Some big changes are on the way for real estate agents, thanks to a recent settlement by the National Association of Realtors (NAR) following an antitrust lawsuit. According to investment firm Keefe, Bruyette & Woods (KBW), many agents might not be ready for what’s coming.
In March, NAR agreed to a $418 million settlement over allegations regarding commissions putting unnecessary financial strain on sellers. Despite denying the claims, NAR is committed to making significant operational changes, including getting rid of commission regulations by mid-July.
These changes could shake up the housing market by altering how agents charge for home sales and demanding more transparency in fees. KBW suggests that most agents are not prepared for these impending changes.
Many agents have underestimated the impact and speed of these changes, considering them minor and distant. Requiring buyer agents to establish written agreements with homebuyers early on detailing payment terms is viewed as a crucial shift.
This transparency is likely to prompt more comparison shopping and negotiation among buyers, creating tougher competition for agents based on quality of service and cost.
The real estate industry has seen a decline, with fewer brokers and sales agents in 2023 compared to pre-pandemic levels. The effects of the NAR settlement will take some time to settle within the U.S. housing market.
This shake-up is viewed as a chance for industry consolidation, increased innovation, and a divide between successful and struggling agents and brokerages. Although homebuyers may face challenges initially, the changes are expected to bring more transparency and higher-quality services in the long run.