As agents showed houses over the weekend to clients eager to capitalize on an ongoing dip in mortgage rates, they were doing so under rules that were rewritten last year in an attempt to benefit those clients in their journeys.
Those rule changes took effect on Aug. 17, 2024, and were the result of a landmark legal settlement between the National Association of Realtors and homesellers who filed lawsuits targeting broker compensation practices. The changes followed a verdict that threatened to upend the real estate industry, and they were ostensibly put in place to help give homebuyers and sellers greater transparency.
The lead-up to the changes led to consternation for many in the industry, which for much of 2024 braced itself for the worst. But now, 12 months since the rules debuted, the jury may still be out on whether the settlement ushered in its intended effect.
“It’s a mixed bag,” said NextHome CEO James Dwiggins, one of the most outspoken industry leaders who has called for reform.
Dwiggins said whether the changes outlined in the settlement were helping buyers and sellers depended on how each individual brokerage, multiple listing service and Realtor organization adapted to the agreement. He also noted the real estate industry is massive, and the full effect of the changes will likely not be felt for some time.
But he and others — including NAR itself — said there were positive changes made over the past year, with more work to come.
“The practice changes have enhanced consumer choice and promoted increased transparency for home buyers and sellers alike,” NAR said in a statement. “NAR and its members are committed to implementing the practice changes and continue to assist consumers through their homebuying and selling journeys.”
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Commissions dropped, then ticked back up
Make no mistake: Buyer agent commissions are down from where they were before the Sitzer | Burnett trial and verdict put a spotlight on agent compensation.
That’s according to the latest Redfin data, which shows the average buyer agent commission in the second quarter of this year sitting at 2.43 percent. That’s actually up from 2.36 percent when the rule changes took effect, though it’s down from 2.51 percent at the start of 2023.
Still, sentiment among real estate agents has calmed.
Widespread uncertainty over whether buyers’ agents would be replaced entirely gave way to a general sense that commission rates haven’t plummeted, according to surveys of hundreds of agents and brokers by Inman Intel.
A small but significant minority of agents surveyed by Intel in late July even reported seeing commissions increase since the new rules made negotiation more common. Negotiation now often takes place at the start of the homebuying journey, as the rule changes require agents to obtain a signed buyer representation agreement with a client before touring properties. Those agreements must outline the agent’s pay.
Given that the rule changes also eliminated offers of compensation from within the MLS, the burden of setting buyer agent commissions shifted from sellers to buyers.
Ultimately, more than half of all agents who responded to Intel said they’ve seen commissions stay the same, whereas 36 percent said they’ve decreased slightly or significantly.
Settlements continued
NAR’s settlement — reached in March 2024 — covered more than 90 percent of its members. Those left out were companies that transacted more than $2 billion in sales volume in 2022.
An estimated 90 brokerages were left uncovered and forced to choose between continuing the legal battle or stepping up to the negotiating table and striking deals of their own. One by one, those brokerages — companies including Compass, HomeServices of America, Side and others — reached agreements to pay damages and change practices in exchange for protection from existing homeseller lawsuits.
In the case of eXp Realty and Weichert Realtors, the two firms struck agreements in a Georgia case but quickly became entangled in legal wrangling over allegations that they shopped around for the best settlement terms.
Those companies’ settlements have so far received preliminary approval, but the situation highlights the fact that even after NAR’s rules debuted, legal disputes over agent commissions have continued.
Other issues overshadow the settlement
After the dust from the rule changes settled, the industry quickly found itself grappling with other issues: A persistently slow market and divisive policy debates.
Existing home sales landed at just over four million in 2024. They’re on track to finish just under that in 2025. And nearly three out of every four agents didn’t close a single transaction in 2024, according to Redfin.
The slow market, persistently high interest rates and home prices, and uncertainty in the economy have given the industry plenty else to worry about. NAR now expects, for example, about 20 percent of agents to shed their Realtor memberships next year.
Meanwhile, industry leaders also set their sights on changing policies that could have other implications for consumers.
Compass, the nation’s No. 1 brokerage by sales volume, leaned into a business model over the last year that relied heavily on creating a robust network of private listings. At the same time, the brokerage advocated for an end to an NAR rule known as the Clear Cooperation Policy, which requires agents to upload listings to the MLS within one business day of publicly marketing it.
Against that backdrop, Zillow implemented its own policy regarding which listings it will display on its site — sparking an ongoing battle between the portal and Compass that continues today.
The stakes in the fight are high, given that the Department of Justice has investigated the Clear Cooperation Policy in the past. Many believe the DOJ is still watching, leaving a cloud over the industry and sparking questions about what the federal agency wants.
Either way, though, battles over private listings and policies such as Clear Cooperation have, over the past year, begun to overshadow commission lawsuit rules and settlements.
The DOJ looms
The DOJ has expressed an interest in continuing to investigate the Clear Cooperation Policy, which was updated in March to provide some flexibility around pre-MLS marketing of policies but otherwise kept in place.
But according to Dwiggins, there’s another post-settlement business practice that could also attract the Feds’ ire: Some listing agents are still sharing with buyer agents the compensation their sellers are willing to pay — a practice Dwiggins believes is a problem.
“The listing agent doesn’t know and the seller doesn’t know what the buyer and buyer agent agreed to for compensation in the buyer rep agreement,” Dwiggins said.
“The practice changes that have occurred. They just didn’t go far enough,” he added. “Cooperative compensation should just be banned, and then the DOJ would go away.”
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