💸 How are real estate agents, home buyers, and sellers reacting to recent Realtor commission changes? 💸
Views of the settlement and its consequences are improving among real estate agents, although nearly two-thirds (64%) still oppose it. Meanwhile, more than two-thirds of homeowners (67%) and over half of buyers (53%) support the overhaul.
Agents Warming to Settlement Changes | Confusion and Worry Remain Among Agents | Home Buyers Lack Settlement Knowledge | Changes From Sellers | New Tactics From Agents | Methodology | FAQ
The biggest shakeup in decades for the American real estate market is now a reality. On Aug. 17, changes resulting from a ground-breaking legal settlement with the National Association of Realtors took effect, reshaping important parts of the home-buying and -selling process.
Most significantly, sellers are no longer obligated to pay for the buyer’s agent’s commission, and listing agents are prohibited from advertising a set buyer’s agent commission on their clients' homes. This puts the onus on buyers to determine how their agents are compensated, whether it’s a concession from sellers, wrapping the fees into their mortgage with a higher offer price, or paying the cost out-of-pocket.
For buyer’s agents, this means they’ll need to get a signed agency agreement from buyers before they show homes or submit offers — or risk losing their commission. Meanwhile, listing agents now have an extra factor to weigh when presenting offers to their clients.
Predictions about the impact of this overhaul have been all over the map, ranging from higher costs for first-time buyers and job losses among Realtors to more transparency in transactions and lower overall commission costs and home prices in the long run.
To find out more about how things will play out going forward, we surveyed those on the front lines of this change: homeowners, those who plan to soon buy a property, and the real estate agents who serve both groups.
Clever Real Estate asked 1,000 Americans about their thoughts on the NAR settlement and how it might impact their behavior. Responses were split between 79% who currently own homes and 21% who plan to buy one in the next year. In addition, we asked 516 active real estate agents about their views on the changes to the real estate market in the wake of the settlement.
All responses were received after the new rules took effect.
📊 Post-NAR Lawsuit Realtor Commission Change Statistics
- Nearly two-thirds of real estate agents (64%) oppose the recent changes to commission structure, but that’s down from 70% earlier this year.
- The percentage of agents who believe the settlement will hurt first-time home buyers has decreased by 12 points since April but remains at more than three-quarters (76%).
- More than two-thirds of homeowners (67%) support the changes brought about by the NAR settlement, although only 53% of upcoming buyers do.
- Barely a quarter of homeowners or potential buyers (26%) have a strong understanding of the lawsuit and resulting settlement, compared to 40% who either don’t understand the implications of the changes at all or haven’t even heard of the lawsuit.
- Agents used the words “confused,” “confusing,” or “confusion” to describe their feelings on the settlement more than any other term.
- Nearly three-quarters of agents (72%) believe the NAR settlement will have a negative impact on the real estate industry overall, while only 20% expect a positive one.
- Almost half of the agents surveyed (48%) indicate that their overall outlook on their real estate career has become more pessimistic since the NAR lawsuit settlement was approved.
- Only 16% feel more optimistic.
- Two-thirds of agents (66%) believe buyers will become more hesitant to use a Realtor due to the NAR settlement, but just 22% of homeowners and potential buyers say they’ll be less likely to do so.
- Post-settlement, 71% of potential buyers still plan to use an agent.
- However, about half of potential buyers (49%) say figuring out their Realtor's compensation, even if they don’t have to pay it themselves, makes it less likely they'll end up actually buying.
- 63% of homeowners who intend to sell in the next year are more likely to sell now that they’re not obligated to pay the buyer’s agent commission.
- More than a third of agents (35%) say they won’t work with sellers who don’t offer a concession that buyers can use to pay their agents.
- 79% of homeowners and 71% of potential buyers believe real estate agents should be required to disclose their commission rates upfront.
Agents Are Slowly Warming to Settlement Changes
Whether it’s a result of learning more about it or simply being forced to adjust, real estate agents feel slightly more positive about the commission overhaul than they did earlier this year.
Nearly two-thirds of real estate agents (64%) oppose recent changes to the commission structure, with 33% strongly opposed. Still, that’s down slightly from the 70% who opposed them when Clever surveyed agents before the settlement took effect.
Meanwhile, 86% of agents expect that the recent changes in commission structure will cause Realtors to leave the industry. As high as that is, it’s down nine points from the nearly unanimous 95% of agents who believed this in April 2024.
It’s worth noting that not every Realtor sees this as a bad thing. Agent Lisa Ragland of Wilmington, North Carolina, believes that impact will mostly hit inexperienced or part-time Realtors.
“This will allow seasoned professionals, especially those who offer flexible commissions, the opportunity to thrive in their local markets and serve their communities better than ever before," Ragland said.
There are similarly more positive signs in the number of agents who believe the settlement changes will cause problems for first-time home buyers. Although more than three-quarters (76%) feel that way now, 88% thought so in our previous survey.
“First-time buyers are worried that they will be pushed to the side when more financially secure buyers can afford to pay brokerage fees out of pocket.”
Agent Carl Heitman, Worcester, Massachusetts
Although the commission overhaul impacts buyer’s agents more than those who work only with sellers, 90% of agents say they’ll remain open to working as a buyer’s agent going forward. Still, more than a third (36%) say they’re less likely to work with buyers, a trend that could lead to a shortage of buyer’s agents down the road.
Buyers and Sellers Show Steady Support
Unlike agents, a majority of the public supports the commission changes. However, that support isn’t evenly distributed among all groups.
Roughly two-thirds of homeowners (67%) support the changes brought about by the NAR settlement, although only about half of upcoming buyers who don't currently own a home (53%) do. Clever’s April survey of the general public found the same 67% level of support sellers currently show.
An extra few months hasn’t done much to educate many people. Barely a quarter of homeowners or potential buyers (26%) have a strong understanding of the lawsuit and resulting settlement. That’s compared to 55% who either don’t understand the implications of the changes at all or haven’t even heard of them.
Still, back in April, nearly two-thirds of Americans (64%) weren’t even aware of the NAR commission lawsuit.
Confusion and Worries for Many Real Estate Agents
Although agents might be slightly more positive than earlier this year, their overall mood can be summed up in one word: confused. Real estate agents used this term, along with “confusing” and “confusion,” to describe their feelings on the settlement more than any other.
In any case, it’s critical they get things straightened out. About 68% of agents have had clients reach out to discuss the changes due to the NAR settlement.
Based on what they do know, many real estate agents don’t see the overhaul as a good thing for them or their profession. Nearly three-quarters of agents (72%) believe the NAR settlement will have a negative impact on the real estate industry overall, while only 20% foresee a positive impact.
Agent Erick Dunn, who serves clients in the Columbia, South Carolina, market, sees only downsides.
“It's frustrating for agents to do more work for the same money," Dunn said. "It's confusing to sellers the way that the fees are broken down on the contract. It's scary for buyers to have to sign something before they can even see a house."
"I have already lost three potential clients over this."
Agent Erick Dunn, Columbia, South Carolina
At the same time, others like agent Carmen Cavanaugh of Gulf Shores, Alabama, tell Clever they’re concerned about the quality of Realtors for price-sensitive buyers.
"I expect to see that the public will have reduced respect for the role of a real estate agent."
Agent Carmen Cavanaugh, Gulf Shores, Alabama
Almost half of agents surveyed (48%) indicate that their overall outlook on their real estate career has become more pessimistic since the NAR lawsuit settlement was approved. Only 16% feel more optimistic.
Agents Have Mixed Views on Specific Settlement Aspects
When it comes to the particulars, a majority of agents (57%) have a favorable opinion of just one change: requiring buyer’s agency agreements upfront. These agreements with buyers spell out their compensation, the services they’ll provide, and other critical factors for their relationship.
In the past, 42% of agents didn’t have their clients sign these agreements until they made an offer or were about to close. Just 1 in 7 agents (14%) say they previously got an agency agreement signed immediately upon gaining a client.
However, many Realtors are still taking the risk of showing properties without signed agreements. Almost three-quarters of potential buyers who haven’t hired an agent (71%) say they’ve had one show them properties without signing an agreement.
“We need to normalize accountability of buyers choosing a good agent and being loyal."
Agent Ryan Davis, Fresno, California
Still, it’s apparent that a significant number of buyers are resisting this new step.
Cheyenne, Wyoming, agent Barbara Kuzma said, "Buyers don't like not getting to know me as an agent before I ask them to sign the new forms required."
“Real estate used to be about building relationships. It doesn’t feel that way anymore."
Agent Michael Pellegrini, Sonoma County, California
Realtors are much more negative when it comes to other changes, however. In particular, 60% of agents have an unfavorable opinion of how listings can’t advertise a fixed buyer’s agent commission, while only 20% view that favorably.
A similar number (59%) have an unfavorable opinion of shifting commission costs more directly to buyers, compared to just 19% of agents who view that favorably.
The overall pessimism may boil down to one key factor. Two-thirds of agents (66%) believe buyers will become more hesitant to use a Realtor due to the NAR settlement.
Agent Alison Baity, who works in the Costilla County, Colorado, area, said, “My home buyers want to go directly to the listing agent.”
“Buyer's agents will be a thing of the past.”
Agent Maryann Spearman, Largo, Florida
However, these fears may be unfounded. Just 22% of homeowners and future buyers say the changes make them less likely to use an agent in the future, compared to 34% who say the overhaul actually makes it more likely. The largest group (44%) say the changes won’t make a difference at all.
Buyers Are Largely in the Dark About the Implications of the Lawsuit
Although buyers have a generally positive view of the settlement, it’s important to take these opinions with a grain of salt. A majority of those who intend to buy a home in the next year (59%) admit they have limited or no understanding of the NAR settlement.
The significant changes for buyers may be a particularly rude awakening for more than 1 in 4 of those with plans to purchase a home (29%), who say they haven’t heard anything about the commission changes.
Fewer than half of buyers who have already hired an agent (48%) have had their agent discuss the NAR settlement with them.
For these folks, there’s no doubt it’s worth taking the time to learn more about the changes. Two-thirds of buyers (66%) would change their home-buying strategy if they had to pay their Realtor's commission and it wasn’t covered by the seller at closing.
When confronted with the typical buyer’s agent commission on a median-priced home, which costs roughly $12,000, nearly two-thirds of would-be buyers (63%) say it would make it less likely that they buy a home.
“Most buyers that I have come across barely have enough for the down payment and closing cost and can't afford to pay their agent and don't want the extra expense wrapped up into their mortgage."
Agent Tracy Trammel, Washington, D.C., and Prince George's County, Maryland
Regardless of if they end up paying out of pocket or through a seller concession, about half of potential buyers (49%) say having to figure out their agent’s compensation makes it less likely they end up actually buying.
Even with the new hurdles, the vast majority of buyers still plan to use a Realtor. Nearly three-quarters (71%) say they already have an agent or expect to hire one.
Agents shouldn’t ignore potential warning signs from buyers, though. Two-thirds (66%) say they’d at least consider alternatives to traditional agents, such as online platforms or discount brokers.
Meanwhile, only 40% of buyers know a real estate agent’s commission rate is negotiable, and fewer than half of buyers who have already hired an agent (43%) negotiated with them.
However, 89% of buyers who don’t have an agent but expect to use one plan on negotiating their commission.
Nearly Two-Thirds of Potential Home Sellers Are More Likely to Sell Under New Rules
Many homeowners or potential sellers have likely heard just one takeaway from the settlement: that they no longer have to pay commission to buyer’s agents in addition to their own. In fact, 63% of homeowners who intend to sell in the next year are more likely to sell now that they’re not obligated to pay those costs.
Although they had few alternatives, many homeowners weren’t especially pleased with the former commission arrangement. More than two-thirds (68%) believe it was unfair.
However, those counting on saving thousands in commission costs may be in for a surprise. Just 43% of would-be sellers who have already hired an agent or intend to hire one have discussed the changes with one.
When they do, they’ll discover that they’ll likely have a tougher time finding a Realtor if they refuse to offer a concession for buyer’s agents. More than a third of agents (35%) say they won’t work with sellers who don’t.
Agent Barbara De Lucca of Honolulu County, Hawaii, says sellers who believe they don’t need to offer money that can be used to compensate the buyer’s agent are “misinformed."
Another agent, Houston's David Smith, argues it’s in the seller’s best interest to do so.
“If no offer compensation is provided, we may see a trend of buyers overlooking properties due to the out-of-pocket expenses they would incur, which could also have a dramatic impact on a home failing to sell,” Smith said.
Some believe that even a lower-than-average concession could impact whether buyer’s agents will bring clients to a property.
“Now more than before, [buyer’s agents] can influence the buyer if the commission is less than expected or desired."
Agent Stewart Ramirez, Lake County, Illinois.
In all, nearly half of those who plan to sell their homes in the next year (45%) say they’ve been pressured by their agent to offer a concession for buyers to compensate their agents anyway.
However, Memphis, Tennessee, agent Brandi Brooks has found most sellers are flexible and willing to listen to their Realtor’s advice.
“Sellers are asking questions about the impact on not offering a commission," Brooks said. "Once they hear my explanation, they are still offering the buyer's agent a commission, especially with homes sitting longer on the market."
Significant Splits Between Potential Sellers and Other Homeowners
Another clear takeaway from our survey is that homeowners who are considering selling their properties in the next 12 months are unsurprisingly far more tuned in to the settlement and its consequences than those with no plans to move.
A closer look at the 26% of current homeowners who say they have a strong understanding of the NAR lawsuit reveals this number includes 43% of those who intend to sell in the next year, but fewer than 1 in 5 homeowners (19%) who don’t intend to sell.
One-third of homeowners without plans to sell their properties (33%) say they’re not even aware of the settlement, compared to just 14% of potential sellers.
More than 8 in 10 Agents Plan New Tactics in Response to NAR Settlement
Although they might grumble a bit, most Realtors aren’t taking the changes lying down. About 83% of agents are planning to experiment with new business strategies in the wake of the NAR settlement.
The most common change in strategy is the use of short-term showing agreements (43%), which provide a single showing or a handful over a short period for no cost.
Many agents also plan on providing more detailed cost breakdowns for customers (42%) and adjusting commission structures (40%).
“This is a change in our industry,” said agent Marisa Bilkiss, who works in the Las Vegas market. “It’s now a teachable moment to our consumers."
"Once explained, [consumers] get it and don't seem to have any pushback or problems with the changes."
Agent Marisa Bilkiss, Las Vegas, Nevada
How much things change for a Realtor may also depend on the broker they’re working with.
"Many large brokerages have implemented robust education platforms and are actively training their agents to navigate new challenges, while many smaller mom-and-pop brokerages are not as well prepared and lack the necessary education,“ Houston agent David Smith said.
Agents Expect Small but Noticeable Commission Rate Changes
One of the most significant benefits for buyers and sellers promoted by supporters of the changes is the possibility of lower commission rates as people become more price conscious when it comes to their Realtors.
Looking ahead, listing agents say they plan to offer a 2.60% concession that can be used as a buyer’s agent commission. This is a change of -0.13% from the average buyer’s commission rate before the NAR lawsuit. Based on a median home sale price of $412,300 in the second quarter of 2024, that saves about $536.
It looks like buyer’s agents are willing to be flexible going forward, too. On average, agents report that the lowest buyer’s commission rate they would accept would be 2.08%. However, 55% of respondents indicated that the lowest rate they would accept is 2.00%. This could suggest rates will continue to trend down over time.
Currently, agents would accept a lower-than-average commission rate for a variety of reasons, including that a homeowner has multiple properties to sell (47%), the homeowner also plans to buy with them (47%), and high competition for clients (44%).
On the other hand, agents might also request a higher-than-average commission for certain deals, such as ones where a seller wants luxury listing services or a premium marketing package (52%), the seller has unrealistic expectations (45%), and a property that’s far away and inconvenient (41%).
Listing agents plan to ask for an average commission of 2.78% going forward after the NAR lawsuit settlement. That’s essentially even with the 2.81% before the changes.
However, there are some small signs that commissions are already slightly decreasing. Agents report an average listing agent commission rate in their area of 2.76%, which is lower than the 2.83% reported in our last agent commission survey before the NAR settlement.
Meanwhile, the average buyer’s agent commission rate, according to agents, is 2.60%, which is lower than the 2.66% reported in our previous survey.
Americans Don’t Understand — But Don’t Mind — Commission Costs
In general, real estate commission is a mystery to many Americans, including both buyers and sellers. More than a third (35%) of current homeowners, most of whom likely worked with Realtors to buy, confessed to not understanding how agents are paid from a home sale, while over half of buyers (51%) say the same.
This could be changing. In the wake of the settlement, agent Dylan Dehmiri of Fort Wayne, Indiana, said, “People are asking more questions, which is good."
However, clients would prefer fewer guessing games and less haggling in their real estate dealings. About three-quarters of homeowners (79%) and potential buyers (71%) believe real estate agents should be required to disclose their commission rates upfront.
About 57% of homeowner and 59% of future buyers want more than just a disclosure, believing that real estate commissions should be regulated by the government.
Although they might crave more information and regulation, most people feel OK with the costs they pay to buy or sell property. More than half of homeowners (54%) and future buyers (58%) believe real estate agent commissions are justified, given the services Realtors provide.
Methodology
Clever Real Estate surveyed 1,000 American homeowners and upcoming home buyers about their views on the current real estate market, real estate agents, and the NAR lawsuit settlement. This survey was conducted from Aug. 28 to 29, 2024, after the NAR lawsuit settlement took effect.
In addition, Clever Real Estate surveyed 516 active real estate agents about their views on the current real estate market, the real estate industry, and the NAR lawsuit settlement. This survey was conducted from Aug. 28 to Sept. 9, 2024, after the NAR lawsuit settlement took effect.
About Clever
Since 2017, Clever Real Estate has been on a mission to make selling or buying a home easier and more affordable for everyone. Twelve million annual readers rely on Clever's library of educational content and data-driven research to make smarter real estate decisions—and to date, Clever has helped consumers save more than $160 million on realtor fees. Clever's research has been featured in The New York Times, Business Insider, Inman, Housing Wire, and many more.
More Research From Clever
Articles You May Like
FAQs
How do real estate agents feel about the NAR commission settlement?
Nearly two-thirds of real estate agents (64%) oppose the recent changes to commission structure, with 33% strongly opposed. That’s down from 70% who opposed them in April 2024. Learn more.
Who pays Realtor fees under the new rules?
Under the new rules, sellers continue to pay their listing agent, while buyers now have to determine how their agents are compensated, whether it’s a concession from sellers, wrapping the fees into their mortgage with a higher offer price, or paying the cost out of pocket. Learn more.
What happens to commission rates after the NAR settlement?
Listing agents plan to offer a 2.60% concession that can be used as a buyer’s agent commission. This is a change of -0.13% from the average buyer’s commission rate before the NAR lawsuit. Learn more.