Strong reactions to NAR commissions deal 

The National Association of Realtors' landmark $418 million settlement in the commissions cases will undoubtedly be remembered as a transformative moment in real estate history. 

NAR's own leadership signaled that the decision announced today was a difficult one, but ultimately, the only viable path forward.

"There was no perfect option for resolving this litigation," NAR President Kevin Sears told members in a video address. "The settlement will bring changes for all of us, and as a fellow member of the National Association of Realtors and a practicing real estate broker, I feel them personally.  But I also know this resolution means we can continue to do our jobs."

NAR interim CEO Nykia Wright issued a statement earlier in the day that reflected a similar sentiment, noting that the settlement was "the best outcome we could achieve in the circumstances."

Reactions to the settlement terms and the upcoming rule changes have been coming from all corners of the industry, with some expressing concern that the settlement "spells disaster for first-time homebuyers," while others asserting that it's a "gut check for the industry" which "might just be a win for all." 

Here's how industry insiders, from agents to execs, have weighed in so far. Responses have been edited for length and clarity:

Industry leaders and top firms

Glenn Kelman, CEO of Redfin: "How the settlement is perceived may still re-shape agent attitudes about cooperation, and consumer attitudes about fees. The result could be that agent-to-agent cooperation on fees is weakened but not killed. Changes already afoot will accelerate:

• The fees paid to buyers' agents will keep falling.

• More listing agents will sell homes directly to buyers.

• All buyers' agents will require their customers to sign a contract hiring that agent, which is already imposed by law in Washington state, and has been under consideration in California.

• The number of homes marketed outside of the MLS will increase. There may be more backroom deals, benefiting well-connected buyers and sellers at the expense of people of color and immigrants who lose out on a listing without ever realizing it was for sale. A major reason agents post their listings to the MLS has been to tell the buyer's agent how much the buyer's agent could earn from the sale of the home. Consumer advocates who fight cooperation have never fully appreciated how important the MLS is to an open, fair housing market."

Kelman's full statement is available here.

Art Carter, CEO of California Regional MLS: "CRMLS has been anticipating these possible outcomes of the proposed NAR global settlement for quite some time, and we are well prepared to execute the proposed changes. 

In the short term, it is of the utmost importance to support CRMLS users, communicate with complete transparency, and keep everyone continuously informed. 

We support NAR in taking the necessary steps to recognize and take action on what plaintiffs' attorneys and consumer advocates were asking. CRMLS will continue with the cooperative spirit of our industry to assist and support our agents, brokers, and consumers."

A video statement from Carter and CRMLS general counsel Ed Zorn is available here.

Jack Miller, president and CEO of T3 Sixty: "We are glad that the National Association of Realtors has worked hard to create a settlement so the industry can put this litigation behind us and focus on helping consumers with the largest and often the most meaningful purchase of their lives.

We are concerned that the plaintiffs' attorneys and non-industry academics have inflated expectations about how a change to the cost of agent services may impact the housing economy; the brokerage industry is not in charge of housing prices or interest rates, which are the biggest drivers of housing costs." (Note: T3 Sixty and Real Estate News share a founder, Stefan Swanepoel.)

Sharran Srivatsa, president of The Real Brokerage: "This move is significant because it means that an agent's skill is more important than ever. Going forward, a buyer-side agent will need to offer a significant value proposition that goes beyond what so many agents are currently offering.

We expected this. We've been focusing on training Real agents to raise the bar when it comes to how they approach buyers in today's market. The implications of this settlement mean that the truly committed, strategic agents will be the ones to succeed in the real estate environment of the future."

Carrie Wheeler, CEO of Opendoor: "Competition, transparency and choice are the bedrock of good consumer experiences. Details are emerging, but we've maintained that these industry suits would have a neutral to positive impact for consumers and on our business. 

Our business model doesn't rely on earning revenue from commissions paid to buyers' agents. Rather, those commissions are a cost to us that we pay when we resell our homes. For us, our purpose remains unchanged: to power life's progress one move at a time. Today, the door opens even wider for greater access to homeownership in America."

Greg Schwartz, co-founder and CEO of Tomo: "Today's NAR settlement spells disaster for first-time homebuyers. We're essentially sending them to the slaughter. For 50 years, American real estate has operated with dedicated representation for both buyers and sellers, financed by the seller. Now, that's being upended and leaving the average home buyer at a severe disadvantage. 

With most families struggling just to make the down payment, expecting them to come up with an extra $12K-$13K [in agent fees] at closing, it's just plain unrealistic. So, here's the new reality: buyer agents are now a luxury for investors and the rich.

That's why we're urging HUD to step in and allow reasonable brokerage commissions to be financed in mortgages. Let's ensure every hard working American still has a fair shot at achieving homeownership and building wealth."

Philip White, CEO, Sotheby's: "Remember, Sotheby's International Realty affiliated agents and franchisees will receive a release from current and future litigation related to these claims in the settlement our parent company, Anywhere, reached last fall. NAR's settlement is independent of the Anywhere settlement, which has been preliminarily approved. We still expect Anywhere to receive final approval by the court in May.

As we have expressed in the last several months, the Anywhere and Sotheby's International Realty priority is to protect our affiliated agents and franchisees as we put these legal matters behind us and focus our resources on those we serve. We are pleased NAR is taking steps to do so as well, and we will continue to communicate with you as we understand more about their settlement and the ongoing industry dynamics."

Zillow spokesperson (in response to a new rule mandating that agents secure buyer agreements before showing homes): "Real-time touring is an important experience for consumers who want to see a home. Nothing is changing to this experience today. In the event that changes to our home-touring product become necessary, we will certainly adapt as needed."

Realtor.com spokesperson: "We don't comment on third-party settlements. Realtor.com welcomes consumer transparency and remains committed to supporting agents on both sides of the transaction. We believe consumers need both listing and buyers agents, and that both sides are important for advising and protecting consumers' interests in an often complicated, high-dollar transaction."

RE/MAX spokesperson: "RE/MAX, LLC, which entered into a settlement in September 2023, is monitoring all developments regarding the commission lawsuits and continues to support the RE/MAX network and maintain its position as a leader in the real estate industry. RE/MAX agents are some of the most experienced agents in the industry and are well-equipped to handle the changing landscape while delivering the best support to their clients."

Brokers and agents

Phil Faranda, manager and associate broker at Howard Hanna | Rand Realty: "I think this is a partial comeuppance for decades of buyer agents claiming or suggesting that they were free as a value proposition. Competent agents should have few issues making the pivot on their value proposition to their buyer clients. 

We sold HUD homes in the '90s where the bottom line to the seller was affected by the selling agent's commission, which was on a sliding scale on the net to the seller. This isn't going to be completely new for everybody. 

This is a gut check for the industry to a large degree. Listing agents have, for nearly a century, provided a value proposition, signed a contract with clients, and negotiated their commission. Buyer agents should do the same." (Note: Phil Faranda is also a guest columnist for Real Estate News.)

Jeffrey Funk, eXp team leader of The Funk Collection: "Transparency in any industry is a good thing for the consumer. Real estate consumers have access to more information today than they ever had, and the commissions structures should be part of that transparency. 

Commissions should not be something that the consumer should learn about on a closing statement. A concern is that if home sellers decide not to offer compensation to a buyer's agent, there will be an important subset of buyers who will not be able to afford proper representation from a professional real estate agent. Buying a home is one of the most important financial decisions that a person will make in their entire life, and they deserve to have representation for that transaction."

Jon-David Lenard, team leader of The Lenard Team: "As someone who deals with buyers everyday, it's too early to tell what all of this means, but things are going to change. If you have confidence in the value you provide and have the ability to articulate that to the public I could see a scenario where the best agents actually thrive.

I'm less sure exactly how that will benefit the consumer directly in terms of commission, but if it raises the quality of our profession, it might just be a win for all."

Alison Paoli, Realtor with Properties NW and former Zillow communications manager: "While I understand the reasons for the change, I think we need to be vigilant to guard against unintended consequences. The U.S. real estate transaction is made up of many closely tied processes, and it's not always easy to see how changing one may affect others.

I'm particularly concerned with how the industry will respond to representation for low-income buyers, and those with VA loans. There is a real danger that the best agents will avoid low-income and VA buyers altogether and open the door for scams and other poor experiences."

Industry experts and watchers

Stephen Brobeck, senior fellow, Consumer Federation of America: "The settlement announced today by the National Association of Realtors suggests that listing and buyer agency compensation will be completely uncoupled. This settlement over time will benefit home sellers and buyers greatly, eventually lowering agent commissions by tens of billions of dollars a year and helping align agent compensation and services rendered. Increasingly this compensation will reflect agent competence, experience, and the effort they make on a sale.

The industry has raised concerns about first-time home buyers. They will have the opportunity to request a concession from home sellers that helps cover buyer agent compensation. But the real solution is for the industry to work to remove regulatory barriers that make it difficult for buyers to include this compensation in their mortgages. We are fairly confident that the industry will pursue this issue in part to preserve buyer brokerage. Without the option, more buyers will contact listing agents, losing fiduciary representation though also potentially lowering their costs."

Dr. Courtney Johnson Rose, president, National Association of Real Estate Brokers: "NAREB recognizes that this settlement, if approved by the judge, will bring dramatic changes to our industry. Our members often represent Black families and individuals who struggle to raise money for the down payments needed to purchase homes due to decades of discrimination and a lack of generation wealth. Paying the commission for their agent will be an added burden. NAREB will help our members navigate these changes and continue to create avenues for them to thrive and help Black consumers achieve the dream of home ownership.

Our organization was founded at the peak of housing discrimination; our members have always had to be resilient as we fought for and continue to fight for democracy in housing. NAREB is committed to the advancement of Black real estate professionals, increasing Black home ownership and our enduring pursuit for Democracy in Housing."

John Wake, real estate analyst, author of Real Estate Decoded blog: "The worst-case scenario for agents would be if negotiations evolve toward the buyer and seller negotiating both the sales price AND the buyer's agent's commission. Buyer's offer: 'I'll pay you $X for the house and you pay my agent $Y.'

That complicates things! 'You've been a great buyer's agent, and I know I agreed to pay you $Z, but now the seller is only offering to pay you $Y. If you'll accept $Y, it looks like we can go under contract and you'll get paid $Y at closing.'

If buyers and sellers get involved in setting their agent commissions during home purchase negotiations, they'll tend to sell out their agents."