Survey Reveals Negotiability of Commissions
BY ROBERT FREEDMAN
Every year or so NAR releases a profile of home buyers and sellers, and without fail the report is among the association's most popular research products for the year. It's no wonder, because it's full of data about the changing characteristics of consumers and their buying and selling preferences — that kind of information, if picked through thoroughly enough, can be a gold mine of industry intelligence.
The latest profile, released in the fourth quarter of last year, asked for the first time about the negotiability of commissions: who tends to bring it up, and to what extent the associate is willing to negotiate.
The question was included in the survey at the request of the editors of REALTOR® magazine, and we're glad NAR's researchers agreed to add it because it opens up a valuable window into the relationship between practitioners and consumers.
The question revealed that sales associates are just as likely to bring up the issue of commission negotiability as consumers (they each bring it up about 40 percent of the time). It also showed that the issue doesn't come up at all about 20 percent of the time.
A Closer Look
We asked NAR's research analysts to run the findings through a finer filter to see if we could learn even more about what happens when sales associates are talking with consumers about the issue. The results are enlightening.
You'll be able to find some more discussion of what we found in the upcoming March issue of REALTOR® magazine in the Real Life section. But due to limited space in the magazine, we decided to run all the commission findings online .
What's of particular note is that REALTORS® are about 25 percent more likely to raise
the issue of negotiability than are non-NAR members.
Furthermore, consumers are a whopping 55 percent more likely not to know commissions are negotiable when they're talking with a non-REALTOR® than when they're talking with a REALTOR®.
What that suggests, if nothing else, is that REALTORS® are more apt to disclose to consumers what their options are.
Also of note is the relationship between consumers' experience in home buying and selling and their willingness to raise the issue. In general, the more experience they have, the more likely they are to raise the issue.
Therefore, it's no surprise that consumers in resort areas, where second homes are common, are among the most willing to ask about flexibility.
On the other hand, single females are the least likely to know that commissions are negotiable.
This gender gap could close in the future, though, because single females are among the fastest growing home buyer segment in the country, other NAR data has found. So, as their experience increases, so too should their knowledge of, and willingness to raise, commission flexibility.
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