POV: you’re a real estate agent rn

The process for buying and selling a home is about to be upended, much like a heel at the culmination of a WWE match🪑.

The National Association of Realtors (NAR), an organization representing 1.5+ million real estate agents that has set the guidelines for home sales for decades, agreed to settle a series of lawsuits by paying $418 million in damages and eliminating its rules on commissions.

• Currently, agents working with a buyer and seller typically split a commission of 5%–6% of the home purchase price, paid out by the seller.
• As part of the settlement, a broker advertising a home for sale on the Multiple Listing Service (MLS) is no longer required to offer any upfront compensation to a buyer’s agent. Buyers' brokers will also be required to enter into written agreements with their buyers.

The impact: Americans pay ~$100 billion in real estate commissions annually. NAR’s settlement could reduce that figure by 25%–50%, according to TD Cowen Insights.

And less commissions paid out should result in less real estate agents, who are almost exclusively paid via commission. Redfin CEO Glenn Kelman told Bloomberg in October that, should the existing real estate-commission structure be dismantled, “[h]alf the real estate agents in this country would be unemployed.”

👀 Looking ahead… A federal judge is expected to approve the settlement in the coming weeks, while sellers and buyers should see broker fees reduced by mid-July.