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Bloomberg
You just sold your home for $400,000. Good going, nice job, congratulations. Kudos are also due to the real estate agents who helped you close the deal. If you live in a part of the country where the standard commission is 6 percent, you probably just paid them $24,000. Or maybe not.
Real estate commissions are set by custom, not written in stone, and a new survey suggests Americans are haggling. Sixty percent of people who sold a home in the U.S. over the last year got a discount from their agent, with average savings of 41 percent off the standard commission, according to real estate brokerage Redfin. These aren’t trivial amounts: If you’re selling a $400,000 house and manage to cut your agent’s commission to 5 percent, you just saved $4,000. If you got the 41 percent discount that Redfin’s survey identified as the average, you saved just under $10,000.
Why are sellers cutting better deals? One explanation is that low inventory in some markets means a lot of agents are fighting over a small number of listings. In May, the number of U.S. homes listed for sale was down 4.2 percent from the previous year, according to data published by Realtor.com. The shortage of homes for sale has been the dominant theme in such markets as San Francisco and Dallas, driving up prices and forcing buyers to make snap decisions and waive contingencies. Lately, those conditions have been migrating to smaller, less likely cities, including Omaha, Neb., and Buffalo, N.Y. Not only do tight markets create more competition between agents, they also tend to increase sales prices and decrease the amount of time it takes to sell a home—two factors that are probably making it easier for an agent to accept a lower fee.
An additional theory, advanced by Redfin in a blog post accompanying the survey results, is that agents agreeing to accept discounted fees are responding to pressure from real estate tech startups. That cohort includes Redfin, a Seattle-based brokerage that charges sellers 1.5 percent to list a home, so it might pay to consider the source. Still, its plausible that online real estate companies are driving down commissions by charging lower fees, helping sellers list homes without agents, or forcing traditional agents to compete for new leads.