Buyer Agents Are Already Cutting Commissions: The Download

Each week on The Download, Inman’s Christy Murdock takes a deeper look at the top-read stories of the week to give you what you’ll need to meet Monday head-on. This week: In the post-Sitzer world we now live in, agents and brokers are already dealing with the new reality by cutting buyer commissions to the bone.

It seems that in the wake of Sitzer | Burnett, many real estate agents and brokers have spent time in one of two ways. Some went deep into denial, believing that the commission model as it stands would win out and that if everyone will just hold firm, we can all go back to business as usual.

Other agents, brokers and thought leaders, however, have started looking at the new normal, gauging consumer feedback, and rethinking the way they charge for the buyer side of a transaction.

It’s early days yet and lawsuits are continuing to pile up. We don’t yet know how most agents will respond to the shifting commission conversation. Will we end up with a new industry standard, or will we move to a more decentralized system where unique and individualized commission models become a powerful differentiator? Only time will tell.

Mike Repka, CEO and managing broker of DeLeon Realty in Palo Alto, California, responded to the jury verdict in Sitzer | Burnett by preparing to shift his commission strategy. That’s why his brokerage began advertising total commissions of 3.5 percent or less for sellers who work with the firm. Listing agents stay at 2.5 percent commissions while buyer agents receive 1 percent or $10,000.

DeLeon Realty’s agents are employees rather than independent contractors. Since 2017, the brokerage has offered to represent buyers at no cost if they showed interest in a listing and weren’t already working with an agent.

While many in the industry have long complained about so-called “discount brokerages” — how can it be a discount if there’s no “standard” commission rate, one might wonder — brokers who are flexible on commissions see it as a consumer-friendly, service-first choice.

Wondering how to handle the buyer commission conversation? This week, we’re offering three possibilities: One, a shift to a “discounted” model that’s focused on listings, another involving negotiation strategies modeled after the commercial real estate sector and a third based on a detailed value proposition statement.