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Nearly three months have transpired since the National Association of Realtors’ new, litigation-prompted commission rules went into effect on Aug. 17. That’s almost a quarter of the year — which means we’re just now starting to see a trickle of information on the rules’ impacts.
The trickle began flowing in earnest over the last couple of weeks as publicly traded brokerages, portals and other real estate companies shared their latest profit and loss numbers with the public. Many of those companies also used the opportunity to speak about commission trends and what those trends mean for their businesses. Not surprisingly, most companies were bullish, as they are wont to be during such discussions.
But there were also sure signs that change is afoot. Perhaps most notably, the two companies that are directly involved in the selling of houses — so, the iBuyers — are actually evolving their practices regarding commissions. Still other companies indicated that they are seeing some pressure on agent pay.
Many executives also pointed out that it’s still early days. But overall, the commentary from this latest earnings season suggests the new NAR rules are reshaping the way agents earn money — even if that process is happening slowly.
The iBuyers are getting creative
The iBuyers have had a rough go over the past couple of years, and as a result have lost some mind share lately. But they’re still significant in this discussion because, unlike brokerages or franchisors, they’re actually selling homes. And critically, both Opendoor and Offerpad appear to be talking a hard look at how they want to structure agent compensation, or if they want to offer it at all.
Here’s what the iBuyer executives said during their earnings calls:
Offerpad CEO Brian Bair on Nov. 4: Definitely starting to see some impact of commissions there, maybe even 50 basis points coming down on the buy side. And so a lot of direct conversations from agents asking what commission Offerpad pays. We’ve continued, with buyer demand being low, to keep commissions. And obviously to partner with our agents to keep commissions, with our original underwritten commissions, at least till the end of the year (emphasis added). You know, that’s something that we’re always going to be looking at closely. But I do think you’re going to start seeing the impact on the overall commissions. You know, even in the early days, you’re seeing that impacted a little bit. And I continue [to think] you’ll still see a little bit more of that over the next several months.
In other words Offerpad is still offering commissions. But Bair is also floating the possibility of changing this practice in as little as three months.
Opendoor CEO Carrie Wheeler on Nov. 7: We have begun transitioning from paying a blanket buyer broker commission to offering concessions to buyers. If you bring us the best offer we get, we’re going to offer concessions. It is not formulaic, it can vary. And that buyer gets to decide how they want to deploy those concession dollars, whether that’s in their pockets, or they’re going to use that to pay for the agent they brought to the transaction. We’re agnostic. We just want to make sure we are solving for the best outcome for us on a resale basis. So what you’re seeing today for us right now is the combination of buyer broker commission and what we’re spending money on in terms of concessions, that has come down a little bit quarter on quarter.
In the case of Opendoor, the company is pivoting away from commissions and toward concessions. Many had speculated in the lead up to Aug. 17 that concessions would replace commissions, but Opendoor appears to be pioneering that strategy on the ground.
It remains to be seen if regular homesellers might follow the lead of the iBuyers and pivot en masse to concessions, or flirt with not offering commissions at all. But these comments are significant because they mean practices are already changing, and companies are actively questioning how — and if — they should pay agents.
And of course both iBuyer execs mentioned commission compression…
Pressure on commissions is real
The iBuyer executives’ comments above were among the more explicit this earnings season regarding commission pressure. But they weren’t the only ones witnessing that phenomenon. Case in point: Anywhere.
Anywhere CEO Ryan Schneider on Nov. 7: Our commission rates were down four to five basis points this quarter. Four points in one business, five points in the other business, and that’s actually a little less than last quarter and we gave a bunch of commentary last quarter on what was driving that.
Schneider — who also said he was happy with his agents’ ability to articulate their value to consumers — didn’t specifically attribute commission compression on the new NAR rules. But the fact that commission compression is apparently occurring quarter after quarter is significant. And Anywhere seeing this trend also matters; across its many brands, Anywhere has more agents than any other brokerage or franchisor in the U.S., giving it a uniquely sweeping view of what’s happening in the industry.
Other executives said they haven’t seen actual rates go down, but are witnessing more negotiations.
Redfin CEO Glenn Kelman on Nov. 7: Most homeowners are still willing to pay the buyer’s agent, but many aren’t setting that agent’s fee in advance, instead planning to negotiate it alongside other offer terms. This by itself has been a major change (emphasis added). But to our surprise, the fee that is negotiated often seems nearly identical to what buyers’ agents were earning before the settlement. Fees may fall when a new and potentially more-competitive homebuying season begins; many of the buyers and sellers closing a sale this fall had hired an agent in the summer, before the settlement had taken effect.
In other words, Kelman is already seeing “a major change” with the rise of negotiation, and suggested a real dip in commissions is still looming.
RE/MAX has also observed this trend.
RE/MAX President Amy Lessinger on Nov. 1: Our agents are continuing to navigate change as they lean in, and they’re out there articulating their value. I do think not enough time has passed to draw any large conclusions. The difference in average rates was very negligible. Our agents are having more discussions with buyers. And they’re welcoming the opportunity to discuss the value of a professional trusted agent.
Lessinger’s comments about the present being too early for big conclusions, and about her agents succeeding, were in line with much of this earnings season’s commentary. But her remark about agents “having more discussions with buyers” suggests that the new rules have reached the collective consumer consciousness. And while conversations and negotiations don’t automatically lower commissions, they very easily can become a form of pressure.
The commission rule bulls
Lessinger’ comments about “welcoming the opportunity” are worth noting because they capture a widespread sentiment among executives. Redfin took a similar stance, with Kelman saying during his earnings call that “if more consumers seek better value from their broker in 2025, Redfin may expect larger share gains.”
It’s unlikely that every company can increase share, and it remains to be seen who actually will manage to thrive in the post-settlement world. But it’s worth noting that none of the companies whose earnings calls Inman reviewed for this story seemed pessimistic when discussing agent commissions. Change is in the air. Doom is not. (At least on this particular issue.)
Some companies were also quite bullish. Compass was among them.
Compass CEO Robert Reffkin on Oct. 30: I can tell you we are not seeing any meaningful change to our business since the announcement in our settlement or post Aug. 17 related to commission rates, and they’re still in line with historical internal averages. Anecdotally, we are hearing things at both ends of the spectrum, but we’re hearing a number of top agents, for example, saying that they’re now charging a stronger commission rate more in their favor since they are now able to negotiate for themselves. Again, as a reminder, every buyer agent or most buyer agents were just accepting the commission that was negotiated by the listing agent. I’d say one other thing that has changed is, I think, this is driving some of the worst agents and part-time agents out of the business.
Reffkin went on to say that because Compass works with top agents, he thinks the post-settlement trends “tend to go to our favor as a company.”
Zillow was also bullish, and for similar reasons.
Zillow Chief Financial Officer Jeremy Hofmann on Nov. 6: We’re really working with top agents versus a broad swath of folks in [the Premier Agent lead gen program]. And for our agents across our PA business, we’ve seen commission rates stay in a tight band. […] We believe we and our partners are the outsized beneficiaries of any changes in the real estate industry. We have the most customers. We work with the best partners and we provide the most technology. So we expect our PAs will deliver value and get paid because they provide great service, and that we and they are share-takers in really any evolution or dispersion of the industry. So that’s how we’re feeling on that front.
Time will tell if Zillow, Compass and others are correct that NAR’s new rules will tilt the real estate industry in their favor.
But what’s already clear is that change — in the form of more negotiations, conversations, downward pressure and more — is already sweeping the industry.
