"Mediocre" Minneapolis real estate agents could be pushed out
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Illustration: Brendan Lynch/Axios
Real estate brokers may be singing for their suppers after new rules on commissions kicked in last month.
Why it matters: Changes from a National Association of Realtors settlement 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, including Twin Cities agent Joey Oslund, aren't sweating it — they expect the changes to weed out lackluster agents.
- "If you have a good reputation in town … you have an even bigger leg up now," Oslund 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, per the settlement reached in March — meaning buyer brokers can't count on a share of seller proceeds.
By the numbers: The average Twin Cities buyer agent commission was 2.56% in July, down from 2.60% in January, before the settlement was announced, according to Redfin.
- Commissions are projected to fall further nationally.
The big picture: 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.
- The shrinkage comes as the volume of home sales has fallen, and now analysts expect the decline to continue after the settlement.
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 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 Washington Post.
What we're watching: Sellers can continue offering to cover the buyer's agent commission.
- As some brokers look for workarounds to the rules, new websites are making it easy to learn if that's the case, HousingWire reports.