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In the early months after the Sitzer | Burnett commission lawsuit ruling and related settlements, brokerage leaders raced first to understand, then to train their agents on the implications for their businesses.
Now, 27 percent of agent respondents to January’s Inman Intel Index survey say their brokerages have taken their prep to the next level, opting for immediate changes to their buyer agency policies as they prepare to Sitzer-proof their business revenues.
The results of this flagship monthly real estate sentiment survey — also known as the Triple-I — suggest these early movers won’t be the last.
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Read the breakdown of the steps brokerages took in response to this series of legal challenges that threaten to upend the way real estate businesses make money.
A buyer-side conundrum
For many, the buyer agency agreement is not a new feature.
Many brokerages have required them for years. According to the South Carolina Realtors Association, these contracts are mandatory for real estate brokerages in 18 states.
Still, some of the biggest real estate markets in the country — including New York, California, Texas and Florida — do not yet require brokerages to present these contracts to buyers.
Here’s what the Triple-I learned from the 1,029 real estate professionals — including 638 agents and 324 brokerage leaders, among others — who shared their thoughts in January.
- 11 percent of agent respondents said their brokerage has “changed its policy” on buyer agency agreements and now requires them when working with buyers.
- 16 percent said their brokerage “changed its policy” and now requests that buyers sign the agreements.
- 23 percent said their brokerage had not yet changed its policy but that they expected it would.
- 37 percent said merely that their brokerage had not changed its policy.
- The remaining 12 percent chose “other,” with a large portion of these respondents clarifying their brokerage has used buyer agency agreements for some time.
Among other things, these buyer contracts ensure that the client will be responsible for the agent’s agreed commission if the seller doesn’t cover it.
This would be a particularly consequential guarantee in a world where cooperative compensation might no longer be required.
Still, the results make clear that many brokerages take a wait-and-see approach before significantly changing their business operations.
The looming question
While the Sitzer verdict and related settlements dealt an early blow to the big industry players, a number of legal challenges remain unresolved.
That may be why most brokerage leaders don’t yet see these commission lawsuits as their No. 1 business concern — instead, pointing to “interest rates” and other market-related anxieties.
- 8 percent of brokerage leaders who responded to January’s Triple-I survey named “regulation” as the “most challenging part” of today’s business environment.
- Agents were more likely than brokerage leaders to worry about the lawsuits. For 15 percent of agent respondents, commission lawsuits were already the “top business concern” today.
While brokerage leaders generally don’t see regulation as their biggest issue today, many do harbor concerns that lawsuits could be a rising threat in the future.
- When asked about the next 12 months, the share of brokerage leaders who named regulatory issues as their biggest challenge nearly doubled to 15 percent.
A weakened trade group
For decades, the National Association of Realtors was one of the nation’s most powerful and influential trade groups.
Now, with the NAR lawsuits, leadership scandals, and partly market-driven membership declines of 2023, the Triple-I reveals a degree of discontent among the ranks of real estate agents — many of whom are required by their local trade groups or MLS associations to maintain a NAR membership.
- 1 percent of agent respondents to the Triple-I said they actually canceled their memberships in the last 60 days.
- Another 6 percent said they planned to cancel in 2024.
- 25 percent of agents said they did not cancel their NAR membership in the last 60 days but that this was “not by choice.”
- 57 percent indicated that it was their choice to keep their membership. Another 10 percent selected “other,” with most of these respondents electing to detail various reasons for not canceling the membership.
As the year ahead develops, the industry stands on the brink of uncertainty on a number of fronts. The Triple-I will continue to closely monitor the steps that business leaders are taking in response to the latest developments.
Methodology notes: This month’s Inman Intel Index survey was conducted Jan. 21-31, 2024. The entire Inman reader community was invited to participate, and Intel received a total of 1,029 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender, or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.
