If
commission
rates
drop
significantly
as
a
result
of
the


National
Association
of
Realtors

antitrust
lawsuit

settlement,
it’s
potentially
an
existential
threat
to
many
brokerages.
But
which
ones
and
how
many?

Data
from

AccountTECH
might
bring
us
closer
to
an
answer.
Based
on
a
sample
of
100
brokerages
of
varying
sizes
and
expenditures,
the
data
shows
a
general
trend
of
larger
brokerages
being
more
sensitive
to
a
drop
in
commission
rates
than
smaller
ones.

That’s
because
many
large
brokerages
still
pay
for
office
space
and
middle
management.

“You
know
that
expression
they
tell
you
at
Weight
Watchers
—
don’t
eat
bread
because
you’re
probably
going
to
put
jam
on
it?”
asked
AccountTECH
CEO
Mark
Blagden.
“Don’t
open
an
office
because
you’re
going
to
have
to
staff
it.”

Blagden’s
study
divides
the
sample
by
agent
count
at
brokerages
and
then
applies
different
commission
rates
to
their
2023
financials.
The
commission
splits
at
the
brokerages
and
their
expenditures
are
held
constant.

While
smaller
brokerages
are
generally
starting
from
better
financial
footing,
they’re
also
less
sensitive
to
lower
commissions.
For
brokerages
with
fewer
than
30
agents,
65%
are
profitable
at
a
3%
commission
rate
while
35%
are
profitable
at
a
2%
commission. 

A
30
percentage
point
drop
is
certainly
dramatic,
but
for
brokerages
with
an
agent
count
between
75
and
100
agents,
90%
are
profitable
at
a
3%
commission
and
only
20%
are
profitable
at
a
2%
commission,
70
percentage
point
drop.

Larger
brokerages
are
already
struggling,
though
it’s
fair
to
say
they
have
more
resources
at
their
disposal
to.
For
brokerages
with
an
agent
count
between
200
and
300,
only
42%
are
profitable
at
a
3%
commission
and
it
drops
to
17%
at
2.5%,
according
to
AccountTech.
With
an
agent
count
between
100
and
200,
64%
are
profitable
at
a
3%
commission,
but
that
number
plunges
to
9%
at
a
2.25%
commission.

Blagden
says
that
the
50-to-75-agent
brokerages
are
in
the
best
position
to
sustain
drops.
He
sees
the
average
commission
right
now
being
about
2.5%,
and
70%
of
brokerages
in
that
agent
count
range
are
profitable,
which
is
significantly
higher
than
other
ranges.

While
those
brokerages
do
see
a
drop
to
just
20%
at
a
2%
commission
rate,
that’s
more
than
brokerages
above
50
agents,
and
it
only
drops
below
50%
at
that
rate.

“Having
75
to
100
agents
seems
to
be
the
best
place
to
be
because
you
don’t
necessarily
have
to
have
management,
you
don’t
have
to
have
a
lot
of
offices,
you
don’t
have
to
have
a
lot
of
managers,
and
you
can
just
take
most
of
that
to
the
bottom
line
in
terms
of
profit,”
he
said.

He
added
that
the
most
impactful
ways
for
brokerages
operating
in
the
red
to
get
into
the
black
is
to
dump
office
space
or
take
a
higher
split
of
commissions.

While
it’s
largely
expected
that
commissions
will
drop
as
a
result
of
the
new
settlement
rules,
different
brokerages
have
reported
different
numbers.
On
its
second-quarter
earnings
call,


Compass
disclosed
that
it
has
not
seen
any
movement
in
commissions,
while

Redfin
reported
that

they’ve
dropped.

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