The court system has, at long last, given final approval to the National Association of Realtors (NAR) commission lawsuit settlement agreement. On Tuesday November 26, the U.S. District Court for the Western District of Missouri, brought to a conclusion more than five years of hearings and investigations.
While this now finally closes the years long legal wrangling over historic agent commission earnings, two key changes took effect more than three months on August 17: Banning buyer agent commission offers from being shared on MLSs and requiring NAR members to sign written buyer agreements with buyers prior to touring a home.
The end goal of these new rules is to make commissions more transparent and competitive, so buyers and sellers are empowered to negotiate more favorable commission rates. Or in other words, the unofficial 5% to 6% commission will no longer be baked into the process and could be pushed downwards.
But aside from simply creating a race to the bottom on commission earnings, many agents have been finding ways to add value to the services they provide to their clients. This is helping them to both justify their fees as well as compete against other agents on more than just price.
Digital Platforms and Rich Data
Many agents have been turning to technology to either upskill or provide more services to their clients. As Zach Gorman, Co-Founder and COO of RealReports, puts it “agents are really looking for ways to draw a line. How am I different? Why is somebody going to pay me a commission over somebody else?”
In his case, he’s seeing a large increase in agents using his platform, where they can analyze everything from property photos to HOA documents using AI-powered natural language searches. The feedback Gorman is getting from agents is that this is helping them to build credibility and trust post NAR-settlement.
Chris Fellows, Co-founder and CEO of Bold Street AI, has been witnessing a similar trend. ”There’s more and more pressure for agents to actually show value. And so a lot of the folks that are using Bold Street or sign up, they’re like, wow, now I can give investment summaries to my buyers, and wow, I’ve suddenly just gone up in their eyes.”
In Fellow’s case, his company’s platform is designed to help turn traditional agents into investment-savvy advisors, by equipping them with tools and data to analyze and market the investment potential of residential properties. He notes that while 20% of full-time agents left the business last year, those who learned to work with investors have maintained their success.
Having access to powerful data analysis tools is opening up other use cases for agents too. According to Craig Foley, Chief Sustainability Officer for LAER Realty Partners, “the settlement has shaken things up, no doubt, but it’s also created an opportunity for realtors to differentiate themselves.”
“Today’s buyers are more environmentally conscious than ever,” he noted. “They’re not just looking at location and price; they want to know about a property’s energy efficiency and environmental impact. Sustainability knowledge is becoming a valuable asset to agents in this new landscape.”
The market trends support this shift towards sustainability. Younger generations, particularly Millennials and Gen Z, are showing increasing interest in the green credentials of homes, mirroring trends seen in sustainable investing.
In terms of how agents are responding to this, Foley observed that “we’re seeing a real shift in how realtors approach property listings. More and more, they’re highlighting energy-efficient features and discussing long-term sustainability with their clients.”
Don’t Forget First Principles
New tools and platforms can be great when adding value to investor-purchasers or buyers with sustainability goals. However, for the lower end of the market, where many buyers are simply trying to close on something within their price range, agents have been emphasizing the importance of demonstrating value by focusing on first principles; helping to get your client over the line.
“What I’ve been doing is trying to find government subsidies or programs for first-time home buyers where things like the Virginia Housing Authority can provide some assistance” explains North Virginia Realtor Dallison Veach. “I help my clients get through that”.
For other agents, the settlement has been an opportunity to have more open conversations with clients which help to build trust. “I like the new changes,” explained Bryan Vant Hof, veteran real estate agent with RE/MAX Advantage Plus in Minnetonka, Minnesota.
Vant Hof notes that about 80% of his transactions since the settlement have continued to follow traditional compensation structures. For the remaining 20% requiring negotiation of seller-paid compensation, he hasn’t found it difficult to reach reasonable arrangements.
“It’s actually been a very good way to have a more in-depth conversation with buyers and sellers about the structure of real estate commission,” he explains. While about 90% of clients are aware that something has changed in the industry, most haven’t done extensive research. This creates an opportunity for agents to provide clarity and build trust through education.
Incentivising Discounts
Aside from agent-led innovation, we’re also seeing other stakeholders adapt to the NAR settlement in creative ways. For example Frank Rohde, CEO & Co-Founder of fractional homebuying platform Ownify, has introduced a “two plus ten” commission structure for agents.
“We’ve built a commission plan for agents that work with us, that we call the two plus 10,” explains Rohde. “We pay a base commission of 2% of the list price for any home that we purchase on behalf of a customer, and then we pay 10% of whatever discounts and seller concessions the agent negotiates on our behalf
This approach, particularly timely in the post-NAR settlement era, aligns agent incentives with buyer interests by rewarding price reductions rather than the traditional model that favored higher prices. As Rohde observes, “we’ve gotten a lot of positive feedback on that plan from the realtor community” once agents understand how it aligns incentives to help get better deals for buyers.
Looking Ahead
The dust is far from settled on the NAR settlement. It’s expected that in the long term, commissions will find their “new normal” which will likely be lower than the previous unofficial 5% to 6%. However, agents that adjust now by offering more value and satisfying the other wants and needs of buyers will be the best prepared to compete in the new landscape.
