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Potential homebuyers who are aware of the National Association of Realtors $418 million settlement believe it’s a step forward for consumers, many of whom relish the prospect of negotiating compensation with their real estate agent.
This is just one of dozens of key insights gleaned from the Inman-Dig Insights consumer survey of 3,000 adult U.S. residents who are active in the workforce.
The latest version of this survey, conducted in early April, was designed to be statistically representative of the broader population of working adults. It reflects their attitudes toward a host of real estate topics — including the commission lawsuits that have haunted brokerages and trade groups for years.
The survey findings include:
- About 1 in 4 working U.S. adults say they would not accept a rate of 2 percent of the final sales price if they were responsible for paying their agent directly.
- 1 in 3 say they favor a flat-fee model for agent pay that is popular with consumers — nearly six times as large as the group that supported an hourly rate model.
But for most U.S. consumers, the value an agent provides is clear, and they’re willing to pay a traditional percentage of the transaction price to secure it — even if they would ultimately be on the hook for their agent’s buyer-side commission.
Read the full breakdown below.
Getting a better deal
When asked whether they were aware of the NAR settlement, 23 percent said yes.
Of those who said they knew of the settlement, a large majority — 65 percent — said they believed the settlement would benefit consumers. This group was, however, split on whether the changes were also good for the real estate industry.
On the other hand, very few consumers believe the deal would be bad for both consumers and industry professionals.
Question: You said you were aware of the settlement involving the National Association of Realtors. How do you feel about the potential outcome?
- 38.2% — Good for consumers
- 21.8% — Good for the real estate industry
- 27.1% — Good for both
- 11.4% — Good for neither
- 1.6% — Other
Why are these consumers so bullish on the deal?
For one thing, they’re generally comfortable negotiating terms, especially when it’s their own money on the line.
And when negotiations aren’t a realistic option, consumers are often more comfortable with a flat-fee approach, as opposed to a fixed percentage of the sale price set by another party to the deal.
Question: Which of the following real estate agent fee structures would you accept if offered?
- 24.6% — A set commission percentage based on the home’s sale price
- 34.6% — A negotiated commission based on the home’s sale price
- 33.9% — A flat fee
- 6.2% — Hourly rate
- 0.6% — Other
It’s noteworthy that so few consumers are open to experimenting with an hourly rate. Those who are open to a non-traditional compensation model strongly favor the flat fee over an hourly approach.
Still, a majority of potential clients are open to a traditional commission structure based on the home’s sale price. Intel further explored what that might look like in a world where more buyers feel empowered to negotiate the fee up front.
A different paradigm
As real estate enters a new era later this year, consumers report they won’t feel intimidated about negotiating with a brokerage.
- Only 17 percent of working U.S. adults said they would feel uncomfortable negotiating a buyer’s agent fee, according to the Inman-Dig Insights survey.
That’s essentially the same comfort level that consumers express for negotiating fees for other major purchases, such as cars or home maintenance.
How comfortable would you feel negotiating the fee of the agent who helps you buy your home?
- 22.8% — Very comfortable
- 33.6% — Somewhat comfortable
- 26.8% — Neither comfortable nor uncomfortable
- 11.7% — Somewhat uncomfortable
- 5.1% — Very uncomfortable
But just because consumers welcome a greater say in what they pay doesn’t mean all of them are looking to go cheap with the agent they work with.
If new ruIes required buyers to pay buyer’s agents directly, as opposed to having a seller pay them out of the proceeds of the sale, what is the highest fee you would pay?
- 26.2% — Below 2% of the purchase price
- 56.2% — The traditional 2% to 3% range
- 15.4% — Greater than 3%
- 2.3% — Other
Of course, these survey results reflect the attitudes of potential clients without regard for the other side of negotiations — the brokers and agents who will be loath to accept compensation rates below the traditional range.
The changes from the NAR settlement put downward pressure on commission rates in the long run. But for now, at least, most consumers appear open to paying roughly normal rates for their buyer-side services.
Stay tuned for more insights from this broad-ranging consumer survey in the weeks to come.
About the Inman-Dig Insights Consumer Survey
The Inman-Dig Insights consumer survey was conducted from April 3 to April 5 to gauge the opinions and behaviors of Americans related to homebuying.
The survey sampled a diverse group of 3,000 American adults, ranging in age from 24 to 65 and employed either full-time or part-time. The participants were selected based on a set of criteria that included age, gender and regional distribution.
Statistical rigor was maintained throughout the study, and the results should be largely representative of attitudes held by U.S. adults with full- or part-time jobs. Both Inman and Dig Insights are majority-owned by Toronto-based Beringer Capital.
