In a time of legal upheaval and industry transformation, real estate professionals are faced with unprecedented challenges and opportunities. Our October Presence Panel brought together three industry leaders to share their insights on navigating these changes: Jack Miller, president and CEO of T3 Sixty; James Dwiggins, CEO of NextHome and Raise; and Spencer Rascoff, former CEO of Zillow, current proptech investor, and founder of Pacaso.
The panel, moderated by Chris Linsell of Luxury Presence, provided real estate professionals with a comprehensive look at the industry’s future, focusing on the implications of ongoing legal settlements and the potential role of technology in shaping the real estate landscape.
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Winning the consolidation race
The discussion focused on a critical question: How will real estate brokerages’ traditional business models evolve in the wake of the National Association of Realtors (NAR) lawsuit settlements and an increase in artificial intelligence (AI) technology?
Rascoff highlighted the trend of market consolidation among top-performing teams and agents. “We’ve seen this consolidation happening for over a decade, and it’s going to accelerate. Part of this is due to technology — these top teams are more efficient, they’re better at lead generation, and they run their businesses more like well-oiled machines,” Rascoff noted. He predicted that smaller, less efficient agents would continue to lose market share to these larger, better-equipped teams.
Miller, whose firm specializes in real estate management consulting and research, noted that many of these trends were present for a long time prior to the settlement started accelerating change. “We’ve been tracking consolidation in the industry for the last two decades,” Miller explained. “The capped commission model is the one that’s grown the most, over 300% in the last five to six years.”
But Miller added that it’s still too early to predict the full impact of the legal settlements on the industry’s business models. He also emphasized the need for real estate professionals to keep an eye on the long-term effects of these changes, particularly as they relate to commission structures.
“We’ve surveyed hundreds of brokers and agents, and it’s a mixed bag,” Miller said. “About a third say they’re staying level, another third are seeing challenges in getting the same compensation as before, and a final third report they’re charging more because they’ve improved how they articulate their value.”
The end of cooperative compensation?
Dwiggins offered a unique perspective as the CEO of NextHome, a national franchise navigating these industry changes firsthand. He divided the brokerage community into factions that are clinging to old compensation models and those embracing new approaches.
“There’s a camp of brokerages trying to do things the old way — compensation sharing and cooperative compensation — and then there’s a group that’s moving forward, like us, eXp, and others, who are leaving cooperative compensation behind,” he explained.
Dwiggins predicted that brokerages continuing to rely on cooperative compensation will struggle to compete. “If you’re still doing cooperative compensation and you’re up against an agent who isn’t, your fee is going to be higher, and you’re going to lose market share,” Dwiggins warned. “Good agents are charging more now because they’ve learned to articulate their value better.”
The legal risks associated with cooperative compensation were also a key concern. Dwiggins pointed out that continuing with outdated compensation practices could lead to more lawsuits. “It’s a massive legal risk, and it’s harming sellers,” he stated, predicting that the industry will eventually shift away from cooperative compensation models entirely.
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Commission compression predictions
The big question on many agents’ minds is whether or not we’ll see average commissions decrease as a result of the NAR lawsuit’s attack against buyer agent compensation. “A lot of buyers are going to end up being unrepresented,” Rascoff predicted. “I’m bearish on where commissions are headed. I think buyer agent commissions will compress significantly, especially on more modest homes.”
While Dwiggins and Miller both predicted average commissions would remain relatively stable, Rascoff shared a more cautious perspective on the future of real estate agent pay, predicting that the current average may drop a full percentage point.
“I think that 5.2% commission is going to probably end up in the low fours, around one to one and a half percent on the buy side and the rest on the sell side,” Rascoff said. However, he did add that the net result may not actually equal less money in agents’ pockets due to the increase in listing prices. “So yes, the commission percentage has come down quite a bit from 6% to 5.2%. But the dollars have gone up a lot because there’s been so much appreciation in home values.”
Legal challenges and regulatory concerns
As the panel shifted its focus to the regulatory environment, Dwiggins provided a candid assessment of the challenges brokers and agents face in complying with the new legal landscape. “We have huge problems, and not everyone is seeing them yet,” he said.
Dwiggins emphasized the widespread confusion over buyer representation agreements and compensation practices, leading to buyers signing multiple conflicting exclusive representation agreements, among other potential legal issues. “There’s no one enforcing these agreements, and that’s a massive problem,” he added.
One of Dwiggins’ most pressing concerns was the lack of clear guidance from NAR on how agents should navigate these changes. He called for state-level regulatory enforcement to ensure consistency and reduce the legal risks agents face, noting that this would mean all licensees need to comply with the same rules.
“Non-Realtors don’t have to follow the settlement terms. That creates a situation where licensees are operating under different standards, and there’s no uniformity,” Dwiggins said. “If you’re doing things that are non-compliant, you should lose your license.”
Miller agreed, stressing the importance of conducting audits to ensure compliance. “We’ve been auditing broker practices for 18 months, and what we’ve found is alarming,” Miller said. “If you haven’t done a self-audit, you’re probably a walking set of violations right now.” He urged brokers to review their buyer agreements, listing agreements, and transaction processes to avoid potential legal pitfalls.
The AI revolution in real estate
As the conversation turned to technology, all three panelists emphasized the transformational potential of AI in real estate. Miller compared the current moment to the personal computing revolution, predicting that AI would have an even greater impact on the industry. “AI is going to rebuild every piece of technology we have, from compliance tools to transaction management,” he said.
Miller highlighted the efficiency gains AI could bring, allowing agents to focus more on client relationships and less on administrative tasks: “Imagine having an AI assistant that never gets tired, that can handle compliance, manage contracts, and streamline the transaction process. That’s where we’re headed.”
Dwiggins was equally optimistic about AI’s role in empowering agents. “I don’t think AI is going to replace agents, but I do think it’s going to create AI-empowered agents,” he said. He pointed to emerging technologies like Matterport’s augmented reality tools as examples of how AI will enhance the homebuying experience, making it more interactive and efficient.
Rascoff added that AI tools will allow agents to strengthen their relationships with clients, maintaining connections throughout the entire homeownership cycle. “Agents will have AI assistants that help them maintain relationships, even after the transaction is done,” he said.
Rascoff likened the impact of AI to the introduction of answering machines or car phones, which revolutionized agent productivity in the past. “We’re going to see a similar productivity unlock with AI.”
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The road ahead: Embracing change
Looking to the future, all three panelists agreed that the current moment of disruption presents significant opportunities for those willing to adapt. Rascoff compared the present situation to previous periods of industry upheaval, such as the financial crisis of 2008.
“Periods of tumult are a terrific time for gaining market share,” Rascoff observed. “In 2008, the top teams and portals gained ground because they adapted faster than their competitors. This is another one of those moments.”
Miller echoed this sentiment, urging real estate professionals not to miss the moment. “This is the best time ever to build something new,” Miller said. “Your competitors are constrained by the old way of doing things, and you have this shiny new toolbox of AI and technology to create something innovative.”
Dwiggins concluded by stressing the importance of introspection and continuous improvement. “Look at your entire business from top to bottom. What are you doing right? What are you doing wrong? Tear it apart, fix what’s broken, and double down on what’s working,” he advised. “This is the greatest opportunity to take market share that we’ve ever seen.”
The future of real estate + Luxury Presence
The real estate industry is undoubtedly in a period of profound transformation, but as this panel made clear, those who are prepared to adapt and embrace change will find themselves in a position to thrive. By leveraging new technologies like AI, refining business practices, and ensuring compliance with evolving regulations, real estate professionals can turn the challenges of today into the opportunities of tomorrow.
If you’re ready to take your real estate business to the next level, Luxury Presence offers the tools and support you need to succeed in this ever-evolving landscape. From beautifully designed websites to cutting-edge digital marketing solutions, our platform is built to help agents stand out, capture leads, and grow their businesses. Get in touch with us today to learn more about how Luxury Presence can help you navigate the future of real estate with confidence.
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