Real Estate Agent Splits and Inventory Challenges: A Regional Breakdown

Introduction

The real estate industry has faced numerous challenges in recent times, and different regions of the country have experienced unique difficulties. In this article, we’ll dive into the latest Intel Index, a survey of 708 real estate professionals, to explore the key trends and factors driving business in the four main regions of the United States: the Northeast, South, West, and Midwest.

Regional Takeaways

1. Inventory Squeeze: A Different Beast in the Midwest and Northeast

New listings are a rare commodity in most parts of the country, but the decline in inventory has stabilized in most places. However, for agents in the Midwest and Northeast, new-listing business has suffered significantly over the past year. According to the survey, 23% of agents in the Midwest and 27% in the Northeast reported a substantial decline in their listing client pipelines over the past year, compared to 12% in the West and 15% in the South.

As a result, agents in the Midwest and Northeast are more likely to list "lack of inventory" as their top business concern, with 33% in the Midwest and 44% in the Northeast reporting this as their primary concern. In contrast, agents in the South and West were more likely to name "mortgage rates" as their top concern.

2. Top-Level Agent Splits: A Regional Dynamic

Ultra-high agent splits have become more common in recent years, particularly among brokerage startups and franchises. However, the survey suggests a more layered regional dynamic. Agents in the Northeast reported fewer split deals, with only 5% having splits of 90/10 or above with their brokerage. In contrast, 18% of agents in the Midwest, 31% in the West, and 34% in the South reported splits of 90/10 or above.

This regional disparity may be due to the population of agents who responded to the poll, but it’s not entirely clear. Agents in the Northeast were more likely to work with publicly traded, non-franchising brokerage brands, which might contribute to the lower split rates in this region.

3. Sellers in the West May Be Wising Up to NAR Changes

While many agents have fielded questions from at least a few clients about the commission lawsuits, clients don’t always have a specific tactic in mind. However, agents in the West have reported a higher level of client engagement with the details of the commission changes. 35% of agents in the West told Intel that a significant share of their seller clients had asked whether they’re required to cover the buyer’s commission in recent months, compared to 22% in the South, 22% in the Northeast, and 17% in the Midwest.

As a result, agents in the West were among the most likely to name "commission compression or negotiation" as their top business concern, with 26% reporting this as their primary concern. In this high-price region, it’s no surprise that mortgage rates remain a top concern for 34% of agents.

4. Itch to Jump Ship vs. the Wait-and-See Approach

This region-by-region examination of the Intel Index also revealed differing dynamics about recruiting. Agents in the Northeast were more likely to report plans to switch brokerages, with 12% nearly certain to do so within the next 12 months. In contrast, the share of agents who believe they will definitely move was 10% in the South, 9% in the West, and a mere 3% in the Midwest.

However, just because many Midwest agents aren’t yet sold on a move doesn’t mean they are closed off to one. 18% of Midwest agents reported being 50-50 or leaning slightly towards leaving their current brokerage, compared to the 14% of agents in all other regions who said the same.

Conclusion

The real estate industry is not immune to regional differences, and the latest Intel Index highlights some of the unique challenges and opportunities that exist across the country. From inventory concerns in the Midwest and Northeast to the emergence of commission compression as a top concern in the West, agents must be adaptable and responsive to the changing needs of their clients and the market.

FAQs

Q: What is the Intel Index?
A: The Intel Index is a survey of 708 real estate professionals, conducted by Inman, that examines the key trends and factors driving business in the real estate industry.

Q: What are some of the key takeaways from the Intel Index?
A: The survey highlights the regional differences in inventory concerns, agent splits, and commission changes that are affecting the real estate industry.

Q: Why are agents in the Midwest and Northeast more concerned about inventory?
A: Agents in these regions are facing a more severe decline in new listings, which is impacting their ability to do business.

Q: How does the commission lawsuit affect agents and their clients?
A: The commission lawsuit is forcing agents to re-evaluate their relationships with their clients and consider new ways to negotiate commissions.

Q: What is the significance of the split rates in the Northeast?
A: The lower split rates in the Northeast may indicate that agents in this region are more likely to work with publicly traded, non-franchising brokerage brands, which could affect their business dynamics.

Q: What is the implication of the West Coast agents’ concerns about commission compression?
A: The concerns about commission compression highlight the need for agents in this region to be proactive in negotiating commissions and adapting to the changing market.

Author: www.inman.com

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