In an Aug. 13 post on LinkedIn, Kuchar said that in order for buyer agents to fight this trend, they need to double down on what makes them valuable. That includes being a trusted advisor.

"People do business with those they know, like and trust. Be that person and you'll thrive in any market," his post said.