The homes your real-estate agent doesn't want you to see

A house being covered up with cloth
Real-estate agent commissions have barely budged over decades. Critics blame a shady practice known as "steering."Allevinatis/Getty, stuartbur/Getty, malerapaso/Getty, Tyler Le/BI

The last month of 2020 should've been a happy time for real-estate agents. The catastrophe of the pandemic had turned into an improbable housing-market boom, as home sales reached 14-year highs. But instead of celebrating their unexpectedly prosperous year, a lot of agents were pissed.

In private chats and message boards, they complained about new rules that would publicly expose their commissions. For homebuyers, the amount an agent gets paid has historically been out of sight, out of mind. But as part of a November 2020 settlement between the Department of Justice and the industry's top trade group, the National Association of Realtors, real-estate search sites like Zillow and Redfin would soon start publicizing exactly how much buyers' agents stood to collect on nearly every home for sale in America.

Among real-estate agents, no topic is more sensitive than their commissions. In private comments at the time, screenshots of which were shared with Business Insider, agents revealed just how squeamish they were.


"It's no one's business," one disgruntled agent commented in a private Facebook group. "Do we go around asking people how much they make?"

"Someone has it in for real estate," another responded.

In the middle of the vitriol, a brave agent — whom I'll call Julie — applauded the move, suggesting it could help rid the industry of one of its dirty secrets: a sly tactic called steering.

Because of America's convoluted home-sales system, the seller typically pays out agents on both sides of a transaction. The commission is baked into the home's final price — it's usually between 5% and 6% of the total — and split evenly between the buyer's and seller's agents. Technically, the seller can promise as little as $0 to the buyer's agent; after all, why pay for someone you didn't hire? But there's a catch: Offer less than the going rate, and you risk getting the cold shoulder from other brokers and fewer eyeballs on your listing. Agents might steer their clients toward the homes that offer the standard commission and away from ones that don't. The practice screws over both sellers, who might miss out on offers, and buyers, who might unknowingly pass over their dream home.

"Whether or not people admit it, steering due to commission rate definitely happens and it is incredibly wrong," Julie wrote in a Facebook comment.

"Wrong," someone else replied, "or the real world?"

Steering is notoriously difficult to prove or quantify, but evidence of the practice can be found littered throughout the housing market. The extent of steering is a main point of contention in the multibillion-dollar class-action lawsuits over agent commissions; the plaintiffs say the threat of steering is a big reason commissions have barely budged over the years. Wendy Gilch, a consumer advocate who focuses on transparency in real estate with her company, Selling Later, likened this moment to "a reset button" for the industry.

"It's a great opportunity to start over," Gilch told me.

It's hard to know how much steering actually happens, mostly because a buyer might never know they were a victim in the first place.

The first article in NAR's code of ethics says Realtors must "protect and promote the interests of their client," and the organization's official position can be summed up simply: Steering doesn't exist. It's a myth, the argument goes, created by those who want to dismantle the system and force buyers and sellers to pay their agents separately. But multiple agents told me there are all kinds of ways shady practitioners try to skirt the rules.

For instance, some agents might filter out listings with subpar commissions before passing along options to their clients. Or if they do show their client a house, they could insinuate that a low commission is a warning sign that the seller is hard to deal with or invent reasons the house isn't a good fit. They could also caution that if they're not getting their desired commission from the seller, they'll expect the buyer to make up the difference. Agents are within their rights to do that, but it can discourage a cash-strapped buyer from pursuing a home.

"All a Realtor has to do is make a face about a house and they put a question in the buyer's mind as to whether or not it would be wise to put an offer in on a house," Doug Miller, a real-estate attorney in Minnesota, said in an email.

Critics say the stickiness of the going commission rate is evidence of steering's ubiquity. The cut that's split between agents on both sides of the deal has basically fluctuated between 5% and 6% of the total sale price since at least 1992, despite the widespread adoption of home-search technology, an increase in the number of agents, and huge differences in agents' experience and skill. In recent years, greater numbers of agents have been fighting for clients, while technology has streamlined their jobs and made it possible for anyone to look up homes online. In a competitive market, critics say, you'd expect the price of agents' services to come down. But data from RealTrends indicates that in 2021, even as home prices were skyrocketing and agents were signing up en masse, the typical commission rate actually went up.