{"id":52467,"date":"2016-08-10T02:50:04","date_gmt":"2016-08-10T09:50:04","guid":{"rendered":"https:\/\/redfindevelop.wpengine.com\/blog\/?p=52467"},"modified":"2020-10-06T17:08:14","modified_gmt":"2020-10-07T00:08:14","slug":"survey-60-percent-of-home-sellers-are-now-saving-on-commissions","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/survey-60-percent-of-home-sellers-are-now-saving-on-commissions\/","title":{"rendered":"Survey: 60 Percent of Home Sellers Are Now Saving on Commissions"},"content":{"rendered":"
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In June, Redfin commissioned SurveyMonkey Audience to conduct a survey of more than 2,000 people in eight major U.S. markets who had bought or sold a home in the past year to better understand people\u2019s home-buying and selling experiences and their perspectives on the real estate industry. The most surprising findings were also the most telling about changes that are happening in real estate and hint at where the industry is heading. Here\u2019s what we found:<\/span><\/p>\n

Most sellers save money on commissions, as do nearly half of buyers<\/b><\/h3>\n

Sixty percent of people who sold a home in the past year said they got a discount on the commission they paid to their real estate agent. The average discount was 41 percent off the typical\u00a0commission. <\/span>
\nAmong people who bought a home in the past year, 46 percent said their agent gave them a refund, rebate, closing cost contribution or other form of savings of more than $100, with the average savings amount in that group being $3,693. <\/span>Last year, 37 percent of buyers said they had received savings<\/span><\/a> from their agent worth $500 or more1<\/sup>. The above findings on savings exclude responses from people who indicated that they bought or sold a home with Redfin, which systematically saves its customers money by <\/span>charging sellers 1.5 percent to list and by refunding a portion of the buyer\u2019s agent commission back to buyers at closing<\/span><\/a>. <\/span>
\nThe notion that so many people are saving so much money in fees is surprising because REAL Trends, a widely cited source for statistics on agent and broker commissions, reports that agents\u2019 commissions have increased slightly in the past decade to 5.26 percent in 2015 from 5.02 percent in 2005. It’s possible that while commissions have increased, so has the frequency with which agents provide refunds, rebates, closing cost contributions and other forms of savings to their clients. For tips on how to negotiate commission, check out How to Save Money on Realtor Commission Fees<\/a>.
\n<\/span><\/p>\n

How did savings on real estate fees become so widespread? <\/b><\/h3>\n

There are a few things going on in the industry:<\/span>
\nOne is a surge of investment in real estate disruptors like Redfin that offer money-saving brokerage and other services to homebuyers and sellers. <\/span>According to CB Insights<\/span><\/a>, more than $1.5 billion was raised by real estate tech companies in 2015, and more than $1.8 billion has already been raised so far this year. <\/span>
\nAnother reason for the widespread savings may be Redfin\u2019s growth and influence. To date, Redfin has saved its customers more than $335 million in fees. While Redfin serves a small portion of the market, its growing presence across the country has influenced other brokers to offer savings to their customers in order to compete. Providing a higher level of service at a lower price has been a key tenet of Redfin\u2019s business model since its inception, but this year\u2019s survey results show that other brokers have similarly been able to adjust their fees while improving the quality of their service. Seventy percent of people who bought or sold with Redfin in the past year would recommend their agent to a friend or colleague2<\/sup>, essentially flat <\/span>from last year<\/span><\/a>. Among people who bought or sold with other brokerages this year, 57 percent would recommend their agent, up from 49 percent last year. <\/span>
\nThe shrinking supply of homes for sale could be yet another reason for widespread savings for those homeowners who have taken the plunge and sold their homes. The number of homes for sale has shown <\/span>year-over-year declines in each of the past nine months<\/span><\/a>, which means that real estate agents are competing for a withering pool of business. Offering a discounted fee is a simple and common way to appeal to a homeowner who knows that if priced right, their home is likely to fetch multiple offers and sell within a matter of days. <\/span><\/p>\n

One in five sellers forgo the help of a full-service agent<\/b><\/h3>\n

Also contributing to a climate where agents are motivated to drop their fees could be the fact that more home sellers are choosing to forgo the help of a full-service agent. Nine percent of people who sold a home in the past year used a limited-service agent and another 11 percent chose to forgo the help of an agent altogether. This is slightly higher than the latest figure reported by the <\/span>National Association of Realtors<\/span><\/a>, which states that for-sale-by-owner (FSBO) accounted for 8 percent of home sales in 2014. <\/span>
\nInterestingly, there is some correlation between selling at a higher price point and selling without a full-service agent. People selling million-dollar-plus homes were the most likely to do so without an agent, and those selling homes for more than $500,000 were more likely than those selling for less to use a limited-service agent.<\/span><\/p>\n\n\n\n\n\n\n
Agent Type<\/b><\/td>\n<$250,000<\/b><\/td>\n$250,000-$499,999<\/b><\/td>\n$500,00-$749,999<\/b><\/td>\n$750,000-$999,999<\/b><\/td>\n$1M+<\/b><\/td>\n<\/tr>\n
Full-Service Agent<\/span><\/td>\n79%<\/span><\/td>\n83%<\/span><\/td>\n76%<\/span><\/td>\n81%<\/span><\/td>\n63%<\/span><\/td>\n<\/tr>\n
Limited-Service Agent<\/span><\/td>\n6%<\/span><\/td>\n9%<\/span><\/td>\n17%<\/span><\/td>\n9%<\/span><\/td>\n14%<\/span><\/td>\n<\/tr>\n
For Sale By Owner (FSBO)<\/span><\/td>\n13%<\/span><\/td>\n9%<\/span><\/td>\n7%<\/span><\/td>\n9%<\/span><\/td>\n23%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Most people who sold without a full-service agent did so to save money. Among high-priced home sellers, however, the most popular reason was that they didn\u2019t think a full-service agent was necessary.<\/span><\/p>\n\n\n\n\n\n\n\n\n
Reason for Selling Without a Full-Service Agent (Check all that apply)<\/b><\/td>\nTotal<\/b><\/td>\nSold for <$750,000<\/b><\/td>\nSold for $750,000 or more<\/b><\/td>\n<\/tr>\n
Save money<\/span><\/td>\n54%<\/span><\/td>\n59%<\/span><\/td>\n28%<\/span><\/td>\n<\/tr>\n
Don\u2019t think a full-service agent is necessary<\/span><\/td>\n30%<\/span><\/td>\n30%<\/span><\/td>\n41%<\/span><\/td>\n<\/tr>\n
Don\u2019t trust real estate agents<\/span><\/td>\n14%<\/span><\/td>\n10%<\/span><\/td>\n16%<\/span><\/td>\n<\/tr>\n
Couldn\u2019t find an agent I liked<\/span><\/td>\n12%<\/span><\/td>\n9%<\/span><\/td>\n19%<\/span><\/td>\n<\/tr>\n
Other<\/span><\/td>\n5%<\/span><\/td>\n5%<\/span><\/td>\n6%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Meanwhile, the share of buyers who bought without an agent\u2019s help increased slightly to 15 percent <\/span>from 17 percent last year<\/span><\/a>. <\/span><\/p>\n

The Takeaway<\/b><\/h3>\n

If consumer sentiment is any indication, technology-powered, money-saving alternatives to the traditional real estate brokerage model will continue to change the way we buy and sell homes. Sixty-nine percent of survey respondents said they are open to an alternative to the traditional real estate service, up from 64 percent last year. When asked about agent incentives, just 52 percent of respondents said they prefer a purely commissioned agent. This means that nearly half of homebuyers and sellers are open to a model like Redfin\u2019s, which employs real estate agents, paying them salaries and bonuses based on customer satisfaction. <\/span>
\nThe bottom line is that people who are buying or selling a home soon should evaluate all their service options and negotiate on fees. Here are some links that offer advice when considering various options for buying or selling a home:<\/span><\/p>\n