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Real estate leaders, take heed: Agents are more nervous about these lawsuits than you are. And their clients have no idea what’s coming down the pike.
An Intel survey of over 1,200 real estate professionals in the days leading up to the Sitzer | Burnett verdict in October revealed rising angst within the ranks of real estate brokerages, where 1 in 5 agents and 1 in 7 executives and decision-makers now consider the lawsuits to be their top business concern.
In the week before the verdict, 91 percent of agents said they were monitoring the trial at least “occasionally,” with 26 percent keeping track “daily.” When asked how often their broker was monitoring the trial, 90 percent of agents said at least “occasionally,” while 35 percent said “daily.”
These findings, published this week as part of the Inman Intel Index, or Triple-I, reveal that concerns over the fallout of the lawsuits are now a strong third-place concern for both groups, trailing only high mortgage rates and the lack of housing inventory for sale.
Here’s what these agents and executives told Intel — and how some leaders are beginning to prepare.
- A majority of real estate professionals surveyed by Intel now expect the number of agents to fall “significantly” when the consequences of the commission lawsuits are fully felt.
- 51 percent of rank-and-file agents expect that the cooperative compensation practice will become optional, and that their own numbers will dwindle as a result. Nearly 7 percent more believe that cooperative compensation will be banned outright and drive a significant number of agents out of the market.
- Broker-owners, proptech founders and other real estate executives were more optimistic. Nearly 28 percent of these decision-makers told Intel that they expect cooperative compensation to become optional, but in a way that would have a minimal effect on agent count. Only 20 percent of agents shared this point of view.
- Even before the jury sided with the homeseller plaintiffs in Sitzer | Burnett, real estate professionals could read the writing on the wall. Only 10 percent of executives expected NAR and the remaining brokerages to win or secure a settlement that was favorable to their business practices. 14 percent of agents fell in this same optimistic camp.
Despite the mounting anxiety gripping the real estate industry, agents report that the lawsuits have barely begun to creep into the consciousness of their clients.
- 93 percent of agents reported close to none of their buyer clients mentioning the lawsuits to them. 92 percent of agents said the same of their seller clients.
Holding it together
The good news for brokers: Agents generally believe in their brokerage’s business model. And many of them genuinely like where they work.
- Agents who responded to the survey were most likely to list company culture as the thing they value most in the brokerage with which they work.
- Over 30 percent of agents picked culture, with 24 percent opting instead for brand recognition and 21 percent selecting technology and education. Only 15 percent listed the commission structure.
- Times may be lean, but agents are generally confident in their brokerage’s business model: They give it a score of 4.3 out of 5 on average.
Still, agents and brokerage leaders alike have concerns.
- Chief among these worries are mortgage rates and lack of housing inventory. One-third of agents and real estate leaders pointed to rates, and nearly as many named the dearth of listings as their biggest concern.
- But even before the jury rendered its verdict in Sitzer | Burnett, the commission lawsuit fallout had already risen to become one of the top business concerns of real estate professionals. 20 percent of agents and 15 percent of brokerage leaders said the lawsuits topped their list of worries.
- Among a group of broker-owners, real estate executives and investors, 11 percent said they were most concerned about compensation compression. That’s twice as big as the share of agents who said the same.
- Fewer than 4 percent of agents said they were most worried about technology devaluing or replacing the services they provide.
The final word
In each of the first two editions of the Inman Intel Index, real estate leaders said they were closely evaluating their buyer’s agreements as the commission lawsuits moved through the courts. Many leaders said they’ve been communicating with their agents, providing them information on the lawsuits and their possible impact.
Here are some of the specific steps that leaders in the brokerage, MLS and proptech worlds told Intel they are doing to prepare for a post-Sitzer landscape:
- “Educating members to communicate their value and begin using buyer/broker agreements.”
- “Focus on listing and establishing a niche market for those listings.”
- “I have informed my agents. I’m a Director of the MLS and we’re starting to plan. I’m pushing my agents hard to work [their sphere of influence] for listings. I’ve also started Online Auction of homes, they are exempt from the lawsuit.”
- “[Preparing] for training of agents and loan originators.”
- “Working for a builder I plan on seeing less buyers using agents.”
- “Preparing agents to adopt the flat fee concept of compensation.”
- “Thinking more about how attorneys and lenders will be involved.”
- “[Will] maybe avoid buyer agency altogether.”
- “Selling, Retirement, merge.”
Methodology notes: This month’s Inman Intel Index survey poll was conducted Oct. 23-31, 2023, and the entire Inman reader community was invited to participate, and Intel received a total of 1,269 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.