Tomorrow, the real estate industry is set for one of its biggest shakeups in over a century. While it might seem like just another date on the calendar, August 17 is poised to be a watershed moment for homebuyers, sellers, and the agents who guide them.

As new rules, born from a $418 million settlement between the National Association of Realtors (NAR) and a group of disgruntled plaintiffs, come into effect, the reverberations could fundamentally alter how real estate deals get done in America.

For decades, real estate agents have thrived under a somewhat opaque system where the home seller typically foots the bill for both their own agent and the buyer’s agent. The standard commission, hovering between 5% and 6%, was often baked into the home’s listing price, leading to what many argue were artificially inflated prices.

But come August 17, that cozy arrangement will be upended. Agents will now be required to negotiate their fees directly with buyers, and those fees will no longer be casually advertised in the multiple listing services (MLS) that agents rely on.

“This is a grand social experiment in an industry at scale,” says Leo Pareja, CEO of eXp Realty. His sentiment captures the trepidation of many in the industry, who have been scrambling to adapt to the new landscape. “I’m bracing my agents for what I call the ‘messy middle.’ I fully expect a lot of confusion.”

Confusion might be an understatement. Under the new rules, agents representing buyers must now hash out their compensation upfront, requiring a signed agreement before a prospective buyer even steps inside a property. This is a marked departure from the old norm, where buyers often didn’t worry about their agent’s fee, assuming the seller would cover it.

Traditionally, buyers have enjoyed what could be seen as a “free lunch”—getting professional representation without directly paying for it. But as the new rules take hold, that lunch is about to get a lot pricier, potentially pushing some would-be buyers to reconsider whether they need an agent.

Mary Schumann, a seasoned Realtor from Minnesota, isn’t panicking just yet. “We already do buyers agreements here, and this doesn’t seem to be incredibly different,” she remarks, pointing out that several states have long required such agreements. However, she also notes that the industry-wide implementation of these changes could weed out less experienced agents. “I think more agents will fall off because some people don’t like change.”

Beyond the immediate impacts on traditional agents, these changes could usher in a new era for alternative real estate models. Flat-fee and discount brokerages are already eyeing this as an opportunity to grab market share from full-service agents. According to a March analysis by TD Cowen Insights, real estate commissions could fall between 25% and 50% due to the new rules.

Shelly Cofini, Chief Strategy Officer at Redy, a marketplace where agents bid on home listings, sees nothing but upside. “This is part of this notion of shifting how real estate is always done,” she explains. “Because agents are in control of the proposal process, they decide on the cash incentive they’ll offer and they decide on the commission structure they’re willing to offer.”

Flyhomes, another innovative player, has already jumped ahead of the curve by launching an AI chatbot designed to answer questions that buyers might traditionally ask their Realtor. “Consumers don’t know this is coming,” says Adam Hopson, Flyhomes’ Chief Strategy Officer. “When they decide they want to buy a home and they find they have to sign a contract, they may say, ‘whoa, what is this?’ We think this will drive them to find information from other sources. We will be one of those sources.”

As the clock ticks down to August 17, Realtors and the broader housing market are bracing for impact. While some see this as a chance to innovate, others worry about the growing pains that inevitably accompany such a drastic overhaul.

NAR’s president, Kevin Sears, is trying to strike an optimistic tone. “These changes help to further empower consumers with clarity and choice when buying and selling a home,” he says. “I am confident in our members’ abilities to prepare for and embrace this evolution of our industry and help to guide consumers in the new landscape.”

Whether this optimism will hold as the dust settles remains to be seen. What’s clear is that August 17 will mark the end of an era and the beginning of what could be a more transparent but potentially more complicated real estate market.

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