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Brokers brace for NAR settlement to drive commissions south: Intel



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A $418 million settlement in March by NAR caught agents and leaders by surprise. In a mixed bag of responses to the latest Intel Index poll, they shared their early reactions and existential fears.

This report is available exclusively to subscribers of Inman Intel, the data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.

Last month’s pivotal commission settlement by the National Association of Realtors has shaken agents and brokerage leaders’ expectations for future business revenue.

These observations, gathered in late March as part of the Inman Intel Index survey, make up some of the earliest reactions to NAR’s $418 million legal settlement. More than 1,000 real estate professionals shared their insights with Intel for this month’s flagship industry sentiment survey.

Their broad expectation? The industry will navigate an increasingly negotiable commission environment that drives down the brokerage’s share of the typical transaction.

And as the industry experiments with new models and approaches, some brokerage leaders told Intel they now fear a Wild West variety of models that causes confusion among clients. 

“What is on the table today removes a clear path to a commission as a buyer agent,” one brokerage leader told Intel. “We need clarity on what that path is and how it can be enforced before we can understand this properly.”

Read the complete breakdown in the report below.

An early reckoning

Of all the early reactions to NAR’s settlement that Intel recorded, few reflected a confident view that this is a positive step for the industry.

Early reactions are so mixed, in fact, that it may take months or even years for real estate professionals to fully wrap their heads around the implications of the deal.

  • Only 11 percent of real estate agents Intel surveyed in late March reported they were “satisfied” with the terms of NAR’s settlement.
  • Nearly four times as many agents — 41 percent — told Intel they were not satisfied with the deal.
  • The remaining agent respondents indicated it was too early to tell, or gave another response.

Compared to agents, leaders at brokerages were more likely to say that the industry was in good shape in a post-settlement landscape.

  • 42 percent of brokerage leaders who responded to Intel’s survey said they felt positive about the industry’s future after learning of the tentative settlement terms.
  • Still, a significant share of brokerage leaders expressed negative feelings toward the industry’s future post-settlement, amounting to 34 percent of this respondent group.
  • The remaining brokerage leaders — 24 percent — reported a “neutral” feeling.

From a broker-owner’s outlook, the settlement may well represent a potential positive resolution in comparison to the downside and uncertainty that had been gripping the industry.

Still, this doesn’t mean brokerage leaders believe NAR has succeeded in preserving the status quo for commissions.

The messy implications

For months, industry professionals have told the Intel Index that they expect the ongoing commission suits to take a bite out of brokerage revenues and agent count.

NAR’s settlement announcement did little to assuage these fears.

  • 51 percent of agent respondents in Intel’s March survey had a firm belief that real estate commissions will go down as a result of the settlement.
  • Only 4 percent of agents, by contrast, said that commissions would go up.
  • The remaining agents either expressed that they expected commissions to stay the same, or that no one knows what will happen.

Broker-owners and executives, on the other hand, were less likely to be on the fence.

  • 57 percent of brokerage leaders told Intel that they expect a decline in real estate commissions in the wake of the settlement.
  • A mere 5 percent of brokerage leaders expect an increase in commissions.
  • Only 13 percent of brokerage leaders expressed that “no one knows” what will happen, compared to 22 percent of agents who offered the same response.

After months of uncertainty and doubt, it’s evident that the path forward is finally becoming increasingly clear to most brokerage leaders. So what does that path look like?

  • 62 percent of brokerage leaders told Intel that they believe buyer’s agents will be paid a negotiated commission rate based on the sale price of the home.
  • Only 8 percent believe that buyer’s agents will continue to be paid according to a set commission rate.
  • Barely 6 percent of brokerage leaders think that alternative compensation models — such as salaried agents or a flat fee per transaction — are the most likely way buyer’s agents will make money going forward.

But even though these alternative models may not become predominant, some brokerage leaders worry the industry’s potential flirtation with these ideas has the potential to cause headaches throughout the real estate world.

One such brokerage leader wrote that they are bracing for a particularly volatile period of competing models and potential lawsuits against listing agents regarding “dual agency mishaps.”

Such a problematic environment would not be good for consumers, this leader cautioned — and may prompt government officials to step in yet again to provide a clearer framework for brokerages.

“In the meantime, it will be a wild and broad range of fee structures, further confusing the buyers and likely many not understanding what they are getting into,” the brokerage leader told Intel.

The Intel Index will publish additional insights from this line of questioning in the weeks to come.

Methodology notes: This month’s Inman Intel Index survey was conducted March 20-April 1, 2024. The entire Inman reader community was invited to participate, and Intel received 1,009 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.

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