Most real estate professionals say little has changed since new commission rules went into effect in August. But for a smaller group, the changes have unleashed a completely different experience.
This report was originally published on Sept. 30, 2024, exclusively for subscribers of Intel, the data and research arm of Inman. Subscribe to Inman Intel for a deeper analysis of the business of real estate.
For most real estate agents, the Aug. 17 deadline passed quietly, without much immediate impact on their business or relationship with clients.
But that wasn’t true for everyone.
More than 1 in 5 agents who responded to Intel’s post-Aug. 17 industry survey described a more difficult path — one in which more than half of their seller clients were already peppering them with questions about their rights under the new rules.
For this smaller but substantial group of agents, the new rules have already brought about a completely different experience.
Agents who field these questions frequently report being less successful at persuading sellers to take the traditional step of covering the buyer’s agent commission. They’re also more likely to entertain an exit from the industry.
This week, Intel paints a portrait of this group of real estate agents and their challenges navigating the new commission environment.
As more consumers get their heads around the changes, it’s possible these accounts may become more prevalent. Read about what’s at stake for the industry in the full report.
A different paradigm
In the August edition of the Inman Intel Index survey, most agents were clear: The new rules were not yet changing most client behavior, and the clients showing an interest in alternative business practices made up a small minority.
But the more questions an agent fields from clients, the more overwhelmed they appear to become — and the more trouble they have sticking to business as usual.
Once a majority of an agent’s seller clients start inquiring about whether they have to cover the buyer’s commission, the agent is less likely to talk them out of a hardline stance.
- 34 percent of agents who are dealing with a flood of questions from sellers say that at a significant share of their listing clients — at least 1 in 10 — end up taking a hardline approach against covering the buyer-side fee.
- Among agents who field fewer inquiries, only 5 percent say that a significant share of their recent listing clients have taken a hardline approach.
Agents who field more questions are also more likely to report that buyers are negotiating their commissions down — and in some cases, succeeding.
- 23 percent of agents who field a lot of client questions are also reporting that a significant share of their buyer clients negotiated lower-than-typical commissions for their market in a signed buyer agency agreement.
- Only 7 percent of other agents say the same.
Overwhelmed agents are also more sensitive to the risk that their buyer clients might back out of a deal if the seller refused to cover their fee.
- 57 percent of high-inquiry agents say their typical first-time buyer client would pull out of consideration for a home if the seller refused to cover the buyer-side commission.
- That’s 10 percentage points higher than the share among agents who field fewer inquiries from clients.
As a result, agents who have had to spend more time dealing with client inquiries are more likely to report they are already seeing “significant” declines in commissions as a percentage of the purchase price.
- 15 percent of high-inquiry agents say they’ve seen commissions fall “significantly” since the change in mid-August.
- Fewer than 5 percent of other agents have reported a significant drop.
Perhaps tellingly, the more inquiries agents field from sellers, the more likely they are to be weighing an exit from real estate altogether.
- 44 percent of high-inquiry agents say they have considered leaving the industry in the past 12 months, compared to only 29 percent of agents who field fewer inquiries.
- Agents who field a lot of questions are also more likely to report that the events of the last 30 days have made them more likely to leave the industry — with 24 percent of high-inquiry agents saying they’re more likely to eye an exit, compared to only 11 percent of low-inquiry agents entertaining a departure.
Portrait of an overwhelmed agent
Ultimately, only time will tell how many agents will have a similar experience, and which client approach will win out in the new real estate environment.
It’s also entirely possible that the groups most affected by the change might look different in future surveys.
But there are some general traits that this new class of overwhelmed agents have in common.
- The agents fielding the most questions from clients are generally less experienced. They’re more likely to say they’ve been in the field for five years or less, for example, and less likely to say they have more than 15 years of experience.
- Perhaps partly for the reason above, the overwhelmed agent is less likely to report a high transaction volume of 11-plus deals over the past 12 months.
- The overwhelmed agent is more likely to be affiliated with a franchise or big publicly traded brokerage. Agents at smaller indies, on the other hand, are less likely to report being inundated with client inquiries.
For now, it’s worth repeating that the groups of agents most affected by the new NAR settlement rules remains relatively small.
Intel will continue to track the experience of this group — and its prevalence throughout the industry — in the months ahead.
Methodology notes: This month’s Inman Intel Index survey was conducted Aug. 19-30, 2024, and received 779 responses. The entire Inman reader community was invited to participate, and a rotating, randomized selection of community members was prompted to participate by email. Users responded to a series of questions related to their self-identified corner of the real estate industry — including real estate agents, brokerage leaders, lenders and proptech entrepreneurs. Results reflect the opinions of the engaged Inman community, which may not always match those of the broader real estate industry. This survey is conducted monthly.