How Philadelphia real estate agent commissions are changing
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Illustration: Sarah Grillo/Axios
Philadelphia's real estate brokers may have to sing for their suppers now that new rules on commissions have kicked in.
Why it matters: That could prove especially tough for what Business Insider calls the country's "glut of mediocre Realtors," including amateurs and those whose services might not be worth the price to homebuyers.
What we're hearing: Industry veterans expect the changes to weed out lackluster agents.
- "There are lesser agents who are either newer or they don't [know] how to articulate, 'This is what I bring to you as an agent,'" Chicago agent Jesse Treviño tells Axios.
Catch up quick: The status quo is that home sellers typically pay a 5% to 6% commission that is split between the buying and selling agents.
- Buyers should now be compensating their own brokers, according to a settlement the National Association of Realtors reached earlier this year — meaning buyer brokers can't count on a share of seller proceeds.
- The new rules took effect Saturday, but commissions have slipped a bit since March, after the deal was announced. And they're projected to fall further, Axios' Emily Peck reports.
Reality check: Chris Mattioli, president of the Philly regional chapter of Realtors, doesn't expect an exodus of local agents.
- Mattioli tells Axios more transparency around agent commissions will enhance the customer experience while making agents more competitive.
- "This is forcing agents to articulate their value more clearly and more directly," he said.
By the numbers: People are flocking to the real estate profession in the Philly tri-state area.
- The metro had an estimated 3,900 real estate agents in 2023, up more than 600 from 2019, data shows.
- The Pennsylvania Association of Realtors (PAR) counts more than 39,000 realtors.
State of play: The Philadelphia metro's housing market remains hot as year-over-year sales were up 13% in July, per the listing service Bright MLS.
- Inventory continues to climb: Active listings were up 18% at the end of July compared to last year.
The latest: As brokers look for workarounds to the rules, new websites are making it easy to learn if a seller is offering to cover buyer agent fees.
Meanwhile, the PAR is advising its members against playing "fast and loose" with the new rules, which could open them up to lawsuits, per a blog post this past weekend.
- "Please don't. The words 'workaround' and 'loophole' are why we can't have nice things," the association wrote.