Real estate commissions drop in Las Vegas as industry braces for massive change

Real estate commissions have dropped in the Las Vegas Valley, according to a new report from Redfin as the industry braces for massive change this weekend.

The average commission for a residential real estate deal in the valley at the end of January was 2.55 percent and now sits at 2.46 percent as of July 14, the report said. This is part of a much larger trend where real estate commissions have dropped nationally from 2.62 percent at the end of January to 2.55 percent as of July 14.

Las Vegas Realtors President Merri Perry declined to comment on the report; however, longtime Las Vegas real estate agent Steve Hawks said this is just the start of what should be a massive upheavel of the real estate industry.

A $418 million settlement agreement with the National Association of Realtors following a class-action lawsuit brought against the powerful trade group kicks into effect Saturday.

Hawks said the biggest change as a result will be agents’ commissions will no longer be included in the Multiple Listing Service, where the vast majority of homes are listed.

“Many experts and brokers expect average buyer commission to drop below 2 percent compared to the 2.5 percent that NAR said was the traditional buyer side,” he said. “If a buyer wants to see just one or two homes are they going to pay 2.5 percent or 1.5 percent or offer a flat fee? That remains to be seen, but will a buyer pay $15,000 or more to see and write an offer on one or two homes the buyer is interested in?”

The second biggest change about to hit the industry is that buyers’ agents have to discuss compensation upfront, and agents who are working with a potential homebuyer must now sign a written agreement before touring properties with that agent.

“Pre-settlement the buyer-broker agreement protected the Realtor and the Realtors’ commission,” he said. “Post-settlement the buyer-broker agreement is to protect the consumer.”

NAR continues to deny any wrongdoing in connection with the MLS cooperative compensation model rule as the organization detailed on its website.

“NAR has long maintained—and we continue to believe—that cooperative compensation and NAR’s current policies are good things that benefit buyers and sellers,” reads the statement. “They promote access to real property ownership, particularly for lower- and middle-income buyers who can have a difficult-enough time saving for a down payment. Real estate laws in many states authorize offers of compensation.”

No one is totally sure what is going to happen or how much this settlement will impact the industry, but Hawks said he is confident that commissions will continue to drop as the industry adapts to the new rules.

“The outcome will likely lead to more professional, knowledgeable agents like what happened in the mortgage industry in 2010,” he said. “Experienced knowledgeable agents will get the full contracted amount per a buyer-agent agreement. Unprofessional real estate agents who create more problems than they solve will find their commission wiped out sometimes at the last minute.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.