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Once they’ve taken their place at the top of the industry, high-volume real estate agents have long enjoyed significant advantages over their lower-volume counterparts: stronger relationships, more leads and recurring revenue streams.
These benefits may increase even more in the post-settlement paradigm, according to a new survey of real estate professionals.
TAKE THE INMAN INTEL INDEX SURVEY FOR DECEMBER
The latest results of the Inman Intel Index survey reinforce previous findings that commission negotiations should not have a significant impact on the bottom lines of many agents after the new rules that went into effect in August.
But while the industry’s worst fears have yet to materialize, customers continue to put downward pressure on compensation that has gradually deepened over time. Its long-term effects are unknown.
In the short term, however, as many as possible 1 in 7 respondents in the November Intel Index survey reported that their experience was very different.
And they are divided between two camps:
- A group of low- or medium-volume agents — including a decent number from indie firms — report “significant” slippage in their negotiated compensation levels.
- And it’s a crop of high-volume players who are taking advantage of the new environment to successfully negotiate with consumers with a significant reduction in workload.
It is important to note that the majority of agent respondents — 7 out of 10 in the November survey – report little change in their compensation. It’s possible that their negotiated rates are unchanged, or even slightly lower, but not enough to make a significant impact.
But this marginal trend, if it persists, could widen the gap between the industry’s cream of the crop and those in the middle.
Intel dives deep into the evolution of consumer agency conversations, and the client interactions that fuel them, in this week’s report.
The commissions are there – but the customers aren’t giving up
Before diving into the emerging gap between top-performing agents, let’s take a closer look at where things stand a little more than three months into the implementation of the new NAR rule.
Here are a few big picture trends:
1. More vendors are testing hardline positioning
After the rapid changes, only 27 percent of agents responded told Intel in late August that they met with one listed customer who was unwilling to cover the buyer-side commission.
That number remains a minority of agents, but it has steadily increased in each study since then.
- 36 percent of agent respondents in late November said at least some of their salespeople are taking a more aggressive approach.
- For many of this group – 22 percent of all the agent respondents – hardliner sellers are still a minority of recent clients: less than 10 percent.
Still, listing agents ask more questions, reporting that their sellers know more about the new options available to them under the deal.
- 38 percent of agents who responded in November said “more than half” of their new sales clients had at least inquired about a no-buyer’s commission strategy — from 21 percent three months earlier.
But these marketer trends are just behind the set of conversations that can have the most impact: those that happen on the buyer’s side.
2. Consumers negotiate — and sometimes win
In the first weeks after the new rules came into effect, 76 percent are agents respondents to the Intel Index survey said that none – not one – of their recent clients had tried to negotiate a lower commission than was typical in their market.
At the end of November, only 61 percent agents can claim the same.
- The share of agent respondents who said that a large part of their clients – at least 10 percent of this type of client – tried to negotiate from 10 percent late August to 15 percent after three months.
This increased level of negotiation also has a significant impact on signed buyer agency agreements. For most agents, it is relatively small. But for some, it makes a big difference.
- 33 percent of agent respondents in November told Intel that at least some of their buyers have negotiated signed contracts with below-market compensation levels, since. 21 percent who said the same three months ago.
- 16 percent of agent respondents in November said at least 10 percent of their buyer agency deals featured a below-market commission rate, compared to 1.0 percent of agents in August.
This continues to represent a number of contracts. But what is clear from the results is that customer awareness is only growing. And commissions are always on the way down a little bit, which, although small so far, has not been fully played out.
3. Overall commission rates have decreased, but not by much
More than three months into the new period, agents are increasingly convinced that commissions have not changed much.
- While 37 percent of agent respondents in late August said it was “too early to tell” what effect the new rules had on commissions, that share declined 15 percent in the months since then.
Here’s where things stood in late November.
What have you seen happen to real estate agent commissions (as a percentage of the purchase price) since the NAR real estate tax rules went into effect in August?
- Commissions increased as a percentage of the purchase price — 7%
- They are always like – 40%
- Come down a little – 31%
- They are very good – 7%
- It’s too early to tell – 15%
The result? There is more low pressure than high pressure – although the effect remains small or non-existent for most agents.
That said, only a small percentage of agents have actually been able to take advantage of the opportunity to make their value to customers.
Winners and losers
It’s early, and few respondents to Intel’s survey — which included a total of 57 agents in the latest survey — are reporting significant increases or decreases in their negotiated commission rates.
But these two groups differ from each other in ways that seem logical.
Agent attributes whose commission rates have increased:
- High transaction volume – 38 percent commission earners reported doing more than 20 jobs in the past year, by comparison 7 percent of those who reported a significant decline in employment
- Large brokerages – 62 percent agents with higher commission rates from a traditional business or a non-public company, in comparison 54 percent for those whose commissions are very low
- The benefit of “local knowledge”. – 21 percent of agents who have benefited from the changes identify their local knowledge as what their clients value most, compared 7 percent of agents whose commissions are very low say the same
On the other hand, agents who are harassed by buyers often start with a weak hand.
- A little feeling to draw on — Only 50 percent of agent respondents with the lowest commission rates say they have more than 15 years of experience in the industry, compared 65 percent of agents saw their compensation increase
- A little indie style – About half of the agents have a commission reduction (46 percent) from independent indie brokerages, in comparison 38 percent for agents their commissions are rising
Intel will continue to track these trends as the new environment progresses.
Methodology Notes: This month’s Inman Intel Index survey made Nov. 18-Dec. 4, 2024, and received 751 responses. The entire Inman student community was invited to participate, and a rotating, random selection of community members was encouraged to participate via email.. Users answered a series of questions related to their own corner of the real estate industry – including real estate agents, brokerage leaders, lenders and proptech entrepreneurs.. The results reflect the views of the Inman community involved, which may not always be the same as those of the wider real estate industry. This survey it is done every month.
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