Consumers Are Starting to See the Bright Side of the Post-Residential Real Estate
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For most of 2024, the housing situation was full of panic.
Months before the start of the year, the National Association of Realtors and major franchisors lost court over allegations of antitrust, raising unanswered questions about what will happen next.
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The subsequent settlement from NAR and the major corporations provided some clarity, but still, the only certainty seemed to be uncertainty. One of America’s most important industries, housing, was set up in the wrong place.
The frenzy has since died down a bit, but with 2025 just a few weeks away, Inman reached out to a group of buyers at medium and small companies to find out what they were seeing. And those buyers shared something unexpected: While few would be thrilled that the commission’s lawsuits are happening in the first place, at least a few leaders are starting to see the positives in the emerging area.
To be clear, no one was knocking on the proverbial door to sing praises about people’s accusations. But when Inman reached out, every trader counted at least one silver lining. It was a surprising find given how much frustration there was in real estate in 2024, and it shows the volatility of the industry.
The top of the new normal
The sellers mention a few post-settlement developments in the area, which, in their view, are positive. And the most basic of them is that buyers still use agents.
Anne Jones
“There’s still a clear desire and need in a particularly challenging market for a really skilled tradesman,” Anne Jones, owner of Windermere Abode, told Inman.
Jones said some buyers have moved into less expensive or cheaper models. His company is based in Tacoma, Washington, and has seen Redfin move in, for example. But Tacoma is also more affordable than nearby Seattle and, therefore, has been an area for first-time buyers.
Some buyers searching for local housing stock may have lower credit scores or face additional unique factors that, in Jones’ words, lead to a transaction that “requires a higher level of expertise.” And the result is that the agent model did not fall by the wayside.
Courtney Poulos, founder and CEO of Acme Real Estate, sees the same thing in her home area of Los Angeles.
“At first we were afraid that people would think they could come in without a buyer’s agent,” he told Inman. “But most buyers are smart enough to know they need some kind of guidance and representation with these expensive purchases.”
Courtney Poulos
Poulos also never saw significant backlash when he tried to get consumers to sign representation agreements, even though his company was already using such agreements before settling. And none of the Acme dealers refused to pay compensation to the buyer’s agents.
Asked about the wide area in his market, Poulos said other buyer’s agents are negotiating. more compensation than they would have earned in the pre-compensation world.
“One of the positive effects of this is that our agents don’t work for free,” he added. “They are assured that they know what they will get for their work.”
Tiffany McQuaid, president and broker of McQuaid and Company, also cited many positives – even describing the transformation in recent months as “fascinating” and “exciting in a way.”
First, experienced sellers in the past may have committed to paying 5 or 6 percent commissions. However, at McQuaid’s company – located in Naples, Florida – his agents have adopted the practice of simply asking sellers if they are prepared to offer some kind of compensation, but not attaching a number to the offer.
Tiffany McQuaid
“That’s a yes or no,” McQuaid explained. “But we leave it at that and we don’t ask for a percentage.”
This leaves the buyer’s agent’s commissions in the hands of the buyer, meaning that the offer can include as much or as little money as they want. It’s a more open approach than has often been the case in the past, but McQuaid said it was a milestone.
“Usually everyone says yes,” he told Inman. “But you don’t negotiate that percentage at that time. So they went into it very happy.”
John V. Russell, realtor and founder of Mainframe Real Estate, took a similar approach, telling Inman that his agents allow buyers to ask for compensation rather than rush to offer it on the spot. He explained that this “does not mean that if a request comes in, [sellers] they don’t give” commissions. Instead, what it does is give its clients greater bargaining power.
John V. Russell
“I feel like for the most part, we haven’t seen any big changes,” Russell said. “But I think it benefits the sellers because they can negotiate a little more than before.”
Russell also said that one of the causes of the 2024 commission chaos is that many consumer agents are getting representation agreements signed with their clients. Such agreements are now mandated by the new NAR rules. Russell said agents should have been using them before the rules were issued, but that wasn’t always possible.
“Agents in general did not sign those because there was a lot of trust in this relationship with the buyer,” he said. “I feel that all this is good because agents must sign agreements between the buyer and the buyer. I think it’s a good thing.”
Data supports marketers
Inman Intel’s survey data suggests that these consumers are not alone. For example, a November poll showed that while more and more buyers are trying to negotiate when it comes to agent compensation, only a minority are paying below market rates.
Additionally, only 7 percent of respondents to the November survey indicated that they had seen commissions drop significantly since NAR’s compensation rules went into effect in August. Another 31 percent reported that commissions have decreased slightly.
However, and significantly, 40 percent of survey respondents saw no change in commissions, and 7 percent indicated that commissions have actually increased – findings consistent with Poulos’ observations in Los Angeles.
Mauricio Umansky, founder of The Agency, made a similar point about rising commissions when he spoke with Inman in November.
To be clear, not all agent salaries are rising in the post-paid world. Intel’s data specifically suggests that the gap between the most and least skilled agents is widening. But the truth is that there is evidence of talented agents earning the highest in the residential area.
The conflict is still there
None of this is to say, however, that conflict hasn’t existed yet.
McQuaid, for example, said that some buyer’s agents at other companies have called his people to ask what a particular seller is offering on the job. But the McQuaids have steered clear of suggesting a specific number or percentage, and that has apparently angered some less informed people.
“There are a lot of angry agents who call you if you don’t give the percentage that the seller gives,” said McQuaid. “It’s become a big deal.”
McQuaid said some such agents have suggested they won’t show homes without getting a number — a practice McQuaid condemns.
“That shouldn’t even be a question or a statement,” he said.
Still, while the vendors Inman spoke with described essential preparation to be ready for the post-completion world, not all agents in the industry have reaped the benefits of this directive. The result, traders often agree, is that different levels of expertise represent a constant point of contention in some markets.
Carl Medford
Some vendors complained that in some cases there is more work to be done now. Carl Medford, CEO of the Medford Real Estate Team – a Keller Williams team based in California’s Bay Area – told Inman for example that the new rules have doubled the amount of paperwork he has to do.
“That’s funny,” she said. “It is foolish.”
Other complaints brokers mentioned in Inman include that the commission’s case is still ongoing. Several also cite the fact that many agents do very few jobs per year and that such agents may drop out of the industry. That last point didn’t come as a complaint — salespeople Inman spoke with around the world said their agents had enough skills to make the changes — but it does suggest that many industry members are facing new pressures.
Still, the conversations Inman had with buyers were often very positive. Medford, for example, had an appeal or two. But overall, he was happy with the way it took all the conversations Inman had on the subject.
For example, Medford also moved away from having sellers’ agents designate a certain percentage or number to give to buyers’ agents. And the result is that the changes, upheavals and upheavals of the past year are beginning to look like they have come with a silver lining.
“In some ways,” said Medford, “this has made listing the property a lot easier for us because we don’t have to have those discussions with buyer’s agents and pay buyer’s compensation.”
Email Jim Dalrymple II
