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BAM Key Details: 

  • In a recent survey by Clever Real Estate, 1,000 American consumers and 331 real estate agents responded to a series of questions about the upcoming changes resulting from the NAR settlement. 
  • 67% of the general public support the changes to the commission structure and see multiple benefits ahead, while 70% of real estate agents oppose them. 

Meaningful changes to the real estate commission structure will take effect on August 17—less than two months from now—and public opinion on those changes is sharply divided. 

Two-thirds (67%) of the general public are in favor of the changes, while 70% of real estate agents oppose them, according to a recent survey. That said, only 36% of the public is even aware of the NAR settlement and what it means for them. 

In a recent survey by Clever Real Estate, 1,000 American consumers and 331 real estate agents responded to a series of questions about the upcoming changes resulting from the NAR settlement, including two key changes: 

  • Listing agents will no longer be required to offer buyer agent compensation
  • Agents will be prohibited from including commission information on the MLS

The survey revealed the widely different perspectives of agents and the general public on the commission changes and on the commission structure in general—as well as an opportunity for real estate professionals to provide clarity on a confusing subject. 

It also raised questions about the impact of these changes on homebuyers and the real estate industry as a whole.  Supporters are expecting declines in both commission rates and home prices, as well as increased competition and improved transparency. 

Opponents, on the other hand, are concerned it will raise out-of-pocket costs for buyers (especially first-timers), inhibit home sales, and reduce income for real estate agents. 

Byron Lazine and Nicole White discussed the survey and its findings on last week’s episode of The Real Word. Read on for the highlights and then block out some to enjoy their thoughtful (and, as always, entertaining) review. 

Reasons for supporting commission changes

With 67% of American consumers supporting the commission changes, it’s worth taking a closer look into why. If only 36% of consumers are even aware of the NAR settlement and how it could impact them, why do so many support the changes? 

After all, for the agent-client relationship to benefit both parties, both need to be on the same page when it comes to commissions. In the seller’s case, the listing agent needs to be able to communicate how offering buyer agent compensation gives them a competitive advantage. The seller needs to see examples of home sales where the final sale price more than offset the additional cost of the buyer agent commission. 

Because they’re going to ask, in one way or another, “Is this ultimately going to benefit me, or is it just going to cost me more?” 

It’s also worth noting that public support for commission changes was nearly 10 points apart for those who have purchased homes (70%) and those who have not (61%). 

That could be partly because consumers who have purchased homes have equity they can put toward their next home purchase, unlike first-time homebuyers

That said, here are their most frequently cited reasons for supporting upcoming changes:

  • “It would reduce the financial burden on home sellers.” (44%)
  • “It would create a more level playing field between home buyers and sellers.” (41%)
  • “It would increase fairness and transparency in real estate transactions.” (41%)
  • “It would improve trust in the real estate industry.” (32%)
  • “It would provide more flexibility for consumers in choosing services.” (29%)
  • “It would incentivize agents to provide higher-quality services.” (28%)
  • “It would make real estate transactions more accessible to a wider range of people.” (28%)
  • “It would lead to more efficient and effective real estate transactions.” (28%)
  • “It would increase competition among agents.” (27%)

Reasons for opposing commission changes

Survey respondents who oppose the drastic changes to the U.S. commission structure gave the following reasons: 

  • “It would increase the burden on the home buyer.” (47%)
  • “It would discourage first-time buyers from entering the market.” (36%)
  • “It would create uncertainty in the real estate market.” (29%)
  • “It would disrupt the traditional real estate business model.” (25%)
  • “It would make it harder for new agents to enter the market.” (25%)
  • “It would lead to a decrease in the quality of service from agents.” (23%)
  • “It would hinder smaller real estate agencies from competing effectively.” (22%)
  • “It would erode trust between agents and clients.” (22%)
  • “It would decrease income for real estate agents.” (20%)
  • “It would lead to job losses in the real estate industry.” (20%)

Perspectives on the NAR settlement

As mentioned above, only 36% of the general public is aware of the NAR settlement. But, according to the survey, more than three in five (61%) agree with the general premise of the major commission lawsuits—and, by extension, the Sitzer/Burnett verdict

So, a majority of consumers believe it’s unfair for home sellers to have to pay commissions for both their listing agent and the buyer agent. 

Among the real estate agents surveyed, though, 89% oppose the Sitzer/Burnett verdict because they do not believe the allegations against NAR were valid. 

More statistics from the survey: 

  • 91% of Americans believe the NAR settlement will impact future homebuyers and sellers; 30% expect lower commission rates and 26% expect an increase in competition. 
  • 60% of real estate agents are concerned about an expected drop in average buyer agent commission rates, which could affect their income. 
  • 71% of surveyed agents expect the NAR settlement to have a negative impact on the real estate industry as a whole, while 40% of the general public expect negative effects and 39% anticipate a positive impact. 

Who will benefit from upcoming changes?

Behind the numbers for those in support versus those who oppose upcoming commission changes are beliefs about who stands to benefit the most from those changes versus those most likely to be adversely affected by them.  

When asked “Who do you think will benefit from the upcoming changes, 59% of the general public and 36% of agents see home sellers profiting from the changes, while 44% of consumers and 6% of agents expect the changes to benefit homebuyers. 

Who will be hurt by upcoming changes?

A sweeping majority of real estate agents (85%) believe the commission changes will hurt first-time homebuyers, while only 40% of the general public agree. 

The same share of agents expect the changes to negatively impact buyer agents, while 82% expect adverse effects for buyers as a whole. Meanwhile, just 40% of the public expects negative consequences for buyers, buyer agents, and small/independent brokerages. 

66% of first-time buyers would not be able to afford their agent’s commission

Among the survey respondents, two-thirds (66%) of prospective first-time homebuyers said they would not be able to afford their agent’s commission fee, on top of the down payment and other expenses tied to a home purchase. 

On the other hand, 47% of consumers say the NAR settlement won’t impact whether or not they enlist the help of a real estate agent to buy a home. And only 28% say it makes them less likely to work with a buyer agent. 

Among sellers who decide to forego a listing agent, 27% say they’ll attempt a for-sale-by-owner (FSBO) transaction, while 16% will try a flat-fee MLS, where they would pay for a listing but would not have agent representation. 

Another telling statistic: 57% of American consumers admit they don’t understand how buyer agents are compensated under the traditional commission structure. Only 6% correctly answered that buyers currently pay nothing to their agents. 

Those stats reveal an opportunity for motivated, proactive, and service-oriented agents to educate consumers on the commission structure—what we have now and how the NAR settlement will change it—especially since, according to the survey, 75% of agents believe their clients understand agent commission rates ahead of time. 

For many buyers, having to negotiate compensation will be a new experience, including many of those who have purchased homes before since only 30% say they’ve negotiated commission with a real estate agent. 

That said, more than half (55%) of those who tried negotiating the commission say it resulted in their agent reducing their rate. 

Real estate entrepreneur, speaker, and coach Jared James reviewed this data in a recent Instagram green screen and posed an interesting question for those considering working with an agent: 

“When you’re selling your home, do you want the professional that you win a negotiation [who does not] communicate their value? Or do you want the person on your behalf, when selling the largest asset you’re ever going to own, working for you?” 

In other words, if an agent cannot demonstrate their value in a negotiation with you over their commission rate, why would you trust that agent to win a negotiation with the buyer agent over the sale price of your home?

Impact on home sellers

Survey respondents were asked, “Will the NAR settlement impact whether you use a real estate agent to sell a home?” Nearly half responded in the negative, while more than a quarter said they would be somewhat or much more likely to use an agent. 

  • “No impact” (49%)
  • “Somewhat more likely” (16%)
  • “Much more likely” (11%)
  • “Somewhat less likely” (15%)
  • “Much less likely” (9%)

Impact on the real estate industry

Agents across the U.S. have real concerns about the impact of the NAR settlement on the real estate industry. The highest share of them say it will likely cause agents to leave the industry completely, and more than half say it will adversely affect their business. 

Answers to “How do you think the settlement will affect the real estate industry?”

  • “It will cause agents to leave the industry” (95%)
  • “It will create more competition among buyer’s agents” (61%)
  • “It will lead to more difficulty negotiating fees directly with clients” (60%)
  • “It will have a negative impact on my business” (58%)

When it comes to the housing market and what buyers and sellers can expect from it, more than half of the real estate agents surveyed (56%) expect the average days on market for listed homes will increase as a result of the NAR settlement changes. 

Nationwide, that figure sits at approximately 50 days—about 20 days longer than the roughly 30 days on market during the post-pandemic summers of 2021 and 2022. 

More days on market can mean higher costs for sellers and a higher likelihood of price cuts as well as concessions to buyers, especially if the latter still contend with low housing affordability. 

Read the full report for more.