The NAR lawsuit rocked the industry. It's now taking its toll on agents.

By Andy Medici

If there's is a primary consequence real estate agents expect from the National Association of Realtors' commissions lawsuit settlement announced earlier this year, it's that it will pressure agents to quit their jobs.

A new survey by real estate firm Clever Real Estate found that 86% of agents surveyed believe the settlement will lead to agents leaving the industry. Additionally, 48% of the agents surveyed said they are more pessimistic about their careers since the settlement announcement; just 16% feel more optimistic.

The announced settlement from the NAR came after a jury verdict of $1.78 billion last fall against the NAR and several big brokers. The plaintiffs claimed in the litigation the NAR’s “participation rule” and “cooperative compensation” practices unfairly forced home sellers to pay inflated commissions to buyer agents. Plaintiffs argued a complex network of rules kept buyer-broker commissions high and essentially mandated the seller offer buyer commissions.

The NAR and a host of brokers — some who settled before the verdict — ultimately have reached settlements totaling nearly $1 billion. The trade group also agreed to a series of internal changes it put into place in August, including sellers no longer being able to make offers of buyer-broker commissions on any Multiple Listing Service the NAR owns.

Some local associations have not signed onto the settlement and are not bound by the settlement agreements.

The Clever survey shows that 64% of agents oppose the changes to commission structure, and 76% believe the changes will hurt first-time homebuyers. Two-thirds of the agents surveyed believe buyers now will be more hesitant to use an agent.

Among other findings: 

• 83% of agents plan to experiment with new business strategies.

• 35% of agents say they'll avoid working with sellers who do not provide concessions to help buyers cover agent fees.

• 67% of homeowners support the changes, although only 26% admit to having a strong understanding of the lawsuit.

Interest in real estate agent jobs declines

An analysis of job-search data by Flatworld Mortgage Solutions found that search interest in real estate agent jobs has dropped this year to its lowest point since 2016. It had peaked in 2022.

And while real estate agent jobs boomed in 2021 and 2022, far outpacing the nation's overall growth in employment, that surge has since fallen back to below-average job-growth numbers.

A separate survey of real estate agents by The Real Brokerage Inc. found that most home sellers are still willing to offer a buyer-broker commission even after the settlement. Sixty-three percent of agents said sellers were still “frequently” covering buyer-broker commissions, with 21% saying sellers were “occasionally” covering the commissions. Additionally, 55% said sellers were offering buy-side commissions of 2.5% or greater, while 30% said sellers were offering commissions below 2.5%, and only 1% said they noticed a shift toward so-called “flat fee” models. 

In the last four weeks of July, the typical American home seller paid a 2.55% commission to the real estate agent hired by the buyer, according to MLS data analyzed by real estate brokerage Redfin Corp. (Nasdaq: RDFN). That's down from 2.62% in January.

The average commission paid to a buyer’s agent in the U.S. is $15,377, up slightly from $15,124 in January. The dollar amount has increased marginally even though the percentage has declined because of overall growth in home prices, according to Redfin.

The decline in commission rates being seen this year has actually been occurring slowly over many years, dropping from a 2.89% mark in 2013. That long-term decline is the result of a competitive housing market before and during the Covid-19 pandemic — which motivated some sellers to offer a low commission because they knew they could still attract buyers, Redfin Chief Economist Daryl Fairweather said as part of an analysis with the research findings.

David Tarter, a practicing real estate attorney and executive director of the Center for Real Estate Entrepreneurship at George Mason University’s Costello College of Business, said any changes that come out of the NAR settlement are likely to be a “slow boil” over the coming years.

Buyers, for example, might see the changes as having to foot the bill for broker services, but those costs already were borne by the buyer. They were just more deeply wrapped into the transaction, such as with a higher asking price or less wiggle room for concessions.

“There is not going to be massive change tomorrow,” Tarter said. “But this could be the start of unbundling of services.”

That might bring more transparency around fees and pricing along with greater competition for services, Tarter added. It's too soon to tell whether that ultimately brings down commissions or pushes people not to use agents.

The pressure on commissions also comes from the fact that it has been a sellers' market, Tartar said, and many sellers felt they didn’t need to offer buyer commissions to sell their houses. That might change in a buyers' market.

“I think the things will ebb and flow in the marketplace and who has the advantage — and right now, it's a sellers' market,” Tarter said.

For potential buyers who are unsure of how to pick a good agent, The Playbook asked experts what questions to ask and how to vet a good agent.

Final Thoughts

The aftermath of the NAR lawsuit is reshaping the real estate industry, and agents are feeling the heat. With reduced commission structures and increased uncertainty, many agents are rethinking their career paths. Yet, this evolving landscape could offer an opportunity for savvy agents to innovate and adapt to new business strategies. For buyers and sellers, transparency around commission fees may eventually lead to a more competitive market, with services unbundling to allow for greater choice. If you're relocating from out of state, it's essential to understand how these changes might impact your home buying or selling process—choosing the right agent now requires careful consideration.