A survey of hundreds of real estate agents suggests that commission-based “steering” used to be rare. After the August 17 deadline, it could be ubiquitous – but with buyers as the drivers.
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It’s hard to get a large group of real estate agents to agree on anything – but on this topic, the agents are pretty much unanimous.
Before the NAR settlement, the practice of brokers “scaring” buyers away from listings with low buyer’s commissions was rare. Many brokers even go so far as to say that regardless of ethics, it would not have been worth it for even a broker.
But with new NAR processing rules for MLS set to go into effect across the U.S. later this week, there is a consensus in the industry that steering will become much more widespread—even if it is driven primarily by buyers rather than agents.
- Less than 13 percent of brokers who responded to the Inman Intel Index in late July said that MLS disclosure of a listing’s buyer-side compensation offer “occasionally influenced” their advice to clients.
- Of this relatively small group more than half said they simply passed the commission information on to their buyer customers and left the decision to them.
- Only 5 percent of agents said they had engaged in something resembling covert “steering”—for example, using MLS information to try to withhold a listing from a client or discourage a client from making an offer on a home.
In its monthly survey of 611 real estate professionals, Intel examined the actual prevalence of steering practices, the actual impact of steering on agent-client relationships, and agents’ perceptions of the likely future impact of this practice under NAR’s new billing rules.
All results can be found in the analysis below.
What “steering” actually looks like
Starting Saturday, MLS listings nationwide will no longer include a commission field, eliminating the one-stop shop where buyers’ agents could confirm their commission.
To understand what this change might mean for agents, Intel first wanted to find out what insights they thought agents had gained from practice.
Throughout your career in real estate, when working with buyers, have you regularly checked the MLS to confirm the buyer’s compensation of an offer?
- 61 percent — Yes, but it has never influenced how I advise my clients
- 23 percent — No, I felt that it was not necessary to check.
- 13 percent — Yes, and it occasionally influences how I advise my clients
- 3 percent — No, I felt it would be wrong to check
We see that a large majority of agents – almost 3 out of 4 — say they regularly check the compensation field in the MLS. At the same time, very few — only 1 of 20 – said they used this information to direct customers without their knowledge.
So What value did the agents gain? through an MLS compensation field?
Agents gave a long list of answers and often selected multiple options. Here are some of the most frequently selected options by all agents.
- 39 percent of brokers surveyed told Intel that having a compensation field in the MLS would reduce the need to contact brokers for the same information.
- 21 percent of agents said it helped them understand how different brokers handle commissions.
- 20 percent of agents said that the compensation section helps them better track market changes over time.
- 19 percent of agents said it helped them better understand their company’s short-term revenue prospects.
Among the agents who said they do not routinely check the MLS for a listing’s commission information, here are some of the top reasons why.
- 13 percent of agents said they did not check because knowing the buyer’s commission “does not help them serve their client.”
- 7 percent of all agents said they did not care whether the buyer’s commission was 2 percent, 3 percent or something completely different.
- 5 percent of the brokers said that the amount taken by the seller was so normal in their market that they did not consider it necessary to verify it.
Interestingly, nearly all of the representatives of the small group of agents who said they did not review the MLS compensation field for purely ethical reasons believe that the settlement with NAR will lead to stronger, not weaker, governance in the future.
One agent who responded anonymously to the survey described the new terms as “terrible for buyers” and the agents who work with them.
“There will be a lot more steering, at the buyer’s direction of course,” the agent wrote. “In fact, I have never heard of steering based on the amount of commission offered in the past – ever. Now that the buyer is directing it, it will happen any day.”
To illustrate the reasoning behind this, Intel asked agents and brokers how they plan to confirm this information in the new environment.
A framework for the future
So what will the steering actually look like after Saturday’s change comes into effect?
In the short term, buyer-agency contracts appear to be the new standard. And if a seller refuses to pay the buyer’s commission, the buyer – not their agent – will suffer the consequences.
But several questions remain unanswered. Without an MLS compensation field, how can agents confirm what the seller is willing to pay, if anything?
Brokers have largely settled on one of two main paths in their brokerage policies or guidelines:
- 43 percent of leading agents surveyed by Intel in late July said their buyer’s agents are encouraged to contact the seller’s agent before their client makes an offer on a home.
- In the meantime, 24 percent of leading brokers have recommended a less direct approach: submitting an offer stipulating that the seller will pay the full commission and then getting to know the seller’s position through normal negotiations.
It should be noted that at the end of July, just a few weeks before the amendment came into force, Almost every fifth leading broker Intel said it was awaiting further information before developing a policy or guidelines on how the buyer’s brokers should confirm the seller’s commission concession.
One possible solution that has been discussed by some MLSs is the inclusion of a “seller concession field” in which the seller could signal that he or she is willing to assume all or part of the commission.
However, most real estate agents surveyed by Intel do not believe this is a viable option – at least not yet.
If the buyer’s premium is no longer included in the compensation field of MLS listings, how do you plan to confirm this information for future listings?
- 60 percent — I plan to contact the agent, if possible, to confirm the buyer’s commission before my client makes an offer on a home.
- 24 percent — I encourage my clients to make an offer where the seller pays my entire buyer’s premium. I will then learn the seller’s position through normal negotiations.
- 4 percent — I do not plan to contact the agent for this information, but will check the MLS listing for other indications of willingness to pay buyer’s commission, possibly in a seller’s concession area.
- 1 percent — I do not intend to contact the broker or encourage my buyer clients to ask the seller to pay the buyer’s commission
- 10 percent – Other
It is clear that under the new rules, most buyer’s agents will feel the need to confirm the portion of their commission that the seller is willing to pay – even if they did not previously feel the need to look it up when the information was still available in the MLS.
And according to the July survey, agents expect most of this to happen outside of the MLS – rather than through a seller concession field or other workarounds.
Notes on methodology: This month’s Inman Intel index Opinion poll was conducted from July 22 to August 5, 2024 and received 611 responses. The entire Inman reader community was invited to participate, and a rotating, randomly selected selection of community members were invited to participate via email. Users answered a series of questions about their self-identified area of the real estate industry – including real estate agents, broker managers, lenders and proptech entrepreneurs. The results reflect the opinions of the dedicated Inman community, which may not always coincide with those of the broader real estate industry. This Opinion poll is carried out monthly.
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