Why Compass's CEO isn't too worried about the NAR settlement

April 7, 2024 at 7:00 AM

The National Association of Realtors and several large real estate brokers agreed to pay a combined sum totaling nearly $700 million to settle allegations the groups were conspiring to keep commissions higher. There are now lots of questions about how the settlement will shake up how people buy and sell their homes.

Compass (COMP) was one of the firms involved in the settlement, agreeing to pay $57.5 million. The firm's founder and CEO Robert Reffkin brushes off concerns that the settlement will completely change the industry. "I think the headlines have been much more dramatic than the details of the actual requirements," Reffkin tells Yahoo Finance.

Reffkin says there are two changes the settlement requires. The first is that the MLS website will no longer be able to show offers for commissions paid to the buyer's agent. The other is that buyers will have to sign an agreement with their agent.

As for whether or not the changes will reduce the number of realtors, Reffkin thinks, in the short-term, it may reduce the number of new agents, but that he doesn't think "there will be any professional agents who leave the business because of this."

Be sure to check out the full interview with Compass Founder and CEO Robert Reffkin. For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

Editor's note: This article was written by Stephanie Mikulich.

Video Transcript

- I have to ask you about the settlement. You know, that is going to change-- we think-- how buyers and sellers are paying their buyers and sellers brokers. Because that's something that could affect Compass. I think everybody's trying to figure out how.

And so as someone who runs a company that this is going to affect, but it's an uncertain outcome. How do you plan for this? What do you think is going to happen?

ROBERT REFFKIN: Yeah, look, I think the headlines have been much more dramatic than the details of the actual requirements. There are headlines that say NAR eliminates the 6% commission. NAR is even govern commissions. And so there are two changes, only two. I think they're fair.

One is that the MLS website-- just a website-- will no longer be able to hold the commission that is paid to the buyer agent.

And the second is that buyers will have to sign a buyer representation agreement with their buyer agent. I think it's not as dramatic as the headlines have described. I don't think things will change as much.

- Do you think, Rob, this could impact the pool of realtors out there? Because I've heard some people make that argument. Maybe you'll see fewer realtors because of this.

ROBERT REFFKIN: I think if you are thinking about becoming an agent and you read headlines. And you're thinking about becoming an agent in the next three to six months, you may decide not to. So maybe you get less people coming in.

I think if you're an agent and you've been doing this for less than a year and you see the headlines, this scary, you may leave. But if you are a professional agent, I don't think there will be any professional agents who leave the business because of this.

- Well, and is there also an opportunity if there is going to be more negotiation between a buyer's agent and buyers. Is there also an opportunity if you are an amazing agent to outperform even more than in the past? I'm still trying to wrap my head around all this in full disclosure.

ROBERT REFFKIN: Yeah. Look, it's a good question. Commissions have always been negotiable. And so from that perspective, they'll be able to negotiate in the same way they have in the past.

But I think to your point, if you're an agent and you think that your services are worth more than others, yeah, I think this gives you an opportunity to say, I think I'm worth more and my services costs 3 plus percent.

And I do see that in the market. Agents independently come up with their commissions. There is no standard commission out there across the MLS. You can look in the MLS, there's all kinds of permutations.

And so I think you are right that you may see some truly great agents, just like truly great lawyers, truly great doctors, command a higher commission than others.

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