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Puget Sound Real Estate: The Impact of Publishing the SOC

On October 1, 2019, the NWMLS became the first MLS in the nation to allow sellers to publish what they’re willing to pay a buyer’s agent.  Almost all the speculation was that this rule change would empower sellers to offer much less than the standard 3% commission buyer’s agents earn on a transaction.  This speculation was even to the point where it drew the headline from the Seattle Times:  “Buying a home in Seattle area may get thousands of dollars cheaper, after rule change by agents”.  But after many discussions, articles, angst, and debate over how the rule change would play out, this game-changing rule change ended up being…not that big.

Here’s some data for the Tri-County area:

  • September (the month before sellers have the ability to publish what they want to pay a buyer’s agent out of the equity in their home)
    • 4% Commission to Buyer’s Agent = 17 Listings (.34% of all listings)
    • 3.5% Commission to Buyer’s Agent = 10 Listings (.20% of all listings)
    • 3.25% Commission to Buyer’s Agent = 4 Listings (.07% of all listings)
    • 3% Commission to Buyer’s Agent = 2,458 Listings (48.65% of all listings)
    • 2.75% Commission to Buyer’s Agent = 35 Listings (.69% of all listings)
    • 2.5% Commission to Buyer’s Agent = 2,458 Listings (48.65% of all listings)
    • 2% Commission to Buyer’s Agent = 62 Listings (1.23% of all listings)
    • 1.5% Commission to Buyer’s Agent = 2 Listings (.04% of all listings)
    • 1% Commission to Buyer’s Agent = 5 Listings (.09% of all listings)
    • 0% Commission to Buyer’s Agent = 1 Listing (.02% of all listings)
  • October (Full month projections based on data through the 24th.  October is the first month sellers have the ability to publish what they want to pay a buyer’s agent out of the equity in their home)
    • 4% Commission to Buyer’s Agent = 19 Listings (.38% of all listings)
    • 3.5% Commission to Buyer’s Agent = 9 Listings (.18% of all listings)
    • 3.25% Commission to Buyer’s Agent = 2 Listings (.04% of all listings)
    • 3% Commission to Buyer’s Agent = 2,369 Listings (47.08% of all listings)
    • 2.75% Commission to Buyer’s Agent = 45 Listings (.9% of all listings)
    • 2.5% Commission to Buyer’s Agent = 2,498 Listings (49.64% of all listings)
    • 2% Commission to Buyer’s Agent = 68 Listings (1.35% of all listings)
    • 1.5% Commission to Buyer’s Agent = 9 Listings (.18% of all listings)
    • 1% Commission to Buyer’s Agent = 5 Listings (.1% of all listings)
    • 0% Commission to Buyer’s Agent = 8 Listings (.16% of all listings)

The Breakdown

There are eight bold sellers trying to sell their homes without offering any sort of commission to buyer’s agents, that’s seven more sellers than in July, August, and September combined.  However statistically still somewhat negligible given the overall inventory.  I think the most telling interpretation of the data above is that in September 49.26% of all sellers were offering 3%+ to their buyer’s agent; and in October that number shrank to 47.68% of all sellers offering to pay 3%+ to their buyer’s agent.  Thus, maybe someone could argue there’s downward pressure on commissions post-rule change, but not by much.  In the end, this rule change by the NWMLS looks like a poster-child amendment if I’ve ever seen one:  it provides considerably more transparency to the consumer.  Buyers now know exactly how much of their agent’s commission is priced into the purchase price of their home.  But yet it didn’t turn the industry upside down.  Great news for everyone!

 

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