The Commission Fight Isn’t the Biggest Problem Facing Real Estate Agents Anymore

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The Eighth Circuit upheld the major real estate commission settlement this week, and I expect the legal arguments surrounding commissions will continue for some time. Objectors can still seek further review, an attorney representing some of them has said his clients may ask the U.S. Supreme Court to hear the case, and other commission-related litigation remains.

But if I were running a real estate business today, the courtroom would not be the thing keeping me up at night.

I would be thinking about the consumer sitting across from me asking a very basic question:

What exactly am I paying you for?

There was a time when the industry could go a surprisingly long way without having that conversation in such a direct way. Compensation was built into a system consumers often did not fully understand, offers of compensation were communicated through MLSs, and many buyers entered the process without ever really stopping to examine the economics of representation.

Whatever anyone thinks about the lawsuits that brought us here, that world has changed.

Under the settlement practice changes that took effect in 2024, offers of buyer-broker compensation cannot be communicated through MLSs subject to those rules. Buyers working with agents in covered circumstances generally enter into written agreements before touring homes, and compensation has to be addressed more clearly. Consumers also must be told that broker compensation is negotiable.

Those changes have now been part of the industry’s day-to-day operating environment for two years.

The appeals court upheld the settlement Wednesday.

At some point, we have to stop acting as though the industry’s primary challenge is finding a legal path back to the way things used to work.

Consumers are asking more questions. They should.

If an agent is asking someone to sign an agreement that addresses compensation, that buyer has every right to understand what comes with it.

I don’t see that as an attack on real estate agents. I think it is an opportunity for good ones.

There are excellent agents working in this country who do far more than open doors and write offers. They understand their local inventory down to the neighborhood. They know which properties are likely to create appraisal problems. They recognize inspection issues a first-time buyer would never notice. They understand contract deadlines, negotiations, seller behavior, competing offers, concessions and when something in a transaction does not smell right.

When a deal starts coming apart three days before closing, those skills become very real, very quickly.

The problem is that the industry has not always been very good at explaining them.

For years, a lot of marketing has revolved around production numbers, awards, signs, social media and phrases about being a neighborhood expert. That may help generate a lead, but it does not necessarily answer the consumer’s question about value.

If somebody asks why your representation is worth the compensation you’re asking for, “because this is what agents charge” is not much of an answer anymore.

I think that’s healthy.

Technology has already removed much of the informational advantage that once belonged almost exclusively to the real estate industry. Consumers can see listings instantly. They can look at sales histories, property information, estimated values and neighborhood information before an agent knows they are shopping.

That has led some people to argue that agents are becoming unnecessary.

I don’t agree with that.

What has become less valuable is simple access to information. There is a big difference.

A consumer having 100 pieces of information on a phone does not mean that consumer understands which five actually matter to the decision they are about to make. Information and judgment are not the same thing.

That is where the real estate professional has to earn the business.

The agent who understands pricing better than the consumer, negotiates better than the consumer, sees risk the consumer doesn’t see and can keep a complicated transaction moving has something valuable to sell.

The agent whose primary value was access to listings has a much harder problem.

The industry should be spending far more time talking about that distinction and far less time pretending a new form or compensation disclosure is the central problem.

Brokerages have a role here too. Compliance training is obviously necessary, but teaching agents how to complete a buyer agreement is not the same thing as teaching them how to have a credible buyer conversation.

What does your agent actually do for a buyer during the 30 or 60 days they are working together? Can the agent explain it without reading a script? Can they talk intelligently about financing? Can they interpret local market data? Do they know how to negotiate more than price? Can they explain the risks in the contract they are asking somebody to sign?

If the answer is yes, increased transparency should not be terrifying.

It may actually help the best professionals.

I also think we need to be careful not to treat every consumer question about compensation as hostility toward the industry. Someone can respect real estate professionals and still want to know what they are buying. I ask that question about almost every professional service I pay for. Consumers are entitled to do the same thing here.

There may be additional legal developments after this week’s ruling, and WRE News will report them when they happen.

But the bigger issue facing individual real estate agents isn’t going to be decided by the Eighth Circuit.

It is being decided every day in listing appointments, buyer consultations and conversations where a consumer is trying to determine whether the person sitting across from them knows enough, does enough and brings enough value to justify being hired.

The industry can spend years fighting that conversation.

Or it can get very good at answering it.