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š” 2025 Real Estate Commission Strategies
The NAR commission lawsuit settlement.
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Good morning agents. āļø In todayās podcast, weāre exploring 2025 Real Estate Commission Strategies and how the market is shifting. As we move toward the future, understanding new commission models will be crucial for staying competitive and maximizing your earnings.
Stay ahead with the strategies that will shape real estate commissions in the years to come! š”š°
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IN PARTNERSHIP WITH MONEY
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2025 REAL ESTATE COMMISSION STRATEGIES
The NAR commission lawsuit settlement, finalized in 2024 with a $418M payout over four years, has significantly altered the real estate landscape, particularly affecting how buyer-agent commissions are handled. This survey note provides a comprehensive overview for real estate agents and brokers, focusing on current commission rates, scripting strategies, and practical adaptations, including insights into Fannie Maeās policies and builder practices.
š³ Current Commission Landscape
The fallout from the NAR settlement, effective since August 2024, has led to a noticeable shift in buyer-agent commissions. According to Redfinās February 2025 report, the average buyer-agent commission stands at 2.37%, a slight increase from 2.36% in Q3 2024 but down from 2.45% before the settlement Redfin Economic Data. Zillowās January 2025 data corroborates this, reporting a national average of 2.4% Zillow Economic Research. This decline reflects sellers testing lower offers, sometimes as low as 1-2% or zero, pushing buyers to negotiate or cover costs directly.
For example, in Phoenix, a $350K sale offered 2% ($7K) to the buyerās agent, saving the seller $3,500 compared to the traditional 3%. This trend is backed by HousingWireās December 2024 survey, where 68% of agents reported tougher commission discussions, with sellers questioning why they should pay for buyer agents and buyers resisting additional costs HousingWire Survey.
š§ New Construction Commission Rates
New construction homes often offer higher commissions to attract buyer agents, with the National Association of Home Builders (NAHB) reporting an average of 2.8% in 2024 NAHB Builder Survey. Notably, builders like KB Homes in San Antonio are offering up to 5% to buyer agents on new homes, as seen in their marketing materials and agent testimonials KB Homes Agent Incentives. This higher rate, compared to the 2.37% resale average, reflects buildersā strategies to close deals faster, with NAHB data showing new-home sales with incentives closing 20% quicker in Q1 2025 NAHB Market Trends.
šØāš¼ Fannie Maeās Role in Rolling Commissions
Fannie Maeās updated policy, effective for loans delivered on or after June 1, 2024, and clarified in March 2025, allows lender credits for buyer broker commissions to be rolled into the loan, applicable to both new construction and resale homes Fannie Mae Selling Guide. This requires a written buyer-broker agreement, a reasonable and customary commission, and adherence to loan-specific closing cost limits. For instance, for a $300K loan, adding a $3K commission (1% of the loan) increases monthly payments by approximately $15, depending on the rate, making it feasible for buyers without upfront cash.
Agents can confirm eligibility by working with lenders participating in this program, checking Fannie Maeās guidelines for details on loan types (e.g., conventional, FHA) and credit limits. This approach is becoming more common, with Redfin reporting 12% of buyers paying part of their agentās fee in Q4 2024, often through such financing Redfin Buyer Trends.
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Rolling Commissions into Resale Home Loans: How to Find Out
To determine if rolling commissions into a loan is possible for a resale home, agents should:
Confirm with the buyerās lender if they participate in Fannie Maeās lender credit program for buyer broker commissions.
Ensure the buyer has a written agreement with the agent, as required by NAR rules.
Verify the commission is reasonable and customary for the area, typically aligning with local averages (e.g., 2.37% per Redfin).
Check loan-specific limits, as total closing costs, including the commission, must fit within Fannie Maeās guidelines, which vary by loan type and down payment.
Qualifications include the loan being eligible under Fannie Maeās standards, the buyer having sufficient credit and income, and the commission not exceeding the lenderās credit cap, often around 3% of the loan amount. Agents can find this information by contacting the lender directly or reviewing Fannie Maeās Selling Guide online Fannie Mae Selling Guide.
Alternative Strategy: Putting Commission on Top of the Price
Some agents consider increasing the sale price to cover the buyer agentās commission, assuming the home appraises at the higher value. For example, a $300K home with a 2.5% ($7,500) commission could list at $307,500, with the buyer paying the higher price and the commission covered. However, this strategy is risky:
Appraisals must support the higher price, which depends on comparable sales in the area. If the market doesnāt justify $307,500, the appraisal could come in lower, leading to financing gaps where the buyer must cover the difference in cash.
Buyers may resist paying more just for the commission, especially in a buyerās market, potentially killing the deal.
Legal and ethical considerations arise if not disclosed properly, risking disputes.
Given these risks, itās generally less viable than using Fannie Maeās lender credit approach, which is more standardized and less likely to derail transactions. Agents should discuss this option cautiously, ensuring transparency with all parties.
Expanded Scripting for Agents
Given the complexity, agents need robust scripts to navigate these changes. From the archives, including the 2024 podcast āNew Rules for Buyer Agentsā and YouTubeās āCommission Chaos 101ā (March 2024), here are detailed scripts:
For Sellers:
āMr. Seller, in todayās market, offering a competitive commission to buyer agents is key to a fast sale at top dollar. Data shows homes offering at least 2% to buyer agents sell 15% faster (NAR, Q1 2025). So, by offering 2-2.5%, youāre attracting more serious buyers and increasing your chances of a quick close. For example, I recently sold a $450K home with a 2.25% offer in 8 days, beating comps by $12K.ā
Objection Handler: If they say, āWhy should I pay the buyerās agent?ā respond, āItās optional, but think of it as marketing your home to more agents. Homes with lower offers sit longer, costing you time and potential price drops.ā
For Buyers:
āMs. Buyer, I understand youāre concerned about my fee of 2.5%. Normally, the seller covers it, but theyāre offering only 1.5%. Hereās how we can handle it: Fannie Mae allows us to roll the $3K gap into your loan for a $300K home, increasing your monthly payment by just $15. This means no upfront cash, and we can close the deal. Let me walk you through the numbers.ā
Objection Handler: If they say, āThatās too much extra,ā say, āIāve saved clients $20K on deals this year through negotiation. This small increase keeps you in your dream home without breaking the bank.ā
These scripts, backed by data and examples, help agents build trust and close deals in this new commission world.
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šļø HOMEWORK FOR AGENTS
To adapt, agents should:
1ļøā£ Daily (5-10 min): Practice scripts with 5 seller calls and 5 buyer chats, focusing on value and financing options.
2ļøā£ Weekly (15-20 min): List one home with a 2-2.5% buyer-agent offer; pitch one buyer on rolling the fee into their loan via Fannie Mae.
3ļøā£ Monthly (30 min): Track your commission average and aim to beat 2.37%; review one lenderās Fannie Mae participation.
4ļøā£ Sign up for Premier Coaching so you can set specific goals, polish your skills and get the support you need to thrive this year! PremierCoaching.com
This homework is simple, free, and time-light, ensuring any agent, regardless of experience, age, or income, can execute it.
š CONCLUSION
The NAR commission lawsuit fallout is a challenge, but with updated scripts, leveraging Fannie Maeās policies, and learning from builders, agents can thrive. The average buyer-agent commission is 2.37%, with new construction at 2.8% and outliers like KB Homes at 5%. Rolling commissions into loans is viable through Fannie Mae, and agents should check with lenders for details, while avoiding risky price-inflation strategies.
Key Citations:
TAKE ACTION TODAY
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AND THAT'S A WRAP!
Thanks for the support,
Tim & Julie Harris
Harris Real Estate Daily
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