This summer, the real estate industry is set to experience a great shift when it comes to commissions and the job of a buyer’s agent, thanks to the National Association of REALTORS®’ (NAR) settlement and others in the commission lawsuits across the industry. These changes have been the subject of conversation not just in the real estate sphere, but amongst the public as well.
There is a clear divide between the opinions of the public and that of REALTORS®, according to a new study from Clever. The study found that 67% of the general public support upcoming changes to real estate commissions, while 70% of real estate agents oppose them.
Clever reported that more than three in five Americans (61%) agree with the NAR lawsuit’s main premise: homesellers having to pay the buyer’s agent commission is unfair and an anti-competitive practice. In contrast, 89% of agents don’t believe the allegations are valid.
Carl Gresen, a REALTOR® with 25 years of experience in the Tampa Bay area, told Clever that he doesn’t feel most of the public is correctly well informed.
“They have no clue,” he said. “Most just read headlines and think they don’t need to pay buyer agent commission now. Of course, some have no idea anything is going on.”
When it comes to how the settlement changes will impact the industry, Clever found that 71% of agents think there will be a negative impact, while the public is almost evenly split, 40% negative to 39% positive.
Listing agent Paul Smith of the El Paso, Texas, area, told Clever he sees the potential for a slowdown in the immediate aftermath of the changes as both sides figure out the best strategies moving forward.
“(A year from now), we’ll have a completely streamlined process and documentation to address the changes the lawsuit set in motion,” he said. “There will be a shakeup of agents that are not 100% invested in this as a career, and processes that make it easier for buyers to handle transactions on their own will crop up.”
Nearly 48% of Americans see homesellers as the biggest winners from the rule changes, and roughly equal amounts of Americans see homebuyers (39%) and real estate agents (41%) as the ones who’ll benefit least. In addition, 82% of real estate agents believe homebuyers will be hurt by the commission changes, while 42% believe the changes will also negatively impact homesellers.
With commissions possibly not being covered by homesellers as often in the future, 66% of prospective first-time homebuyers indicated they wouldn’t be able to afford their agent’s commission in addition to other closing costs and the down payment.
“Most buyers are not going to pay out of their pockets or finance their agent commission,” broker Jim Holbrook—who has worked in real estate for two decades in the Temecula, California, area—told Clever.
Only 15% of real estate agents believe the changes will have a positive impact on their business, while almost six in 10 (58%) expect negative results. However, there are many agents who don’t see too much of a shift coming at all.
Holbrook, as a broker, told Clever he doesn’t believe there will be much of an impact overall, as both agents will still need to be compensated for their work.
“I believe we need all buyer agents to bring buyers to our listings, and to think a listing agent can do it all is naive,” he said.
Rhonda DuBois, an agent in the Maricopa County area of Arizona for nearly three decades, told Clever she agrees with Holbrook. “Seasoned REALTORS® will let the sellers know the value in paying for a co-broke fee.”
“Our major shift will be explaining the agency agreement to buyers prior to beginning the home-buying journey,” Adrian Alvarado, a REALTOR® in the Southern California area, told Clever. “It’s no different than explaining to a seller the listing agreement and fees that are paid through the transaction. Most agents avoid compensation conversations when representing buyers, and that will change with the industry change.”
As for staying in the game, 95% of surveyed agents expect that the new commission structure will cause agents to leave the industry. Meanwhile, about half of real estate agents (52%) who intend to chart a course are considering offering additional services to stay competitive.
“Agents who don’t want to change and are already looking for workarounds won’t make it,” Gresen told Clever.
For the full report, visit https://listwithclever.com/research/real-estate-commission-changes-2024/.
