NAR Lawsuit and Questions

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Brian Adams
Residential Real Estate Agent · Dallas, TX · Member since 2013 · 232 posts · 173 votes
2y

Ironically, I think the DOJ nonsense is backfiring on their intentions. 

I do NOT think it will lead to commission compression (which may happen anyway with or without the settlement). 

It does NOT lead to more transparency. For example, I can no longer use commissions in the filter for NTREIS. The reason is to keep me from screening out low commission options. But what it does instead is makes it very difficult for me to share with my seller what the average cooperating commission is in Dallas. So instead of a data-driven and transparent approach to recommending commissions, more and more sellers will be entirely ignorant of what the prevailing and competing commissions are. That probably means sellers will more often rely on the X% that folks vaguely believe to be the industry standards. 

But I see little to suggest it will lead to anything meaningful for consumers. Home buyers already had the option of not using an agent. Sellers already had the option of not using an agent or offering a reduced commission. 

What am I missing, @Russell Brazil?

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  • David NilesBusiness Member
    Property Manager · DeLand FL · Member since 2012 · 860 posts · 243 votes
    2y

    Its a disaster IMO. They now have bumped it back until 8/17/24 and wouldn't be surprised to see it move again. 

    Zillow trying to do their own thing now have their own "Non exclusive touring agreement" being a workaround that again IMO doesn't do much for a buyers agent. 

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  • Sam McCormackBusiness Member
    OP
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes
    2y
    Quote from @David Niles:

    Its a disaster IMO. They now have bumped it back until 8/17/24 and wouldn't be surprised to see it move again. 

    Zillow trying to do their own thing now have their own "Non exclusive touring agreement" being a workaround that again IMO doesn't do much for a buyers agent. 


    Hey David, appreciate your feedback! eXp is trying something as well almost like their own MLS. Which isn't too unrealistic because they don't have any debt (eXp is cloud based and doesn't have buildings/offices)

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y

    I'm as familiar with it as they come. I'm an NAR board of director member.

    I gave an interview to Axios last winter where I detailed the likely outcomes.

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  • Louisa Davis
    Investor · Arlington, VA · Member since 2021 · 50 posts · 28 votes
    2y
    Quote from @Sam McCormack:

    Out of curiosity, how many people are familiar with the NAR Lawsuit and what will come of it? What do you take of it?

    This is all just curiosity, from a realtor in an area with a lot of investors. Let me know!


    In my experience as a realtor, I haven't had a problem yet even though this has been circulating in the news for several months already. The lawsuit settlement does more to *try* to increase transparency than it does to changes what a seller can or can't pay to the buyer's broker. I say try because it also reduces transparency: After the changes, I won't be able to tell my buyer client if a given seller is going to pay the commission on their behalf just by looking at the MLS anymore. It introduces more steps and time to get that information, because you have to go directly from each listing agent, which is problematic is we're trying to work fast to submit an offer within a span of a few hours.

    The bigger hurdle for most of the country is getting buyers to sign an exclusive representation agreement to work with a buyer's agent. That's not a problem in the DC area, as we've been using these for 20 years already and are very used to it. They basically state: "BUYER is responsible for making sure their broker gets paid X amount at closing. In most cases the seller pays on their behalf, but in the event they don't, the buyer is obligated to." 

    Since buyer representation was created in the '90s, the buyer side commissions have essentially been "rolled into" the sales price most of the time. Because of the change in public sentiment after the NAR settlement, this will probably be the case less often going forward. It will become another data point and expense buyers need to consider when planning their offer in each case.

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  • Lucia Rushton
    Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes
    2y
    Quote from @Sam McCormack:
    Quote from @David Niles:

    Its a disaster IMO. They now have bumped it back until 8/17/24 and wouldn't be surprised to see it move again. 

    Zillow trying to do their own thing now have their own "Non exclusive touring agreement" being a workaround that again IMO doesn't do much for a buyers agent. 


    Hey David, appreciate your feedback! eXp is trying something as well almost like their own MLS. Which isn't too unrealistic because they don't have any debt (eXp is cloud based and doesn't have buildings/offices)


     we love #exp

    1Reply
  • Brian Adams
    Residential Real Estate Agent · Dallas, TX · Member since 2013 · 232 posts · 173 votes
    2y

    Ironically, I think the DOJ nonsense is backfiring on their intentions. 

    I do NOT think it will lead to commission compression (which may happen anyway with or without the settlement). 

    It does NOT lead to more transparency. For example, I can no longer use commissions in the filter for NTREIS. The reason is to keep me from screening out low commission options. But what it does instead is makes it very difficult for me to share with my seller what the average cooperating commission is in Dallas. So instead of a data-driven and transparent approach to recommending commissions, more and more sellers will be entirely ignorant of what the prevailing and competing commissions are. That probably means sellers will more often rely on the X% that folks vaguely believe to be the industry standards. 

    But I see little to suggest it will lead to anything meaningful for consumers. Home buyers already had the option of not using an agent. Sellers already had the option of not using an agent or offering a reduced commission. 

    What am I missing, @Russell Brazil?

    4Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    Quote from @Brian Adams:

    Ironically, I think the DOJ nonsense is backfiring on their intentions. 

    I do NOT think it will lead to commission compression (which may happen anyway with or without the settlement). 

    It does NOT lead to more transparency. For example, I can no longer use commissions in the filter for NTREIS. The reason is to keep me from screening out low commission options. But what it does instead is makes it very difficult for me to share with my seller what the average cooperating commission is in Dallas. So instead of a data-driven and transparent approach to recommending commissions, more and more sellers will be entirely ignorant of what the prevailing and competing commissions are. That probably means sellers will more often rely on the X% that folks vaguely believe to be the industry standards. 

    But I see little to suggest it will lead to anything meaningful for consumers. Home buyers already had the option of not using an agent. Sellers already had the option of not using an agent or offering a reduced commission. 

    What am I missing, @Russell Brazil?


     The settlement absolutely leads to less transparency.  Less transparency will put upward pressure on commissions. That is generally bad for consumers. The settlement is also likely to lead to a lower number of agents, which will put upward pressure on commissions. The settlement will also force consumers who don't want to enter into buyer agreements to do just that in order to view properties.

    Less transparency. Less competition. Mandatory buyer/agent agreements.

    All of these things are bad for the consumer, and ultimately good for agents in the long run. 

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  • Brian Adams
    Residential Real Estate Agent · Dallas, TX · Member since 2013 · 232 posts · 173 votes
    2y

    @Russell Brazil

    Ah yes, I forgot about forcing people into buyer agency. How absurd. 

    Before I could show you a home and you didn't even have to commit to me as your Realtor! What is more consumer friendly than that! 

    DOJ...FTC....all of them are not serious people. 

    1Reply
  • Sam McCormackBusiness Member
    OP
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 834 votes
    2y
    Quote from @Brian Adams:

    @Russell Brazil

    Ah yes, I forgot about forcing people into buyer agency. How absurd. 

    Before I could show you a home and you didn't even have to commit to me as your Realtor! What is more consumer friendly than that! 

    DOJ...FTC....all of them are not serious people. 


     That has been my biggest mental hurdle. I know people who are trying to force the BRA IMMEDIATELY, which is too much. Not many people will do that. I am doing One Time Showing Agreements for a few so they understand how I work before signing with me

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Russell Brazil:

    I'm as familiar with it as they come. I'm an NAR board of director member.

    I gave an interview to Axios last winter where I detailed the likely outcomes.

    Russell I had my first contract come in on one of my new builds and the commission was simply one of the line items in the addendum.. it became a negotiating point and thats what I did as the owner/seller I did my counter and part of it was a commission adjustment to the amount the agent put in the offer.. We just completely ratified  ( we means  Ms Lori) ratified it a few hours ago so everyone is happy at this point.

    so instead of the commish being offer in the listing as a BAC and the buyer not knowing how much it was ( seller knows of course) Now it was fully disclosed up front on the buyers contract to purchase. 

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  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    2y

    Well @Sam McCormack, @Russell Brazil hit nail square on the head for impact in my team. 

    I had always operated in a manner fully compliant with current direction, have clear disclosure, conversations and written defined contracts with buyers detailing exactly what comissions would be and how they'd work out, etc etc. 

    But now.... 

    Now, no more non-exclusive on buyer agency. Which, before this, I ONLY did NON-exclusive buyer agency. Can't anymore as listing agents are going to be laser focused on "commission farming". 

    And, considering buyer up-front fee of some sort or kind. Probably a retainer basis. 

    On listing side, again was fully compliant but now just adding 1 more disclosure and agreement to it all drawing it all out in "crayola" as seller defines THERE choice, that it is there choice, and most importantly the extra clarity on dual agency because THAT is biggest impact I see coming, a whole lot MORE dual agency. 

    Also, shaking the dust off facilitator agreements and getting ready to use those as 1st "go-to" for buyers vs dual agency on a listing. Oh, and, all but tripling our fee structure on those. 

    I am also retooling our entire fee structure across the board. Already raised listing 1pt, very possible if not probable will go up another pt if not 1.5. 

    That's the simple reality of it. I as Real Estate Broker am going to take on more liability, more work, more efforts, more hassles, and that comes with a price tag.     

    Buyer agency was the easiest entry point for new agents, and easiest of all "leads" to get. I see that segment being eviscerated. So as a listing agent/broker I will need to be more optimized for this marketing and processing of inquiries. 

    People will still look to find and buy a home just as they always have, that won't change. What will change is instead of clicking to "get an agent now" and zillow/realtor selling that to a Buyers agent, they will be contacting us directly, the listing agents. 

    Buyers will have a LOT less advocacy, less representation, and I will have some more paperwork saying a person knowingly tried to negotiate with a professional R.E. shark and that they own the results free of any liability on the sharks. 

    I see sold prices going UP, not down as a result.... 

    I mean, what do they expect? If I am literally legal bound in fealty to my seller, well, what do you expect, I'm going for blood, ALL the blood, every last drop of it.... That's literally the job. 

    2Reply
  • Zander Kempf
    Developer · Honolulu, HI · Member since 2018 · 111 posts · 93 votes
    2y

    I honestly don't think this is a bad thing for the industry. Commission rates will become more efficient. It will certainly be a negative impact on real estate agents income levels. I also think there will need to be a solution found in the middle ground because there is a value that buyer agents provide to help buyers navigate the legal complexities, and I'm sure that a large portion of buyers are going to chose not to have an agent in order to save money.

    1Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    2y
    Quote from @Brian Adams:

    Ironically, I think the DOJ nonsense is backfiring on their intentions. 

    We'll figure it out.  We always have.  I don't think it ends the way the DOJ envisioned.  Maybe we have a regime change by the time this is ready to get implemented and it all changes again.

    Buyers and Sellers need us.  Talking with an agent in a different state the other day and they started talking about this or that issue, that I never really heard about.  We don't have the same issues in my area.  I thought to myself, even though I have been selling for about 25 years, if I were to buy in their jurisdiction I would find an excellent agent to assist me.

    2Reply
  • Jack Seiden
    Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes
    2y
    Quote from @Brian Adams:

    Ironically, I think the DOJ nonsense is backfiring on their intentions. 

    I do NOT think it will lead to commission compression (which may happen anyway with or without the settlement). 

    It does NOT lead to more transparency. For example, I can no longer use commissions in the filter for NTREIS. The reason is to keep me from screening out low commission options. But what it does instead is makes it very difficult for me to share with my seller what the average cooperating commission is in Dallas. So instead of a data-driven and transparent approach to recommending commissions, more and more sellers will be entirely ignorant of what the prevailing and competing commissions are. That probably means sellers will more often rely on the X% that folks vaguely believe to be the industry standards. 

    But I see little to suggest it will lead to anything meaningful for consumers. Home buyers already had the option of not using an agent. Sellers already had the option of not using an agent or offering a reduced commission. 

    What am I missing, @Russell Brazil?


     I think people have a fundamental misunderstanding of the goals of the lawsuit & even of doj, the goal was stop what imo was clear collision & basically make real estate more like any other business, there is no public list that shows the average amount a lawyer or doctor makes, people go see what services they are offering, see if they like a person and make a decision on value, some lawyers or plumbers make more than others, I have a a plumber for instance I’m probably “overpaying” because I like the guy and he shows up and does good work. Than this thing about the exclusive buyer agreement to me is great, and I don’t just say that from an agents prospective, people should be able to see in plain terms what services that can expect for what price and decide if that service is worth that to them, just like every other business, problem before is because seller was paying for buyers services it was opaque, now it will be written out in plain terms for everyone to see, the main result of this lawsuit was to put agents more in line with every other service business in America and increase the number of options for consumers, some agents might be paid more some will definitely get less, I think overall average commission’s come down, but again that’s how every other business operates people compete on price compete on service compete on relationships (I can get a better price with some subs because I’m a repeat customer who pays on time and is easy to deal with for instance) and than consumers can decide who that want to go with and once they decide to have that person working for them of course that person deserves to get paid for the time they put in.

    1Reply
  • Brian Adams
    Residential Real Estate Agent · Dallas, TX · Member since 2013 · 232 posts · 173 votes
    2y

    @Jack Seiden

    The buyers representation agreement has a clear portion that spells what commission the buyers agent gets and where he gets it from. That was true already. 

    This doesn't create more transparency. It creates less. 

    Sellers already shop listing agents all the time based on commission. 

    Buyers already shop buying agents all the time based on commission, e.g. working with agents on commission rebate programs. 

    I'm sure DOJ has great intentions. Everybody always has the best of intentions. That matters for naught. DOJ has solved a "problem" that didn't exist and amazingly has now hurt the very consumers they thought they were helping, all while stealing millions from brokerages and NAR members on bad litigation.

    That's what I see from my foxhole. I could very well be missing something, though. It's not on my top 10 things I'm thinking about at the moment.

    1Reply
  • Jack Seiden
    Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes
    2y
    Quote from @Brian Adams:

    @Jack Seiden

    The buyers representation agreement has a clear portion that spells what commission the buyers agent gets and where he gets it from. That was true already. 

    This doesn't create more transparency. It creates less. 

    Sellers already shop listing agents all the time based on commission. 

    Buyers already shop buying agents all the time based on commission, e.g. working with agents on commission rebate programs. 

    I'm sure DOJ has great intentions. Everybody always has the best of intentions. That matters for naught. DOJ has solved a "problem" that didn't exist and amazingly has now hurt the very consumers they thought they were helping, all while stealing millions from brokerages and NAR members on bad litigation.

    That's what I see from my foxhole. I could very well be missing something, though. It's not on my top 10 things I'm thinking about at the moment.


     But everyone basically signed those agreements late into the search right before an offer was made, and because the seller almost always paid, it wasn’t the traditional negotiation you’d have upfront with a seller, 2ndly while I do think this is a net win for the consumer, the idea that the doj “solved a problem that didn’t exist” 1st of all it wasn’t doj it was a jury in Missouri 2ndly the issue is regardless of impact on consumer’s they were almost certainly violating anti-trust law which is illegal lol, the publishing of commissions and the fact that something like 98% of all agents were paid between 2.5-3% was textbook, imagine if the price for a ritz and a motel 6 we’re basically the same, you’d think collusion right? 

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  • Brian Adams
    Residential Real Estate Agent · Dallas, TX · Member since 2013 · 232 posts · 173 votes
    2y

    @Jack Seiden

    There is a lot more variability in commissions then 2.5-3%. 

    If you are looking for a discount listing agent, I can point you toward many. All of whom existed long before this settlement. 

    Here is the range of cooperating commissions on DFW duplexes listings active as of last week. Is this collusion? Looks like there are plenty of options. 

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  • Jack Seiden
    Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes
    2y
    Quote from @Brian Adams:

    @Jack Seiden

    There is a lot more variability in commissions then 2.5-3%. 

    If you are looking for a discount listing agent, I can point you toward many. All of whom existed long before this settlement. 

    Here is the range of cooperating commissions on DFW duplexes listings active as of last week. Is this collusion? Looks like there are plenty of options. 


     1st of all this is for duplex’s only, 2ndly I can’t speak for Dallas but I know in the Kansas City area (where they were sued) 98 of commissions were between 2.5-3% and 94% of the time it was 3%.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Jack Seiden:
    Quote from @Brian Adams:

    @Jack Seiden

    There is a lot more variability in commissions then 2.5-3%. 

    If you are looking for a discount listing agent, I can point you toward many. All of whom existed long before this settlement. 

    Here is the range of cooperating commissions on DFW duplexes listings active as of last week. Is this collusion? Looks like there are plenty of options. 


     1st of all this is for duplex’s only, 2ndly I can’t speak for Dallas but I know in the Kansas City area (where they were sued) 98 of commissions were between 2.5-3% and 94% of the time it was 3%.

    west coast did away with 3% bAC long ago.. by did away I mean the market went that way because we know commish is not fixed.. 6% became 5% some years back and 4% on higher end..  I have not paid a buyers agent over 2% in years .. And in this market if you have a 5% listing the listing agent will take 3% and sometimes split it.  2.5 each.

    In new builds 3 years ago Lennar in their hot developments only paid 5k total and these were 450 to 550k houses.. I was paying 10k BAC and my houses were 600 to 800k..  as the market softened with Interest rates I had to move back to 2% and some of my competition went to 2.5 and 3.0 to drive traffic and buyers.. But our product was/is nicer so we are out selling the other developments regardless of commissions offered except Lennar as they are hundreds of thousands cheaper for same sq foot.. and I think my wife double ends almost half our sales.. WE grab them at Sunday open houses or off our website. But we dont discourage co op or try to steal clients from other agents..

    On the flip side some of my agents that sell my property I pay them 10%  but we expect a lot of foot work for those fees.. This is for our mid west or land deals we do outside of the west coast.. we do a LOT of land deals/ FLips  in the Rockies and so on.  And even in Texas :)  

    And myself when i used to sell property as a broker I usually worked on tough to sell properties or builders that needed to liquidate.. Kind of like you are seeing now with the  Turnkey sales companies selling new builds.. their fee's will exceed market conditions.

    I had one builder that his bank was all over them  he had 22 standing duplexs that were not moving..  they were selling for 200k in the day.. I charged him 30k EAch to sell them.  And what I did was a fly buy program I did a big production in SF Bay Area I rented a big conference room gave out stone tickets and spent probably 60k on marketing to drive traffic to the event.. And it was awesome I wrote them all up that weekend.

    I had my wife and two other agents helping me..  So as we can see commish's are negotiable both up and down.. If I am the Broker then its UP if i am paying then its down.. If someone hired me they were hiring me for my expertise and my ability to front expensive marketing campaigns.

    It could have been a bust and I would have lost 50 to 60k..  Risk reward. this was 2005.. 

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    2y

    Love this lawsuit. It just makes sense removing the current conflict of interest that exist in the industry right now. Imagine going to court and having to have to pay for your attorney as well as pay for the attorney of the guy who is suing you, lol. Madness.

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  • Christopher Wilken
    Investor · Washington, DC · Member since 2014 · 8 posts · 6 votes
    2y
    Quote from @James Wise:

    Love this lawsuit. It just makes sense removing the current conflict of interest that exist in the industry right now. Imagine going to court and having to have to pay for your attorney as well as pay for the attorney of the guy who is suing you, lol. Madness.


    Yes. I see it similarly. The buyer's agent is providing a service to the buyer. They should negotiate their arrangement of price and services between themselves. 


    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    2y
    Quote from @Christopher Wilken:
    Quote from @James Wise:

    Love this lawsuit. It just makes sense removing the current conflict of interest that exist in the industry right now. Imagine going to court and having to have to pay for your attorney as well as pay for the attorney of the guy who is suing you, lol. Madness.


    Yes. I see it similarly. The buyer's agent is providing a service to the buyer. They should negotiate their arrangement of price and services between themselves. 



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  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    2y

    Man, this gets people fired up!

    Whenever I see one of these threads or this topic gets brought up at my brokerage I just grab some popcorn and sit back to enjoy. 

    Make your assumptions, and make your plans. Then be prepared to pivot when **** doesn't go as expected. 

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