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Once they’ve taken their place at the top of the industry, the most prolific real estate agents have long enjoyed crucial edges over their lower-volume counterparts: more established relationships, more leads and more recurring sources of revenue.
These advantages may be growing even more pronounced in the post-settlement paradigm, according to a new poll of real estate professionals.
TAKE THE INMAN INTEL INDEX SURVEY FOR DECEMBER
The latest results of the Inman Intel Index survey reinforce a previous finding that commission negotiation has yet to make a meaningful impact on most agents’ bottom lines in the aftermath of the new rules that went into effect in August.
But even though the industry’s worst fears haven’t been realized, clients continue to apply downward pressure on compensation that has gradually deepened over time. Its long-term effects remain unknown.
In the short run, however, as many as 1 in 7 agent respondents to November’s Intel Index survey reported their experience has been very different.
And they’re split down the middle between two camps:
- A group of low- and mid-volume agents — including a decent number from indie firms — who are reporting “significant” slippage in their negotiated compensation rates.
- And a crop of mostly high-volume performers who are taking advantage of the new environment in order to successfully negotiate with buyers for a bigger cut of the transaction.
It’s worth noting that most agent respondents — 7 in 10 in November’s survey — report little change to their compensation. Either their negotiated rates have barely changed, or they’ve fallen slightly, but not enough to make a significant impact.
But this trend at the margins, if it holds, would serve to widen the gap between the industry’s cream of the crop and those in the middle of the pack.
Intel takes a deep dive into the evolution of buyer agency negotiations, and the client interactions that are fueling it, in this week’s report.
Commissions hold — but clients aren’t letting up
Before diving into the emerging gap between high-performing agents, let’s take a broader look at where things stood just over three months into the new NAR rule implementation.
Here are a few big-picture trends:
1. More sellers are testing out a hardline stance
In the immediate aftermath of the changes, only 27 percent of agent respondents told Intel in late August that they had encountered a single listing client who was completely unwilling to cover the buyer-side commission.
That number remains a minority of agents, but has climbed gradually in each of the surveys since.
- 36 percent of agent respondents in late November said at least some of their sellers were taking a hardline approach.
- For most of this group — 22 percent of all agent respondents — the hardliner sellers still remained a small minority of recent clients: fewer than 10 percent.
Still, listing agents are fielding many questions, reporting that their sellers are broadly aware of the new options available to them under the settlement.
- 38 percent of agent respondents in November said that “more than half” of their recent seller clients had at least inquired about the strategy of not covering the buyer’s commission — up from 21 percent three months before.
But these seller trends are just a backdrop for a potentially more impactful set of discussions: the ones that are happening on the buyer side.
2. Buyers are negotiating — and sometimes winning
In the early weeks after the new rules went into effect, 76 percent of agents who responded to the Intel Index survey said that none — not one — of their recent clients had tried to negotiate a lower commission than what’s typical for their market.
By late November, only 61 percent of agents could claim the same.
- The share of agent respondents who said that a significant share of their buyers — at least 10 percent of this type of client — had tried to negotiate rose from 10 percent in late August to 15 percent three months later.
This rising level of negotiations is also having a noticeable effect on signed buyer agency agreements. For most agents, it’s a relatively minor one. But for some, it’s made a bigger difference.
- 33 percent of agent respondents in November told Intel that at least some of their buyers had negotiated signed agreements with a below-market compensation rate, up from 21 percent who said the same three months earlier.
- 16 percent of agent respondents in November said that at least 10 percent of their buyer-agency agreements featured a below-market commission rate, compared to 10 percent of agents in August.
This continues to represent a small minority of contracts. But what’s clear from the results is that client awareness is only growing. And commissions remain on a slight downward trajectory that, while slim so far, has yet to fully play out.
3. Commission rates as a whole have declined, but not by much
More than three months into the new era, agents are increasingly sure that commissions have not radically changed.
- While 37 percent of agent respondents in late August said it was “too early to say” what effect the new rules were having on commissions, that share has dropped to 15 percent in the months since.
Here’s where things stood in late November.
What have you observed happening to real estate agent commissions (as a percentage of the purchase price) since the NAR settlement rules went into effect in August?
- Commissions have increased as a percentage of the purchase price — 7%
- They have stayed the same — 40%
- They have decreased slightly — 31%
- They have decreased significantly — 7%
- It’s too early to say — 15%
The result? There’s more downward pressure than upward pressure — although the effect remains minor or even nonexistent for most agents.
That said, a small share of agents have actually been able to take advantage of the opportunity to make their value case to clients.
Winners and losers
It remains early, and few Intel survey respondents — comprising a total of 57 agents in the most recent survey — are reporting an increase or significant decrease in their negotiated commission rates with buyers.
But the two groups stand out from each other in ways that seem to make sense.
Attributes of agents whose commission rates have risen:
- Higher transaction volume — 38 percent of commission-risers reported conducting more than 20 transactions over the past year, compared to 7 percent of those who reported steep drops in commission
- Bigger brokerages — 62 percent of agents with rising commission rates hail from either a traditional franchise or a publicly traded non-franchising firm, compared to 54 percent of those whose commissions have dropped significantly
- A “local knowledge” advantage — 21 percent of agents who’ve benefited from the changes point to their local knowledge as what their clients value most, compared to 7 percent of agents whose commissions have significantly dropped who said the same
On the other hand, agents who are being outmaneuvered by buyers tend to be starting out with a weaker hand.
- Less experience to draw from — Only 50 percent of agent respondents with significantly declining commission rates said they have more than 15 years of experience in the industry, compared to 65 percent of agents who have seen their compensation rise
- Smaller indie approach — Nearly half of agents with steep commission dropoffs (46 percent) hailed from private indie brokerages, compared to 38 percent of agents whose commissions are on the rise
Intel will continue to track these trends as the new environment unfolds.
Methodology notes: This month’s Inman Intel Index survey was conducted Nov. 18-Dec. 4, 2024, and had received 751 responses. The entire Inman reader community was invited to participate, and a rotating, randomized selection of community members was prompted to participate by email. Users responded to a series of questions related to their self-identified corner of the real estate industry — including real estate agents, brokerage leaders, lenders and proptech entrepreneurs. Results reflect the opinions of the engaged Inman community, which may not always match those of the broader real estate industry. This survey is conducted monthly.
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