According to Inman Intel Index results, more than a quarter of brokers say their brokerage firms have changed policies around buyer agency agreements and the impact of commission lawsuits has taken a toll.
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In the early months after the Sitzer Affair | In the wake of the Burnett Commission litigation ruling and related settlements, brokerage leaders scrambled first to understand and then train their agents on the impact on their business.
Now, 27% Agent respondents to the January Inman Intel Index survey said their brokerage firms have taken preparations to the next level, opting for immediate changes to buyer representation policies as they prepare to secure income for Sitzer’s business.
Results from this flagship monthly real estate sentiment survey, also known as Triple-I, suggest these pioneers won’t be the last.
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Read details on the steps brokerages are taking to combat a series of legal challenges that could upend the way real estate businesses make money.
Buyer’s Dilemma
For many people, buyer’s agency agreements are nothing new.
Many brokerage firms have required them for years. According to the South Carolina Association of REALTORSthese contracts are mandatory for real estate brokerages in 18 states.
Still, some of the nation’s largest real estate markets — including New York, California, Texas and Florida — don’t yet require brokerage firms to offer these contracts to buyers.
Here’s what Triple-I learned from 1,029 real estate professionals, including 638 brokers and 324 brokerage leaders, who shared their thoughts in January.
- 11% of agent respondents said their brokerage firm has “changed its policy regarding buyer agency agreements” and now requires them when working with buyers.
- 16% said their brokerage “changed policy” and now requires buyers to sign an agreement.
- twenty three% said their brokerage has not yet changed its policy, but they expect it will.
- 37% Just saying their brokerage hasn’t changed its policy.
- the remaining 12% Selecting “Other,” a significant portion of respondents clarified that their brokerage firm has been using a buyer’s agency agreement for some time.
Among other things, these buyer contracts ensure that if the seller does not pay the agent’s commission, the client will be responsible for the agent’s agreed commission.
In a world where cooperative compensation may no longer be necessary, this will be an especially important reassurance.
Nonetheless, the results clearly show that many brokerages are taking a wait-and-see approach before making drastic changes to their business operations.
looming issues
While the Sice verdict and related settlements dealt an early blow to big industry players, many legal challenges remain unresolved.
That’s perhaps why most brokerage leaders don’t yet consider these commission lawsuits their No. 1 business issue, instead pointing the finger at “interest rates” and other market-related concerns.
- 8% Brokerage leaders who participated in the January Triple-I survey called regulation the “most challenging part” of today’s business environment.
- Brokers are more likely than brokerage leaders to worry about these lawsuits.for 15% Among agency respondents, commission litigation has become the “top business issue” today.
While brokerage leaders generally don’t view regulation as their biggest issue right now, many do worry that litigation could become a growing threat in the future.
- The proportion of brokerage leaders who cited regulatory issues as their top challenge nearly doubled when asked about the next 12 months 15%.
Trading blocs weakened
For decades, the National Association of Realtors has been one of the most powerful and influential trade groups in the United States.
Now, with NAR lawsuits, leadership scandals and Some market-driven membership declines In 2023, Triple-I revealed a level of dissatisfaction among the ranks of real estate agents — many of whom are required by local trade groups or MLS associations to maintain NAR memberships.
- 1% of Triple-I respondents said they had actually canceled their membership within the past 60 days.
- other 6% said they plan to cancel in 2024.
- 25% of agents said they had not canceled their NAR membership in the past 60 days, but it was “not their choice.”
- 57% said it was their choice to retain their membership.other 10% Selecting “Other”, the majority of respondents chose to detail various reasons for not canceling their membership.
As the year ahead unfolds, the industry is teetering on the edge of uncertainty in many ways. Triple-I will continue to closely monitor the steps taken by business leaders in response to the latest developments.
Methodological Notes: Inman of the month Intel index poll Taking place from January 21 to 31, 2024.Invite the entire Inman reader community to participate, and Intel A total of 1,029 responses were received.Respondents to this poll were directed to the SurveyMonkey platform where they self-identified their profile in the residential real estate market. Respondents were limited to one response per device, but there was no limit on IP address. Once a profile is selected (residential real estate agent, mortgage broker/banker, business executive/investor/proptech or other), respondents answer a unique set of questions for that specific profile.because poll There is no requirement for age, gender or geographic location demographic information, and there is no data weighting.this poll Will be conducted monthly, with recurring questions and unique questions for each profile type.
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