The Calm Before the Storm: Preparing for the NAR Settlement’s Impact with Dual-Licensing

August 16, 2024 • Article

The Calm Before the Storm: Preparing for the NAR Settlement's Impact with Dual-Licensing

Miami, Florida • As we stand on the brink of a significant shift in the real estate industry, there’s an undeniable sense of anticipation. Tomorrow, on August 17^th, the announcement of the NAR settlement is expected to send shockwaves through the market, fundamentally altering the way real estate transactions are conducted. For homebuyers and real estate agents alike, the landscape is about to change in ways that will challenge traditional norms and demand new strategies.

What Homebuyers Should Expect

If you’re a homebuyer, especially a first-time buyer, the days of relying on sellers to cover your agent’s commission may soon be over. The anticipated NAR settlement is expected to decouple the long-standing practice of sellers contributing to the buyer’s agent commission. This change will likely result in a reduction of buyer-side realtor commissions by 1.0% to 1.5%, down from the current standard of 3%.

What This Means for You:

Increased Upfront Costs: You may now find yourself responsible for paying your agent’s commission in addition to the down payment, potentially increasing your upfront costs and making it harder to afford your dream home.
Affordability Concerns: This added expense could significantly impact your budget, reducing your buying power and making it more challenging to enter the market.

For more information on frequently asked questions about these upcoming changes, we recommend reading this Wall Street Journal article.

The Future for Real Estate Agents

For real estate agents, tomorrow’s settlement marks the beginning of a new era. The expected reduction in buyer-side commissions will create a ripple effect throughout the industry, with many brokerages bracing for a challenging financial future. According to research from Compass Point Research & Trading, LLC and insights from Ryan Tomasello, Managing Director at KBW, over 90% of brokerage firms with more than 100 agents are expected to incur losses in 2025, while more than 65% of smaller firms may also struggle to remain profitable.

Preparing for Tomorrow’s Challenges:

Income Diversification: As commissions shrink, having a backup plan will be more critical than ever. Agents who diversify their income streams will be better equipped to weather the storm.
Staying Ahead: Offering more than just traditional real estate services will be key to standing out in an increasingly competitive market.

The Opportunity: Becoming Dual-Licensed

As we look ahead to the post-settlement world, it’s clear that the agents who will thrive are those who can adapt. One of the most effective ways to do this is by becoming dual-licensed—holding licenses for both real estate and mortgage services. This approach offers a unique set of advantages that will be more relevant than ever:

Flexibility in Negotiations: By also earning a mortgage commission, dual-licensed agents can offer more competitive buyer-side commissions while maintaining their overall income.
Enhanced Client Value: Providing both real estate and mortgage services makes you a one-stop shop for clients, offering them greater convenience and value.
Long-Term Relationships: Dual-licensed agents have more opportunities to stay connected with clients, whether through refinancing or future real estate transactions.

Conclusion for Homebuyers and Agents

As the market shifts, homebuyers should prioritize working with dual-licensed realtors who can manage both the real estate and mortgage aspects of the transaction, providing superior service and potentially increasing overall affordability. For real estate agents, the NAR settlement represents a significant industry change, making it essential to become dual-licensed to stay competitive and protect your income. Contact Realfinity today to discover how our platform can support you in navigating this new landscape with confidence.

About Realfinity

Making it easy to offer mortgage services – for any brand.

Realfinity is transforming how mortgages are being offered, sold, and distributed by reducing compliance and technology barriers in the industry. As an enabling infrastructure provider, we support real estate professionals in offering mortgage services through our origination and processing platform – promoting growth, affordability, and simplicity for all.

For more information about Realfinity and its services, please visit rfm.io