Changes to Buyer Agent compensation
The following is a summary of the progression of changes to buyer agent compensation as a result of the Sitzer Burnett court case decision in early 2024. Buyer agent commissions which have typically been paid by sellers and was the subject of the lawsuit and is described in detail in the post titled 'Buyer Agent Commission in Flux'.
It can be categorized as occurring in 3 phases.
Phase 1:
Late 2023/early 2024: Sitzer/Burnett lawsuit in Kansas City. A number of brokerages, including National Association of Realtors (NAR) were found guilty of collusion of increasing seller costs when selling a home.
March 15,2024: NAR settled the many lawsuits around the country by agreeing to, among other things that NAR owned MLS's and NAR affiliated MLS's (of which the local Massachusetts MLSPin is) will not have the ability to specify buyer agent cooperating compensation. This will mean that the seller will not be able to directly compensate the buyers agent for writing a successful offer on their home. The buyers agent may write a request for compensation in the offer and it's then the sellers choice as to whether to accept the offer as written or negotiate.
June 20,2024: MLSPin (Massachusetts MLS) sent an email to participants notifying them of their choice to not join the NAR settlement, and allowing brokerages/agents to determine whether to display the seller offered buyer agent compensation.
Phase 2:
August 17 2024:
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MLS’s across the country who were subject to the settlement removed the ability for buyer agent compensation to be visible.
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MLSPin (Massachusetts MLS) implemented their optional seller offered buyer agent compensation visibility.
Phase 3:
Jan 15,2025: MLSPin (Massachusetts MLS) decided to join the other NAR owned and NAR affiliated MLS’s (local MLSPin) and removed the display of the offered buyer agent compensation.
This sequence of events has meant that Massachusetts has experienced 3 significant phases of flux with regard to buyer agent compensation.
In Phase 1, from early 2024 – Aug 17, 2024 MAProperties explained to their sellers what had been happening and amended several pre-existing listing contracts where the sellers elected to offer a different buyer agent commission than the prior version, and any new listing contracts where the sellers chose their own buyer agent fee payable. When looking at the table contained within the link that can be found at the bottom of this article you can see, for each phase, what the sellers elected to pay the buyer agent, how many offers came in, along with the distribution of buyer agent compensation requested in the offers and what was subsequently agreed to (based on the net of the offers). As can be seen over this period of time, Dani Fleming bought 15 homes on the market, with an average seller paid compensation of 1.7% of the sale price.
During this same period of time in the overall Lexington market, the following statistics on what sellers were paying was:
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March 2024, 81% of sellers paid 2.5%
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April 2024, 80% of sellers paid 2.5%
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May 2024, 74% of sellers paid 2.5%
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June 2024, 71% of sellers paid 2.5%
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July 2024, 56% of sellers paid 2.5%
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August 2024, 60% of sellers paid 2.5% (only partial information available prior to Aug 17)
It’s clear to see that Dani Fleming was proactive with our sellers and having great success in reducing the costs for our sellers, with a very slow adoption rate by other agents who worked in the Lexington market.
In Phase 2, from Aug 17, 2024 – Jan 15, 2025 MAProperties elected to NOT display buyer agent compensation in MLSPin but displayed it on the website for the home based on the street address, Dani Fleming bought 4 homes on the market, with an average seller paid compensation of 1.65% of the sale price.
During this phase, statistics obtained showed for the month of September 2024 that 68% of brokerages elected to NOT display the buyer agent compensation in MLSPin, so the adoption of NOT displaying the buyer agent compensation was widely utilized by brokerages.
In Phase 3, from Jan 15,2025 – end of 2025, where MLSPin did not allow buyer agent compensation to be shown, but MA Properties continued to display it on the website for the home based on the home’s address, Dani Fleming bought 26 homes on the market, with an average seller paid compensation of 2.03% of the sale price.
Summary
What we are seeing in the real estate market nowadays is that most buyers have buyer agent contracts with their buyers agent which specifies how much the buyer agent will be paid if they are successful buying a home for the buyer. Buyers agents/buyers are now specifying that amount in the offers that are being submitted and only when competition occurs are we seeing offers with reduced buyer agent fee offers being submitted. We are also seeing more offers from buyers coming in where they are representing themselves and not asking for a buyer agent fee to be paid, which increases the Net to the seller. When the buyer agent commission changes were ‘fresh’ we were seeing great success with offering less to the buyers agent and this being accepted by the buyers, who would either make up the balance (if they had a contract with their buyers agent), but as time has gone by we are seeing buyers/buyers agents not paying any attention to what the seller is willing to offer, but instead determining what they want the seller to pay, but this amount has moved from an average of 2.5% prior to March 2024 to approx. 2% currently. The only time we see a change in this dynamic is if there is competition for the home.
One of the factors that can be contributed to the small reduction in what the buyer requested seller compensation in offers is that buyers cannot obtain financing for agent compensation, so this limits the ability of buyers to have much flexibility in what they ask the sellers to pay their agent, as per their buyer agent contract.
The standard caveat applies in that this data is ONLY what MA Properties is seeing with offers coming in on the homes we have listed – with the changes of buyer agent compensation not being visible anywhere, we have no visibility into what the industry in general, and other agents specifically are seeing.
For more detailed statistical information regarding this, please see the post https://links.ma-properties.com/buyeragentcommissioninflux which has the table referenced above and goes into more detail of each of the phases described about and documents all of this information.
If you would like an estimate of what your home would sell for in today's market I would be more than happy to come by, have a look at your home, and then provide a CMA (comparative market analysis) which will provide you with an estimate of what your home should sell for, along with a marketing plan to get maximum exposure for your home