Ask Eli: How much commission do buy-side agents earn in Arlington? | ARLnow

This regular sponsored Q&A column is written by Eli Tucker, Arlington-based real estate agent and resident of Arlington. Please submit your questions to him. by email for answer in the next columns. Video summaries of some articles can be found on YouTube at Ask Eli, live with Jean playlist. Enjoy!

Question: What is the normal commission rate for buy-side real estate agents?

To respond: There has been a long-held belief that real estate agents should avoid public discussion of commissions to avoid antitrust laws and ethics violations, but now that many popular public real estate websites (e.g., Zillow and Redfin ) publish buy-side commissions. , not to mention the National Association of Realtors’ recent efforts to open up transparency, I see no reason why I can’t share this data in the same way as other relevant statistics throughout the year.

The data and graphs below represent the buy-side commission published in the MLS for transactions in Arlington, without any subjective comments that could get me in trouble.

How are commissions determined?

In most cases, commissions are set in the listing agreement between the seller and the seller’s real estate agent. A total commission is established, with a disclosed amount going to the agent/broker representing the home buyer. This buyer-side commission is published in the MLS. The other part of the commission/fee (the one that goes to the listing agent/broker) is not and I have no market insight on those numbers.

Buyer agents may establish minimum commissions or other fees in the representation agreement between the buy-side agent/broker and the buyer, but this article/data is specific to the buy-side commission, offered by the seller/ listing broker, published in the MLS.

Buy-side commissions down 11.4% since 2014/2015

In 2014 and 2015, buy-side commissions averaged 2.9% for all transactions in Arlington. In 2021, the average buy-side commission at Arlington fell 11.4%, to 2.57%. The largest year-on-year decline occurred between 2018 (2.75% average) and 2019 (2.65% average).

Aside from the historically high volume of real estate transactions in 2021, gross revenue (calculated by real estate sales volume multiplied by average buyer-side commission percentage) of brokerages covering buy-side transactions in Arlington has remained fairly consistent d year-over-year from 2014-2020 because lower buy-side commissions were offset by higher real estate values.

So for anyone who dislikes us realtors, you can raise a glass and toast the industry (at least the buy side of Arlington deals) by getting little to no raise over seven years from 2014-2020!

3% buyer side commission, it was nice to meet you!

In 2014 and 2015, just under 80% of buy-side commissions at Arlington were 3% (blue bars in chart below) and ~17% offered at 2.5% (orange bars in chart below). below). Fast forward to 2021 and the numbers are almost perfectly reversed with 15% of sales offered at 3% buy side commission and 79% offered at 2.5%.

Since 2014, a buy-side commission has been offered at 2.5% or 3% in almost all Arlington transactions, accounting for 93.4% to 96.5% of all transactions in each of the past eight years. After that, the second most common buy-side commission offered was 2.75%, except in 2021 when 2% offers first surpassed 2.75% offers for third place, accounting for 2.5 % of total transactions.

I could write pages about the structure of real estate commissions, the value of real estate agents and the makeup of our industry but that’s for another day!

If you would like to discuss buying, selling, investing or renting, please do not hesitate to contact me at [email protected].

If you would like a question answered in my weekly column or to discuss buying, selling, renting or investing, please email [email protected]. To read one of my older articles, visit the blog section of my website at EliResidential.com. Call me directly at 703-539-2529.

Video summaries of some articles can be found on YouTube at Ask Eli, live with Jean playlist.

Eli Tucker is a licensed real estate agent in Virginia, Washington DC and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. 703-390-9460.

Aurora J. William