As the real estate industry looks back on the past year since the National Association of Realtors’ (NAR) commission lawsuit settlement agreement business practice changes went into effect, many are wondering what, if anything, has really changed. The answer — perhaps unsurprisingly — depends on who you ask.
“I think there have been some substantive changes made, especially in the way that Realtors get paid,” Art Carter, the CEO of California Regional MLS (CRMLS), said.
Rick Haase, the president of United Real Estate, shares a similar view. “A great deal has changed,” Haase said. “There are the business practices that surround making sure that a buyer understands how all of the agents in the transaction are being compensated, the forms, the disclosures — a lot has changed.”
At Benchmark Realty in Tennessee, founder Phillip Cantrell has a more nuanced opinion. “I think there is a disparity between those who have accepted the changes and are actually trying to work with them and those who just have their heads down believing that nothing has changed,” Cantrell said.
“I think there is a disparity between those who have accepted the changes and are actually trying to work with them and those who just have their heads down believing that nothing has changed.”
— Phillip Cantrell, Founder of Benchmark Realty
“A lot of these brokers just don’t want to have to rethink what they are doing or change their compensation models and that is why they are stuck in this traditional way of doing things and it is going to hurt them because we know the plaintiffs attorneys have begun their audits of the MLSs and I think the larger firms will be on deck next.”
While Haase agrees that there may have been some initial hesitancy and pushback against the practice changes, he feels that once the changes went into effect, most brokers and agents realized that there really was no room for them to do anything in opposition.
Forms proved to be the tricky part
Not everyone agrees that the majority of agents and brokers are complying with the changes.
Cantrell said that some forms promulgated by the state Realtor association do not adhere to the sentiment of the settlement rule changes, allowing brokers and agents — at least in his home market of Tennessee — to get away with practices he does not feel align with the settlement. Due to this, Cantrell and his team at Benchmark Realty created some of their own forms, an undertaking his firm was not alone in doing.
“When I look at the forms that we have done, we have worked really diligently to meet the consumer where they are at and give them that streamlined approach and not a whole lot of legalese thrown at them,” Holly Mabery, the senior vice president of brokerage operations at eXp Realty, said.
“The biggest frustration that we continue to have is that the forms that are provided from a variety of sources — the state real estate commission or state association or even some of the MLSs — are so hard to read and understand. So when it comes to forms, we will continue down that path until we see the industry is moving back to something that is more palatable for the consumer.”
“The biggest frustration that we continue to have is that the forms that are provided from a variety of sources — are so hard to read and understand. So when it comes to forms, we will continue down that path until we see the industry is moving back to something that is more palatable for the consumer.”
— Holly Mabery, Senior Vice President of Brokerage Operations at eXp Realty
The forms debuted by eXp during the summer of 2024 became a saving grace for many brokers and agents who were unsure if their state or local Realtor association would have updated forms in time for the Aug. 17 practice change deadline.
Doomsday scenarios averted
Even with access to updated forms, many industry participants were predicting a variety of doomsday scenarios would arise due to the business practice changes. These included agents not getting paid, the disappearance of buy-side representation, rampant dual agency and rapidly declining agent commission rates.
Thus far, however, none of these doomsday scenarios seem to have transpired.
“The first 90 days of any new change is significant and the impact is unknown so there is this fear of the unknown and that is what everyone was feeling in the build-up last summer” Mabery said. “But by the time we hit October, November there was an understanding of the new workflows and how we need to take care of the consumer at this new higher level.”
Out in California, Carter shares a similar view.
“Brokers and agents have really gotten their arms around this new reality and they are still getting paid even though the forms are different and, at least in California, the forms do not allow for cooperative compensation,” Carter said. “The predictions that these changes would kill buyers’ agency have just not come to fruition.”
“Brokers and agents have really gotten their arms around this new reality and they are still getting paid even though the forms are different and, at least in California, the forms do not allow for cooperative compensation. The predictions that these changes would kill buyers’ agency have just not come to fruition.”
— Art Carter, CEO of California Regional MLS
New transparency
Carter said he feels the changes made to the way agents in California do business have made things a lot more transparent, especially for buyers, as they now have to negotiate payment for their buyer’s agent’s services.
Haase agrees that this negotiation process for buyers and their agents has significantly augmented his agents’ ability to articulate their value proposition to their clients.
“In the past, buyers often just assumed that the commission would be paid by the seller, so they didn’t scrutinize the list of services their agent provided, but now they know they might be paying for it themselves, so they want to know all 156 things buyer’s agents do in the transaction,” Haase said.
“Ultimately, the industry is better off making sure that buyer representation is as finely tuned and well articulated as seller representation has been for years, and these changes were the catalyst for this level of enhancement in the communication of that value proposition.”
“Ultimately, the industry is better off making sure that buyer representation is as finely tuned and well articulated as seller representation has been for years, and these changes were the catalyst for this level of enhancement in the communication of that value proposition.”
— Rick Haase, President of United Real Estate
Additionally, despite the predictions that brokerages could go bankrupt if commission rates fell too severely, Haase said United Real Estate and its franchisors have not felt that much of an impact.
“Yes, we invested millions in the process of training our agents, brokers and franchisors on the business practice changes, but I just completed an evaluation of our firm post-regulation change and the impact on our company has been negligible,” Haase said.
The full impact is yet to come
Although a year has passed, some still feel more time is needed before the full impact of these changes are felt in the industry.
“Other than getting buyer agency agreements signed and more negotiations, I feel like for a lot of people it is business as usual still, but I think new models for buyer agent compensation and technologies to support unrepresented buyers are eventually going to emerge,” Nick Aufenkamp, the founder of the Washington state-based The Tartan Team, and DIY Homebuyer Academy, said. “I think there are a lot of things in the works, but we are still just a bit too early to really see some of those things bear out.”
“Other than getting buyer agency agreements signed and more negotiations, I feel like for a lot of people it is business as usual still, but I think new models for buyer agent compensation and technologies to support unrepresented buyers are eventually going to emerge.”
— Nick Aufenkamp, Founder of the Washington state-based The Tartan Team, and DIY Homebuyer Academy
Still, while many agents across the industry have made changes to the way they conduct business, Mabery said what consumers want largely remains the same.
“I think the transparency for consumers has definitely been elevated, but in many cases I think consumers really just want help getting into a home,” Mabery said. “So, I love that our game has elevated, but at the end of the day, the consumer just wants to know that the professional they’re working with has their back and can help them get the best property for them, and that’s not changed.”