The recent settlement of the National Association of Realtors (NAR) lawsuit has left many real estate professionals pondering its potential impact on commission structures. Predictions ranged from minimal effects to significant reductions in agent earnings. Two comprehensive studies—one by AccountTECH and another by RISMedia—have examined commission trends in the immediate aftermath of the settlement to shed light on this critical issue. This article compares and contrasts the findings of these studies to provide real estate agents with a clearer picture of the evolving commission landscape.

AccountTECH Study: Minor Fluctuations in Commission Rates

Methodology:

AccountTECH’s data analysis team conducted a year-over-year comparison, analyzing transaction data from 625 real estate offices. The commission rates charged to sellers were analyzed 30 and 60 days after the settlement and compared to those dates in 2023, excluding rentals and outliers (commissions over 5% or below 0.5%).

Findings: Seller-Side Commissions:

  – 30 Days Post-Settlement: Average commission increased slightly from 2.75% in 2023 to 2.77% in 2024.

  – 60 Days Post-Settlement: A minor rise from 2.724% in 2023 to 2.738% in 2024.

Interpretation: These marginal increases suggest the settlement hasn’t significantly affected seller-side commissions.

Findings: Buyer-Side Commissions:

  – 30 Days Post-Settlement: A slight decrease from 2.595% in 2023 to 2.545% in 2024.

  – 60 Days Post-Settlement: Commission rates dipped from 2.541% in 2023 to 2.486% in 2024.

Interpretation: The modest declines are within normal market variations, indicating minimal immediate impact from the settlement.

Findings: Transaction Volume:

  – Buyer-side transactions decreased by about 10% year-over-year during the first 60 days post-settlement.

Interpretation: While this drop could raise concerns, it may be attributed to broader market conditions rather than the settlement itself.

Conclusion

AccountTECH’s study concludes that the NAR settlement has yet to lead to significant changes in commission rates for buyers or sellers so far. However, the slight downward trend in buyer-side commissions warrants attention, especially if it continues over the coming months.

RISMedia Study: Notable Decrease in Buyer Agent Commissions

Methodology:

RISMedia surveyed over 1,300 agents and brokers nationwide between September 17 and October 7, 2024. The study focused on commission rates for transactions completed after the August 17 policy changes.

Findings: Overall Commission Rates:

  – 2022-2023 Average: 5.21%

  – 2023-2024 Average: Increased to 5.64%

  – Post-August 17, 2024: Dropped to 4.96%

Interpretation: A significant decrease of 0.68 percentage points post-settlement, translating to an average loss of $2,870 per transaction based on median home prices.

Findings: Buyer-Side Commissions:

  – Decreased by 0.37 percentage points, resulting in an average loss of $1,561 per transaction for buyer agents.

Interpretation: The reduction is more pronounced on the buyer side, aligning with expectations that policy changes would affect buyer agent compensation.

Findings: Impact on Experience Levels:

Inexperienced Agents (Less than 3 years):

    – Pre-Settlement Average Commission: 2.58%

    – Post-Settlement: Dropped to 1.82%

    – Loss Per Transaction: Approximately $3,207

Veteran Agents (10+ years):

    – Minimal decrease from 2.68% to 2.58%

    – Loss Per Transaction: Around $422

Interpretation: Newer agents are disproportionately affected, experiencing more significant commission cuts than their experienced counterparts.

Expectations for the Future:

  – 12% of respondents expect commissions to increase.

  – 51% anticipate they will stay the same.

  – 37% believe commissions will decrease further.

Interpretation: While most expect stability, a significant portion foresee continued declines, particularly on the buyer side.

Conclusion

RISMedia’s study indicates a more immediate and substantial impact of the NAR settlement on commission rates, primarily affecting buyer agents and less experienced professionals. The findings suggest a potential shift in industry dynamics, with agents possibly focusing more on listings than buyers.

Differences in Findings Between Studies

Magnitude of Change:

  – AccountTECH reports minimal changes within normal market fluctuations.

  – RISMedia notes significant decreases, particularly post-policy changes.

Impact on Buyer Agents:

  – Both studies agree that buyer-side commissions have decreased.

  – RISMedia emphasizes a sharper decline and highlights the disparity affecting inexperienced agents.

Methodology and Time Frames:

  – AccountTECH analyzed actual transaction data over the 30 and 60 days post-settlement, comparing it year-over-year.

  – RISMedia was surveyed during a shorter, more recent period, focusing on perceptions and experiences after policy changes.

Possible Reasons for Discrepancies

Data Sources:

  – AccountTECH relied on hard data from transactions.

  – RISMedia gathered self-reported data from agents and brokers, which might reflect perceptions or localized market conditions.

Market Variations:

  – Regional differences and market segments could account for varying impacts on commissions.

Time of Analysis:

  – AccountTECH’s broader time frame may smooth out short-term fluctuations.

  – RISMedia’s narrower window captures immediate reactions to policy changes.

Implications for Real Estate Professionals

Monitor Trends:

  – Stay informed about commission rate trends in your specific market.

  – Watch for continued declines in buyer-side commissions, especially if working predominantly with buyers.

Professional Development:

 – Enhance negotiation skills to secure better commission agreements, particularly for newer agents.

  – Invest in training and mentorship to increase competitiveness and value proposition.

  – Leverage experience and expertise to justify commission rates to clients.

Client Communication:

  – Be transparent with clients about how commission structures may affect services.

  – Educate buyers and sellers on the value provided to justify commission rates.

The contrasting findings of the AccountTECH and RISMedia studies underscore the complexity of the current real estate landscape. While immediate, significant changes to commission structures are not universally observed, there are indications of shifting dynamics that could affect agents differently based on experience, focus (buyer vs. seller), and market conditions.

Real estate professionals should remain vigilant, adapt to emerging trends, and continue providing exceptional value to clients to navigate potential challenges arising from the NAR settlement.

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