Aug. 17 is a date marked on every brokerage head’s calendar.
It’s when the National Association of Realtors will institute changes to how broker commissions are offered on the Multiple Listing Service, per the settlement inked in March.
Publicly, industry leaders are downplaying the potential loss in revenue, while some have compared it to D-Day, including on the popular Reddit community r/realtors.
For South Florida, the national settlement could bring a one-two punch: changing the game as the season slows. It was approved in the heat of South Florida’s busy season, before buyers departed to more temperate summer climates, and anticipation of the commission recalibration did not seem to affect spring sales. Price cuts ultimately greased the wheels to get the market moving in April and May.
Despite a slower post-pandemic market, the last year hasn’t been a complete bust. The top 20 brokerages closed a combined $13.3 billion in on-market dollar volume, according to The Real Deal’s ranking of the top real estate brokerages in Miami-Dade County. The ranking, based on sales closed between May 2023 and May of this year, does not include off-market deals.
That period of time captures the post-pandemic cool-off and this spring’s stronger sales season. It marks a drop of about 15 percent compared to the more than $16 billion closed by the top 10 firms the previous year.
But price growth continued, and sales are still setting records.
Billionaire Jeff Bezos bought three waterfront Indian Creek Village estates for a combined $234 million. Of the three deals, only one closed on-market and is included in the ranking data. Douglas Elliman agents represented both sides of the transaction, but even that wasn’t enough to launch their brokerage to the top of the ranking. Elliman landed in fourth place among brokerages in Miami-Dade, with $1.8 billion in on-market deals.
Compass once again clinched the top spot, with nearly $3.2 billion in closed dollar volume. Coldwell Banker and One Sotheby’s International Realty followed in second and third place, with $2.1 billion and $2 billion, respectively. Berkshire Hathaway HomeServices EWM Realty ranked fifth with $1.3 billion.
Each of these firms has a foothold in the luxury market.
“The Covid sizzle is gone, and we’re back to a real market.”
Of the top five brokerages, Compass was the only one to close a higher dollar volume compared to the previous ranking. The brokerage closed about $200 million more in on-market deals. It did so with 1,000 fewer transactions, a feat that speaks to the strength of price growth.
Since expanding to Florida, Compass has attracted top talent in Miami-Dade. It named Chad Carroll and Liz Hogan as its No. 1 and No. 2 agents in the state based on 2023 sales. Both specialize in luxury real estate. Top Compass agents from other markets are also looking to get in on the Magic City action; in June, Los Angeles-based Ari Afshar and his Voyage team announced that they were launching in Miami.
Despite reporting a $132.9 million loss in the first quarter of the year, the brokerage has been pushing to grow across South Florida. It moved into a larger Palm Beach office and opened a Delray Beach shop this year.
“Seeing the transaction count pick up will be dependent on Fed decisions,” said Jeff Polashuk, Compass’ regional vice president for Florida. “Overall, I would say enough people are needing and wanting to relocate to Dade County.”
Market shifts
Following a hyperactive pandemic era, brokerage heads say the past year has marked a return to seasonality for Miami-Dade. Inventory is growing and prices are stabilizing, no longer posting double-digit percentage jumps.
“The buyer has caught up to the seller and said, ‘We’re not dealing with the Covid surge,’” said Coldwell Banker’s Florida President Duff Rubin. “They’re a little more patient and a little more informed.”
Keyes Company CEO Mike Pappas agreed. Days on market are growing along with inventory, he said.
“We’re in a normalizing market,” Pappas said. “We’re having to work more efficiently and diligently to make the same money. The Covid sizzle is gone, and we’re back to a real market.”
After last year’s dip, leaders are saying they expect the market to pick up steam. Buyers are adjusting to the reality of higher interest rates, and continued inward migration is maintaining demand.
“A lot of the market is going to respond with tremendous strength as we move through the end of the year,” said Elliman’s Florida CEO Jay Parker. “We’re in the early innings of a very good baseball game where Florida is winning.”
There are new rules in this season of baseball, and the players are now shifting their gazes to that mid-August deadline.
The new moneyball
With the impending commission changes, brokerage heads are ramping up efforts to prepare their agents.
“With everything going on in the market, it’s never been more important to train our agents and make sure they’re ahead of the curve,” Polashuk said.
One Sotheby’s is offering classes to educate agents on the new rules, including role-playing conversations with clients, brokerage President Daniel de la Vega said.
“We are taking it very seriously. We believe that our agents now are going to have to really understand what is asked of them,” de la Vega said. “Right now, there’s still so many unknowns, and we’re not being given every piece of information to be able to operate our businesses properly.”
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De la Vega and others believe the class action lawsuit was filed by home sellers who don’t understand the industry.
“It’s not the traditional client that says, ‘Oh, they’re getting paid too much.’ It was a group of people from Minneapolis that don’t really understand our business that well,” de la Vega said. “My main hope is that sellers are smart enough to know that they need to incentivize brokers, and that they offer the proper commissions.”
The settlement will bar listing agents from offering a buyer’s agent compensation on the MLS. But they can still negotiate that outside of the MLS.
Pappas downplayed the potential effects of the settlement.
“We don’t know what the market’s reaction is going to be,” Pappas said. “Our sense is it’s a Category 1, not a Category 5 hurricane. There may be some debris outside that needs to be cleaned up.”
The skills needed to succeed as a broker will remain the same in the post-Aug. 17 landscape, Pappas said.
Parker also expects that luxury real estate, by way of its clientele and price, will be shielded.
“If you are representing a buyer in the price points that we specialize in, there are so many elements of value. I don’t see how buyers do it without you,” he said. “To expect that you will get to the same place by working without a buyer’s broker is not an accurate expectation.”
Still, the unknown is just that: the unknown.
“We’re going toward a time where we frankly don’t know how this is going to affect our business,” de la Vega said. “And if anyone says otherwise, they’re lying to you.”
Access the complete ranking, including key contact information, by visiting therealdeal.com/data.