New real estate commission rules could push out "mediocre" D.C. agents
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Brendan Lynch/Axios
Real estate brokers may be singing for their suppers after new rules on commissions kicked in last month.
Why it matters: Changes from a National Association of Realtors settlement 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: "There really is no simpler way to say this than for the top agents, it is business as usual," DMV agent Russell Brazil tells Axios.
Zoom in: The industry is already shrinking. Membership for D.C. and Maryland's Greater Capital Area Association of Realtors is down 3.95% so far this year and it dropped 4.7% in 2023. The NAR settlement is partly to blame, Brazil says.
- He suspects "the market will be unkind" to agents who approach the industry like a hobby.
Catch up quick: The status quo is that home sellers typically pay a 5%-6% commission, which is split between the buying and selling agents.
- Buyers should now be compensating their own brokers, per the settlement reached in March — meaning buyer brokers can't count on a share of seller proceeds.
Pro tip: Brazil recommends interviewing multiple agents to weed out the unseasoned professionals. Your agent should understand the nuances of what you're buying or selling, he says.
- For example, "if someone is looking to sell their mid-century modern home that was designed by the architect Charles Goodman … then the agent needs to very well understand who Charles Goodman is, and why his homes sell for a premium," Brazil says.
By the numbers: The average D.C.-area buyer agent commission was 2.35% in July, slightly down from 2.4% in January before the settlement was announced, according to Redfin.
- Commissions are projected to continue falling nationally, Axios' Emily Peck reports.
What they're saying: "At the end of the day, the market is going to decide whether there are too many Realtors or not enough Realtors," says Nate Johnson, vice president of advocacy at the National Association of Realtors.
What we're watching: Sellers can continue offering to cover the buyer's agent commission.
- As some brokers look for workarounds to the rules, new websites are making it easy to learn if that's the case, HousingWire reports.
Editor's note: This story has been corrected to note that the average D.C.-area buyer agent commission was 2.4% (not 3.4%) in January.