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Keller Williams president and CEO Mark Willis has read the tea leaves, and they foretell another wave of consolidation amid coming changes to the buyer-broker commission structure.
Mark Willis
“We’re probably going to see a consolidation in this industry — maybe one of the largest waves we’ve ever seen,” Willis told Real Estate News on Tuesday. “I think a lot of people who are broker-owners who lead independent real estate companies are looking at their options right now.”
Willis didn’t specify the challenges independent brokers may face as the industry braces for a post-settlement world.
The National Association of Realtors received preliminary approval of its settlement terms on April 23, which includes $418 million in damages and removing cooperative compensation details from multiple listing services. The settlement also requires MLS participants to have signed buyer representation agreements before touring homes. Final approval won’t happen until November; however, the changes are expected to go into effect in July.
In addition to prepping for a new commission structure, brokerages with annual transaction volumes above $2 billion are facing a looming deadline to opt into NAR’s settlement. Some franchisers, like Keller Williams, and brokerages, like Compass, have already secured multimillion-dollar settlements.
As for the remaining lot, which includes some of the nation’s leading independent brokerages, they have until June 18 to opt in and deposit an amount equal to 0.0025 multiplied by the brokerage’s average annual total transaction volume over the most recent four calendar years into an escrow account.
“If they don’t have the ability to pay that amount, [they must] participate in non-binding mediation with the plaintiffs at their own cost,” a previous Inman article explained. “As an example of the first option, a brokerage with $2 billion average annual total transaction volume would be required to pay $5 million.”
Willis said the settlement could also lead to the consolidation of the industry’s agents, which, by best estimates, tops 1.5 million. He said some agents will leave their real estate careers behind. However, he expects a new crop of agents to come in and quickly acclimate to a new sales landscape — something Keller Williams is already capitalizing on with a slew of updated training and education courses.
“What I know is that best practices are going to start showing up,” he told REN. “If we stay calm, and don’t overreact … not only will this industry survive this, but we will thrive.”
Even with nearly 40 years of experience and insights, Willis said his predictions are just that — predictions.
“Right now, honestly, we don’t know,” he said. “It’s all speculative.”
