60 days after NAR Settlement: Commission rates mostly holding steady

BOSTON, Nov. 12, 2024 /PRNewswire/ -- AccountTECH is pleased to announce significant new findings regarding the effects of the NAR Settlement, finalized in August 2024, on commission rates that real estate agents charge to buyers and sellers. The recently concluded study, led by the data analysis team at AccountTECH, explored whether the anticipated declines in commission rates have materialized. Many professionals in the industry as well as attorneys involved in the lawsuit believed that the settlement of the lawsuit would drive down commission rates to home buyers and sellers.

The research analyzed commission trends before and after the settlement to determine if the changes have led to a significant impact on the rates charged by real estate agents to both buyers and sellers. The study discovered that for the first 60 days since the settlement went into effect, there has been only minor impact - with no far-reaching implications for real estate professionals, buyers, and sellers alike. In the short term, the findings deliver some relief to Real Estate brokerages and agents - who have both had a lot of concern that shrinking commission rates would decreasing revenue and profitability.

The commission rates charged to sellers were analyzed at 30 and 60 days following the settlement and compared to those same dates in 2023.

• At 30 days post-settlement, the average commission rate in 2024 was 2.77%, compared to 2.75% in 2023. This represents an increase of 0.02 percentage points.
  
  
• At 60 days, the average commission rate in 2024 was 2.738%, compared to 2.724% in 2023. This represents an increase of 0.014 percentage points. These minor changes suggest that, so far, the settlement has not led to any meaningful change in commission rates for sellers.

The commission rates charged to buyers were also analyzed at 30 and 60 days following the settlement and compared to those same dates in 2023.

• At 30 days post-settlement, the average commission rate in 2024 was 2.545%, compared to 2.595% in 2023. This represents a decrease of 0.05 percentage points.
  
  
• At 60 days, the average commission rate in 2024 was 2.486%, compared to 2.541% in 2023. This represents a decrease of 0.055 percentage points. These slight decreases indicate that the settlement, so far, has had only a modest impact on reducing commission rates for buyers.

The scope of the study included a year-over-year comparison analyzing data from 625 real estate offices. Only transactions where the date the transaction went under agreement was within 60 days of the NAR Settlement were included. The study focused solely on sales transactions, excluding rental commissions or any other type of commission income. Outliers, defined as cases where the commission charged was over 5% or below 0.5%, were also excluded. For the 625 real estate offices in the study, the buyer side pending transactions in the first 60 days after the settlement amounted to 17,358 transactions.

Potential Warning signs in Market activity?

Additionally, the study found that the number of new buyer side transactions decreased in the first 60 days after the NAR settlement when compared to 2023. In 2023 during the same period, the number of new buyer side transactions was 19,274. This represents a decrease of 1,916 transactions, a decrease of about 10% year over year. This may be a point of concern as it suggests a potential reduction in buyer side market activity following the settlement. We should continue to monitor year-over-year buyer side transaction counts but be careful not to assume every change in market activity is the result of the NAR settlement.  Interest rates, inventory or general economic conditions are just as likely to be a reason for the decline.

Distribution

During the research, the AccountTECH data team also created a distribution analysis for the first 60 days post NAR Settlement time frame. See the numbers in the table below:

Commission rate charged to Sellers on new transactions started in the first 60 days after the NAR Settlement went into effect:

Commission rate charged to Buyers on new transactions started in the first 60 days after the NAR Settlement went into effect:

Summary

For the 1^st 60 days following the NAR settlement, it does not appear that there are any major variances in the commission rates charged to sellers and buyers. 

There was a meaningful decrease in the number of buyer side transactions in the year-over-year numbers, but this may be due to market conditions and not necessarily a reaction to the NAR settlement.  This indicator deserves continued attention.

The small rate of decline in buyer side commissions is likely within the range of normal market variation.  Industry watchers should keep tracking this number closely since a continuation of this 2-month trend of 0.05% decrease per month would bring commission rates on the Buyer side to 2% by June 2025.

Also to watch, the year-over-year count on Buyer side transactions.

About AccountTECH

For over 25 years, AccountTECH's team of real estate accountants and software engineers have been building tools that increase the efficiency of brokerages. Their latest flagship product is darwin.Cloud - a 4th generation evolution of their popular back-office accounting software. The team is constantly adding automation and integrations towards the goal of single-point-of-entry. Their motto is: data entry can happen anywhere, but everything winds up in darwin. In their work with clients, partners and each other, they bring integrity to every interaction and every line of code.

AccountTECH   www.accounttech.com   (978) 947-3600
For sales inquiries, please contact: 
Theresa Hurt   [email protected]  
(978) 710-0071

Media contact:
Rizza Batol
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SOURCE AccountTECH