What the NAR Settlement Means for the Residential Ecosystem
Predicting the impact on agents, commissions, and more
Today’s Thesis Driven is a guest letter from Kurt Ramirez, General Partner at Nine Four Ventures, an early stage proptech fund.
In October of 2023, a series of court decisions lit the fuse for a powder keg of change impacting residential real estate transactions in the US. The rulings go into effect on August 17, 2024, with a potential blast radius that touches consumers, agents, the National Association of Realtors, startups, lenders, and most parties involved in a transaction. The rulings have generated an immense amount of conversation, concern, and uncertainty across the industry, particularly with practitioners. As a VC, however, I see the rulings as catalysts for change that I expect will build on momentum from tech companies and startups already chipping away at industry transformation.
Starting this month, the rulings will dramatically reduce the overall size of the real estate commission pool. This drop will be most acutely felt by agents and brokers, driving some to leave the industry, while tech and startups take market share. This increased competition for commissions, products, and services related to a transaction will largely benefit consumers, who will benefit from lower transaction costs, greater operational efficiencies, and better overall experiences.
Today’s Thesis Driven tackles the potential impacts of the NAR settlement on the residential ecosystem, including:
Global and historical context on residential commissions;
A summary of the NAR settlement;
The role of technology, startups, and changing consumer preferences;
The settlement’s likely impact on the residential market and–in paticular–agents and commissions.
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