Did the NAR Settlement Lower Commissions? Here’s What the Numbers Look Like Three Months After

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After a mammoth $418 million National Association of Realtors (NAR) settlement threatened to decimate real estate agent commissions, AccountTECH, an accounting software firm, has crunched the numbers to see how much agents’ earnings are actually down now. The results might surprise you.

Despite headlines a few months ago that predicted the end of real estate as we know it, with many agents and brokers fearing they would have to find new jobs, a study by AccountTECH found that there has been little to no movement in commission numbers since industry rule changes took effect. The evidence is substantiated by Mike DelPrete’s analysis of commissions dating back to last September.

The lack of variation may be partly because it’s still relatively early in the aftermath, and many deals have not yet cycled through the system. However, agents fearing instant income armageddon can breathe a sigh of relief—at least for now. 

The Data Is Consistent With Our Interviews

The AccountTECH study found that the percentages paid to listing agents increased marginally, while those paid to buyer agents declined slightly. Specifically, the study found that the average commission rate for seller agents was 2.738% at 60 days post-settlement, up slightly from 2.724% in 2023—a number that the study’s authors agree falls within “the range of normal market variation.”

The study bears out the sentiments of many of the agents BiggerPockets interviewed a month after the settlement. They felt that real estate professionals at the top of their game would not feel much of a hit.

“It has not changed anything regarding obtaining business; the changes are how we communicate with new clients once we get connected with them,” Ian Hoover of Deacon & Hoover Real Estate in Pittsburgh told BiggerPockets at the time. “We must have more in-depth conversations upfront to explain the process and how it works, now and into the future…. Occasionally, buyers will want to represent themselves, especially if the process is not explained effectively. This will be a one-off and should not decrease revenues too much.” 

Is It Too Early to Draw Conclusions?

A better barometer for the change the settlement has engendered will most likely be felt by next summer, after the spring buying season. The study’s authors advised: 

“Industry watchers should keep tracking this number closely, since a continuation of this two-month trend of 0.05% decrease per month would bring commission rates on the buyer side to 2% by June 2025.” 

The report analyzed data from 625 real estate offices and 17,358 buy-side pending transactions.

Real Estate Investor Takeaways

Here are the factors real estate investors should consider. 

Buy-side transactions drop precipitously

Despite the modest commission dip, the study found that buy-side transactions had dropped noticeably by 10% year over year during the 60-day period analyzed.

The authors noted that the buy-side numbers could be indicative of many factors other than the NAR settlement, such as mortgage rates and the overall economy. A more extended period with more data points would give a better indication of the overall trend.

Commissions distribution

Breaking down numbers, the most common commission rate on the buy side was 3%, paid on 5,251 transactions, 2.5% (5,090 transactions), and 2% (4,026 transactions). 

Numbers tally with BiggerPockets interviews and brokerage reports

As stated, many of the agents interviewed by BiggerPockets didn’t expect to see a meaningful change in revenue among established agents. Real Estate News said this was consistent with third-quarter earnings calls from many brokerage CEOs.

HousingWire begs to differ

Although the NAR settlement only went into effect in mid-July 2024, HousingWire released an article on Aug. 2 entitled “Buyer agent commissions down to 2.55% since the NAR settlement.” The story was based on Redfin MLS data, which showed that commission had dropped to 2.55% from an average of 2.62% in January.

However, Redfin admitted that factors other than just the NAR settlement could have been affecting their data. Redfin chief economist Daryl Fairweather said in a statement:

“Still, even before the blitz of publicity around the class-action lawsuits and NAR settlement, commissions were coming down. That’s partly because of the competitive housing market before and during the pandemic—which motivated some sellers to offer a low commission because they knew they could still attract buyers—and greater fee transparency.”

What should you believe?

In a study released Sept. 1, AccountTECH found that hundreds of brokerages across the U.S. will become unprofitable if the NAR settlement reduces commission rates and brokers fail to transform their operations. AccountTECH reviewed the finances in depth for 100 randomly selected companies and found that if commission percentages drop to 2%, 79% of the companies in this analysis would be unprofitable.

The study based this on three assumptions:

• Commission “splits” between real estate agents and their companies will remain static.
• Total commission volume will remain the same.
• Operating expenses will remain at current levels.

Final Thoughts

While the latest AccountTECH study showed that the NAR settlement has thus far had a minimal effect on agent and brokerage commissions, it would not be wise for real estate professionals to rely on this finding so soon after the settlement has gone into effect. There’s little doubt that the real estate industry is evolving, and the traditional way of doing business has changed. The widespread use of social media to show, buy, and sell homes means that, inevitably, homebuyers will look to have more control over the homebuying process with a more DIY approach, using lawyers and title companies rather than brokers. 

To keep up, brokerages will need to insert themselves into the process. Recent reality TV shows have shown that modern agents are as much social media influencers as they are real estate professionals. 

In addition, brokerages can leverage technology to streamline their processes and offer buyers a range of services tailored to their specific and diverse needs. If a brokerage can continue to add value for its clients, it will continue to be useful. 

Ultimately, buying real estate involves a lot of money, with great potential for risk and loss. A brokerage must convince its clients that paying a commission for a safe pair of hands to guide them through the transaction process is well worth the price.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.