Brokers await NAR settlement to drive commission cuts: Intel | Private Equity Weekly

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A key commission settlement reached last month by the National Association of Realtors has shaken expectations for future business revenue among agents and brokerage leaders.

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

Their broad expectations? The industry will face an increasingly negotiable commission environment that will reduce brokerage firms’ share of a typical transaction.

As the industry tries new models and approaches, some brokerage leaders told Intel they are now concerned that a Wild West of models could lead to customer confusion.

“What’s on the table today eliminates a clear path to earning a commission as a buyer’s agent,” one brokerage leader told Intel. “Before we can properly understand this, we need to figure out what that path is and how. Execute it.”

Read the full breakdown in the report below.

settle accounts early

Of all the early reactions to the NAR settlement documented by Intel, few felt confident that it was a positive step for the industry.

In fact, the early response is so mixed that it may take real estate professionals months or even years to fully understand the impact of the deal.

• only 11% Real estate agents surveyed by Intel in late March said they “satisfy” Terms of Settlement with NAR.
• The number of agents is almost four times as many as before—— 41% –Tell Intel they are Not satisfied with transactions.
• The remaining proxy respondents stated it’s too earlyor give another response.

Brokerage leaders are more likely than agents to say the industry is in good shape post-settlement.

• 42% Brokerage leaders surveyed by Intel said they Optimistic about the future of the industry After learning of the tentative settlement terms.
• Despite this, a considerable number of brokerage leaders still expressed that Negative sentiment about the future of the industry After settlement, it is equivalent to 34% among this group of respondents.
• Other leading brokerages—— twenty four% –reported”neutral“a feeling of.

From a broker owner’s perspective, the settlement likely represents a potentially positive solution compared to the downside and uncertainty that has been plaguing the industry.

Still, that doesn’t mean brokerage leaders believe NAR has succeeded in maintaining the commission status quo.

meaning of confusion

For months, industry professionals have told Intel Index they expect ongoing commission litigation to reduce brokerage revenue and agent numbers.

NAR’s settlement statement does little to alleviate these concerns.

• 51% Agent respondents to Intel’s March survey strongly believe Real estate commissions will drop as a result of reconciliation.
• only 4% In contrast, agents say Commissions will rise.
• this residual agent or express their expectation Commission remains unchangedor that no one knows what happens.

Brokerage owners and executives, on the other hand, are less likely to take a wait-and-see approach.

• 57% of brokerage leaders told Intel they expect decline Real estate commission after settlement.
• only 5% of brokerage leaders expect Increase in commission.
• only 13% The person in charge of several securities firms stated that “no one knows” What happens in comparison twenty two% Agents who provide the same answer.

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

• 62% of brokerage leaders tell Intel they believe buyers’ agents will be paid Negotiate commission rate Based on the sales price of the home.
• only 8% It is believed that the buyer’s agent will continue to be paid at a set commission rate.
• only 6% of brokerage leaders believe alternative compensation model – such as a salaried agent or a flat fee per transaction – are the most likely ways a buyer’s agent will make money in the future.

But even though these alternative models may not become mainstream, some brokerage leaders are concerned that the industry’s potential forays into these ideas could cause trouble across the real estate community.

One such brokerage leader wrote that they are bracing for a particularly volatile period in competitive models and the possibility of lawsuits against listing agents over “double agency incidents.”

The leader warned that this problematic environment was bad for consumers and could prompt government officials to step in again to provide a clearer framework for brokerages.

“At the same time, it’s going to be a crazy and broad fee structure that further confuses buyers, and probably many don’t understand what they’re getting into,” the brokerage chief told Intel.

Intel Index will release additional insights on this issue in the coming weeks.

Methodological Notes: Inman of the month Intel index poll Taking place from March 20 to April 1, 2024.Invite the entire Inman reader community to participate, and Intel 1,009 replies received.Respondents to this poll They 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 demographic information such as age, gender, or geographic location, and there is no weighting of the data.this poll Will be conducted monthly, with recurring questions and unique questions for each profile type.

Email Daniel Houston