Agents, consumers split on NAR settlement outcomes
A recent survey from Clever found that 70% of agents are unhappy with the deal, but two-thirds of consumers think commissions practices should change.
Key points:
- Most agents surveyed think the settlement will have a negative impact on the industry as a whole, and on their business.
- Few consumers actually knew about the lawsuits, but when asked if they thought traditional commissions practices were unfair, most said yes.
- How agents get paid is a mystery to many consumers — but they still believe agents deserve to earn at least as much as they do now.
It's been nearly three months since NAR announced its settlement in the commissions cases, and while it's been all the buzz within the industry, most consumers know very little about it. But that doesn't mean they don't have opinions about agent pay.
A recent survey from Clever Real Estate, which polled 1,000 Americans and 331 practicing agents, found vast differences between consumers and agents in their reactions to the settlement and ideas about compensation.
Most agents oppose changes to commissions
According to the survey, 70% of agents said they do not support the rule changes mandated by the settlement, including the removal of offers of compensation from the MLS. While the concept of cooperative compensation isn't going away, it will become less of a guarantee, leaving buyer agents to negotiate their fees directly with clients.
Consumers, on the other hand, are largely in favor of the settlement terms, with just over two-thirds — or 67% — of the general public surveyed saying they support changes to the commission structure.
Agents are worried about the industry, and their business
Seventy-one percent of the agents surveyed said the NAR settlement would have a negative impact on the real estate industry, with a whopping 95% saying they expect changes to commissions will cause some agents to leave the industry altogether.
A majority of agents — 58% — think the settlement will also have a negative impact on their day-to-day business. Their top concern? Negotiating fees with clients.
The public, however, was split: 40% said the settlement would have negative effects on the real estate industry, and 39% said it would have positive effects.
Most Americans are unaware of the lawsuits
Perhaps surprisingly, nearly two out of three consumers surveyed — or 64% — said they were not familiar with the NAR lawsuit and settlement. Nearly 80% said they were not aware of any significant news coverage related to the commissions cases.
However, 70% of agents surveyed said they had clients ask about the settlement and its effects on commissions, suggesting that consumers who are active in the market as buyers or sellers are paying closer attention.
While most consumers knew very little about the lawsuits, when asked if they agreed with the main premise — that longstanding commissions practices are unfair and anticompetitive — 61% said yes.
The vast majority of agents disagreed, with 89% saying those claims were not valid.
Consumers don't understand how agents are paid
The survey also highlights another key theme coming out of the commissions cases, which is that the typical consumer doesn't know much about agent compensation. Only half of the respondents said they understood how real estate fees work, while just 27% knew that the total agent compensation equated to roughly 5-6% of a home's sale price.
And only a tiny share — 1 in 16 consumers — correctly identified that in the traditional commissions structure, most buyers don't directly compensate their agents.
These findings are consistent with other reports from NAR and Redfin released earlier this year that found many consumers don't understand agent pay.
The Clever survey revealed another misconception about pay: Most consumers — 83% — greatly overestimate agents' incomes. A third of those surveyed believe the typical agent earns $100,000 or more per year, while 54% think agents make at least $80,000.
Interestingly, those same consumers overwhelmingly think agents deserve that level of pay, with nearly half (48%) saying agents should earn even more.