The recent $418 million settlement by the National Association of Realtors (NAR) marks a significant shift in the real estate industry, impacting how agents will operate moving forward. This settlement arises from antitrust lawsuits alleging that NAR’s practices regarding commission guidelines were artificially inflating costs and limiting competition.

While there are many strong arguments against these claims, if the settlement is approved it will force change and raise the bar in an industry that will benefit from both.  As agents, much of this is out of our direct control – so what do we do?

It’s not the end of buyer agency or Realtor commissions and it’s not the silver bullet to the affordability issues we’re seeing in our market.

The resolution of these cases will, however, catalyze a transformation in the industry, likely ushering out agents who have relied heavily on pre-published, unilateral offers of compensation instead of competing based on the value of their services.

Good News for Proactive Agents

For agents committed to delivering at a high level, the settlement presents an opportunity to highlight their value to clients more prominently.

The new proposed rules would prohibit predefined commission rates on the MLS and mandate agreements between agents and buyer clients before showing homes. This will force agents to demonstrate their value proposition clearly and is likely to create more interview-like situations as buyers choose who to work with.

Agents that have an effective, informative consultation process and a unique value proposition beyond “I can open doors for you…” will thrive when competing with less prepared agents. Increased competition to work with buyers will elevate overall expectations and either force agents to improve and adapt or suffer the consequences.

Raising Industry Standards

The elimination of MLS-listed commission rates empowers consumers by giving them the freedom to shop for agents who not only offer competitive rates but also provide superior service and expertise.

Agents will have to differentiate themselves through higher service standards, better market knowledge, and more effective use of technology.

This change is likely to phase out agents who have relied predominantly on the guaranteed compensation offered in the MLS without providing corresponding value, potentially raising the overall quality and reputation of the real estate profession.

How many times have we as agents complained about the lack of professionalism, poor communication and general lack of effort from an agent on the other side of a transaction…?  This settlement is likely to force improvement or force less diligent agents to accept lower compensation commiserate with their value.

A Push Towards Innovation and Collaboration

The settlement could also spur innovation within the industry. With the old commission model disrupted (not gone but certainly unsettled), agents will explore new pricing structures—perhaps flat fees, retainers, fee for service (regardless of whether settlement takes place), percentage of sales price, or a la carte services—that could provide clearer benefits to consumers depending on their needs.

Some of these may be jarring and upsetting to agents not prepared to see them.  The dust is likely to settle and the industry likely to land on more popular options for consumers (many of which will mirror the current model).

But going into this change without a well defined value proposition will prove to be dangerous. Because agents can no longer rely on preset, published compensation, they will need to collaborate more effectively with other agents to close deals, enhancing professionalism and cooperation across the industry – something that is sorely needed.

Professional Growth and Education

This new environment will likely encourage agents to learn new skills and seek out better training. By educating themselves and embracing continuous professional development (beyond required licensure education), industry knowledge and market/inventory expertise, agents can better demonstrate their value and justify their fees, thereby aligning more closely with consumer expectations and needs.

The agent that already embodies these traits or embraces the mandate to grow will create an improved transactional experience for buyers and sellers and an enhanced agent skill set, making them a better advocate for their clients. Agents unwilling to adapt and improve are likely to command lower compensation and may struggle to stay in the industry.

Conclusion: A Healthy Environment for Agents and Consumers Ahead

Are many things going to remain the same after the NAR settlement is approved and industry changes made?  Yes.

Strong, competent representation is still in the best interest of buyers regardless of how compensation is structured.  As always, buyers and sellers will have the ability to negotiate their commissions.  The lack of a predetermined compensation value in the MLS means that more buyer agents will be paid based on the the value they bring to the table.

For agents willing to adapt and focus on providing tangible value, this change is a welcome development that will enhance their marketability and success.  There is massive opportunity for the true professionals in the industry.

Agents who fail to adapt, however, may find it increasingly difficult to compete, raising the industry’s standard and benefiting consumers and dedicated agents across the board.

Some form of change is coming.  Embrace it.  Be proactive and focus on the things you control.  Create a plan.  Focus on training and education.  The future is bright for those who are prepared to innovate and who consistently demonstrate their value and dedication to their clients. Decide if that is going to be you.

If you’re uncertain about your ability to navigate this new environment, unsure whether you know how to demonstrate your value or even struggling to define how to differentiate yourself from every other agent that “works hard for their clients,” we should talk.  Our team and our training organization have been proactive and are prepared to take advantage of this shift while other agents react and hope they figure it all out.  

Whether through our team or our free training platform our mission is to provide an environment where committed agents can succeed, crush their goals, become what they want to be and change their “I am” statements.  If you want to chat schedule a quick call with Michael Gillies to learn more about our approach and how we can succeed together.