All eyes are locked on the upcoming November court date that will decide whether the proposed actions from the National Association of REALTORS®’ (NAR) settlement receive final approval. As changes begin to take effect this month, however, the frenzy of what-ifs continues to run rampant, and Clever Real Estate is the latest organization to throw in its two cents.
In the wake of the settlement, the real estate company surveyed 1,000 American adults to gauge sentiment over the settlement, and now, Luke Babich—co-founder and CEO at Clever Real Estate—has shared his own thoughts about potential implications.
The first takeaway from the survey is that the public, particularly homebuyers and sellers, are lacking knowledge about NAR’s proposed terms and commissions in general. Just 36% of surveyed respondents were aware of the changes ahead, according to Clever.
Two major elements take effect Aug. 17. Compensation offers will no longer be permitted on MLS listings and a new stipulation for MLS members requires agents to obtain written buyer agreements before engaging potential purchasers in home tours.
It’s not just an education gap related to the lawsuit, but as it relates to commission practices in general. The company reports a negative lean on public attitudes toward the current structure.
Forty-two percent of current sellers didn’t realize they were expected to pay the buyer agent’s commission, and 55% believe they shouldn’t have to, the Clever survey found. The No. 1 regret among 2022 and 2023 homesellers was a high REALTOR® commission rate, and 42% of respondents said they would be less likely to work with an agent if they were unwilling to negotiate.
Today’s sellers also share a value mentality—with nearly half of homesellers (48%) reporting they are avoiding high REALTOR® commission rates as a “very important” priority. This could contribute in large part to the 67% of the general public that supports the upcoming changes as optics around fair pay remain blurry.
On the flip side, just one in nine Americans (11%) know the average commission rate is close to 6%, per Clever, and when informed of the fact, 69% said it was fair.
Jennifer Stevenson, NAR regional vice president for New York, New Jersey and Pennsylvania and broker/owner of Blue Heron Realty in Ogdensburg, New York, tells RISMedia that it is difficult to speculate about the future of compensation; however, she believes the REALTOR® relationship with clients is expected to continue to thrive.
“These real estate practice changes help to further empower consumers with clarity and choice when buying and selling a home,” says Stevenson. “As the Aug. 17 practice change implementation date approaches, I am confident in our members’ abilities to prepare for and embrace this evolution in our ever-changing industry and help to guide consumers in the new landscape.”
Increased competition on the horizon
While NAR has maintained that the current commissions structure does not lead to increased costs for buyers or sellers, Clever’s Babich predicts that the average commission rate for buyer’s agents will decrease from 2.66% to 1.5% or 2%. This will result in a lower overall national average of about 4.5%, he said.
“A fee reduction is expected as buyer agents compete for clients by offering better services and more competitive fees,” said Babich.
Additionally, he foresees an increase in competition as buyers move toward agents with more affordable rates. “The settlement will likely intensify buyers’ emphasis on scrutinizing and comparing agents,” he said. “Agents must present clear upfront agreements detailing their fees and services.”
Another potential impact: The agent pool could narrow. Recent polling found that 95% of surveyed real estate practitioners believe withdrawal is a likely consequence.
Brokerage models could see a shift as well; Babich predicts there’s an acceleration toward the decline of traditional brokerages. “Agents will gravitate toward newer brokerages with lower cost structures, letting agents keep more of their commission and, therefore, giving them more room to lower their rates,” he said.
