Mediocre real estate agents are out
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Real estate brokers may have to sing for their suppers after new rules on commissions kick in Saturday, Aug. 17.
Why it matters: That could prove especially tough for what Business Insider calls the country's "glut of mediocre Realtors," including amateurs and those whose services might not be worth the price to homebuyers.
What we're hearing: Industry veterans expect the changes to weed out lackluster agents.
- "There are lesser agents who are either newer or they don't [know] how to articulate, 'This is what I bring to you as an agent,'" Chicago agent Jesse Treviño tells Axios.
Catch up quick: The status quo is that home sellers typically pay a 5-6% commission, which is split between the buying and selling agents.
- Buyers should now be compensating their own brokers, according to a settlement the National Association of Realtors reached earlier this year — meaning buyer brokers can't count on a share of seller proceeds.
- Commissions have slipped a bit since March, after the deal was announced, and are projected to fall further, Axios' Emily Peck reports.
Reality check: Many longtime agents say they're not sweating it — the field has grown too big.
- Seasoned pros "are going to make more money" because there will be fewer "Realtors out there who don't know what they're doing," says Laura Ellis, president of residential sales at Chicago-based Baird & Warner.
By the numbers: People are already fleeing the profession. There were roughly 72,000 fewer full-time real estate agents and brokers in 2023 than the year before, data shows.
- The shrinkage comes as the volume of home sales has fallen, and now analysts expect the decline to continue after the settlement.
Between the lines: Nearly half of about 2,000 agents surveyed by the Consumer Federation of America say they sold fewer than two homes in 2023, the Washington Post reports.
What they're saying: "At the end of the day, the market is going to decide whether there are too many Realtors or not enough Realtors," says Nate Johnson, vice president of advocacy at the National Association of Realtors.
The big picture: The National Association of Realtors, which bills itself as the country's largest trade organization, counts about 1.5 million members.
- That number has dropped by more than 100,000 since 2022, one industry observer told the Post.
The latest: As brokers look for workarounds to the rules, new websites are making it easy to learn if a seller is offering to cover buyer agent fees.
