A new survey from Clever Real Estate finds most real estate agents expect some of their peers to leave the industry following recent commission rule changes. That may pose a problem for those looking for help buying or selling a home.
The changes stem from the recent antitrust lawsuit against the National Association of Realtors (NAR) and cover how buyer agent commissions are paid. With sellers no longer on the hook to cover buyer agent fees, buyers must agree on commission fees directly with their agents through a now-required-upfront agency agreement. These can be paid out-of-pocket, through a seller concession, or wrapped into a home mortgage with a higher offer price.
It's still unclear how the new commission structure will affect the industry. Most real estate agents surveyed plan to change their services. They may work less often with buyers. Or they may only list for sellers who offer a concession to pay the buyer's agent. This could further limit the pool of agents available to buyers and sellers.
However, a reduction in the number of real estate agents may not necessarily be a bad thing. The industry is already crowded: roughly seven agents for every 1,000 U.S. adults. Compare that to just one agent for every 1,000 adults in the UK.
Proponents of the rule changes say more experienced agents could rise to the top, an improvement for the industry and those it serves.
What Agents Say About the New Commission Rules
About 86% of real estate agents surveyed believe the new commission rules will cause agents to leave the industry. While high, that number is down from the 95% of agents who thought that way in April 2024, before the rule changes took effect.
Still, 72% of agents expect the NAR settlement to negatively impact the real estate industry, with buyers potentially bearing the brunt. One in 10 agents say they won't work as buyer agents in the future, and about 36% say they're less likely to work with buyers.
The now-negotiable commission fee is undoubtedly the sticking point. Buyer commission rates already fell, down to 2.55% in August from an average of 2.62% in January. That amounts to a $288 difference based on the median home sale price of $412,300. Agents say the lowest rate they would accept is 2%.
Cary Hairabedian, a real estate agent in California, worries fewer agents will work with buyers in the market for lower-priced properties unless they agree to pay an acceptable commission. Lower-income buyers are less likely to have additional cash saved for their home purchase, which would force them only to consider homes offering seller concessions to pay their agent's fee.
"Less experienced and less knowledgeable agents will gravitate toward representing lower-income buyers," Hairabedian explains. "The lower the commission being paid by the buyer to their agent, the lower the quality of agent representation."
Buyers should look at agency agreements closely to ensure they still get high-quality services from an agent charging a low commission fee or a flat rate. Negotiations are critical to helping buyers avoid agents doing minimal work for the lowest price.
Options for Home Sellers
The new NAR commission rules could also impact sellers. About 35% of agents say they won't list properties if the seller doesn't offer a concession to pay the buyer's agent, even though this is no longer required. Sellers may look for alternative ways to list their homes to avoid this.
A discount real estate broker can help sellers save on the commission fee. These services match sellers with pre-vetted agents best suited to their specific transaction type. The agents typically charge a listing fee of 1–1.5% rather than the average of 2.83%. Common examples include Clever Real Estate, Redfin, and Ideal Agent.
Listing the home for sale by owner (FSBO) can eliminate listing fees altogether. However, this can be a complex process, as setting a list price, marketing the home, and negotiating with buyers are time-intensive. Moreover, an FSBO may leave money on the table — sellers who work with an agent tend to get $50,000 more on average.
Low visibility is another FSBO hurdle, but a flat-fee MLS listing service solves this challenge. For a set price, a licensed broker will list the home on the MLS, which real estate agents use to find homes for clients. MLS listings are also automatically shared on major real estate websites, such as Zillow, Realtor.com, and Movoto.
Positive Changes From the Settlement
As some agents consider limiting who they work with, others say they'll adopt more transparent pricing and adjust their services. This change could be a boon to buyers and sellers, who will know precisely what they're paying for.
"We expect the biggest change to be increased professionalism in the industry, with capable, experienced agents who can justify their fees gaining more market share," said Clever Real Estate CEO and co-founder Luke Babich.
For instance, most agents (43%) say they may add short-term showing agreements that provide a limited number of free showings over a specific time. Other changes could include detailed client cost breakdowns, adjusted commission structures, and flat-fee or a la carte services.
Agents said they might also expand their online offerings, reduce rates for buyers willing to house hunt alone, or partner with a discount brokerage. Colten Claus, an associate real estate broker in Colorado, says while these changes may initially create uncertainty, they could ultimately benefit agents by building a more competitive and fair market.
"Agents who adapt to these changes by embracing new technologies and maintaining high ethical standards are likely to succeed," he shares.
Fewer Agents but More Options for Consumers
It will take time for the real estate industry to adjust to the new commission rules. Agents may use new tactics to protect their income — or exit the industry outright. In the meantime, consumers could face fewer options when they're ready to buy or sell a home.
However, experts believe fee changes are ultimately positive. Agency agreements should make processes more transparent so buyers and sellers can choose the agent and commission fee that fits their needs and budget. The changes could also open the door for innovation in the industry through new pricing structures, more online offerings, and a la carte services.
This article was produced by Media Decision and syndicated by Wealth of Geeks.