The following Q&A comes from the HW+ exclusive Slack channel, where HousingWire Senior Real Estate Reporter Matthew Blake answered questions about his three-part HW+ series on the past, present, and future of real estate commissions. After talking to some of the biggest stakeholders in the industry about real estate commissions, he shares his findings and takeaways in this ask-me-anything conversation.
During the discussion, he talks about what real estate agents should be most concerned about when it comes to legal challenges to real estate commissions, what role alternative models like Redfin and Clever are playing, and so much more. The following Q&A has been lightly edited for length and clarity.
HousingWire: To start, from your perspective, can you outline or summarize why this series was so notable or interesting to you?
Mathew Blake: I think it was notable because it touches on a very sensitive topic, but an elemental one for most people, which is “how much are you paid” and “how do you make that money.” What I really like about HousingWire is that we look at all real estate professionals, not just executives, and so this was an effort to explore and explain this vast and varied labor market.
HW+ Member: What was the most profound or interesting information you discovered while working on this series?
Mathew Blake: The most interesting information, to me, was learning that the way real estate agents have been paid has been around for 100 years, and their accruing 5% to 6% of a home sale has been around for about 80 years. I didn’t know about this history. As a journalist, my profession and the way our sector has worked has changed constantly in just the last 20 years alone, and I think that’s the case with many professions. So learning about the stability in agent real estate commissions was the biggest takeaway for me.
HW+ Member: Hasn’t the marketplace allowed for lower commission rates to be established into the economic ecosystem? Some people just choose to go with certain agents and pay more for that service.
Mathew Blake: I think that’s really unclear to me at this point. You might be right, but many academics who’ve looked into real estate agents and agents themselves that I’ve talked to say that the consumer really doesn’t understand there are commission alternatives available. I think it’s on a consumer-by-consumer basis, for sure. But the vast majority of consumers (unfortunately) don’t read HousingWire and don’t know they can pro-actively negotiate rates or that a Clever, or Redfin, or REX exists.
HW+ Member: No longer do consumers wait for their agent to “find” houses for them. Potential homebuyers use Zillow and Realtor.com to do their own hunt. But the real estate agent gets paid for the advice, guidance, and process that leads to a closed deal. Do you think this evolution is part of the counterbalance that helps brokerages/agents protect their model from the low fee folks?