The Consumer Federation of America’s proposal to pay just the equivalent of a 2 percent commission on real estate purchases and sales has drawn attention and outrage.
Moving from Las Vegas to San Diego in 2025, Inman Connect will be bigger, better and bolder than ever. Join us for Inman Connect San Diego July 30-August. January 1, 2025 Join the brightest minds in real estate as they shape the future of the industry. Reserve your seat now to enjoy exclusive offers.
Each week on Download, Inman’s Christy Murdoch goes deeper into the week’s hottest stories to give you the information you need to face Monday. This week: The Consumer Federation of America’s proposal to pay just the equivalent of a 2 percent commission on real estate purchases and sales has drawn attention and outrage.
In recent years, real estate professionals have come under fire for being overpaid, underqualified and failing in their fiduciary duties to their clients. Words like “collusion” and “conspiracy” were used widely, sparking anger, sadness and suspicion across the industry.
Now, as the commission lawsuits and subsequent settlements progress, especially with the terms of the National Association of REALTORS (NAR) Settlement Agreement set to take effect on August 17, we are beginning to gain a deeper understanding of the actual impact on agents and brokers. This means paying attention to what commissions will actually look like in the coming days, weeks, months and years.
Extra: Average buyer’s agent commissions down since NAR
When NAR’s settlement was first announced, reactions ranged from relief that the uncertainty of ongoing litigation was over to anger at the resulting new normal. One popular theory is that as commission negotiations normalize, agents will actually make more Negotiate with senior committees to reflect their unique value proposition within a changing paradigm.
Now, that optimism seems unlikely.
Last week, the Consumer Federation of America (CFA) released recommendations for buyers and sellers to help them negotiate agent commissions and save money throughout the transaction. They advise buyers not to agree to pay an agent just to see a home, but to sign a viewing agreement with no financial obligation.
Most controversially, they advise consumers to aim for representation fees of 2% or less on a dollar basis.
When asked how the CFA arrived at the 2 percent figure, CFA senior fellow Stephen Brobeck told Inman’s Andrea Brambila: “2 percent or less is my best judgment because that’s what most home sellers and buyers can do. Realistic goals to aspire to and achieve. In some markets, most buyer’s agents already charge 2% (but listing agents charge more, which is unfair).
The consumer watchdog group also offers guidance on vetting agents, including working with a broker rather than an agent, checking reviews on sites like Zillow and Realtor.com, and requesting contract forms and proposed terms upfront so they have more Opportunity to view them and ask questions.
Extra: What’s changed since NAR deal: Customer pipeline
Crazy about the idea of 2% commission? You’re not alone (just check out the comments on this story), but it’s crucial to get a 360-degree view of what’s being said from every angle. This can allow you to understand your options and avoid being caught off guard during your next buyer’s inquiry or listing interview.
To deal with uncertainty and frustration, you have two options: scream into the void or rethink business as usual. This could mean increasing the presence of technology, teams, or virtual assistants. This will almost certainly mean changing the way you talk to buyers and sellers. Additionally, it requires you to rethink the way you work and reset your expectations.
Each week, Inman’s contributors provide a collection of ideas to inform, inspire and help you cut through the noise and keep moving forward. This is the latest:
