In a landmark case held on October 31, 2023, a Missouri jury found HomeServices of America, along with the National Association of Realtors (NAR) and Keller Williams, culpable of conspiring to inflate commission fees, resulting in nearly $1.8 billion in damages. While this settlement absolves HomeServices of America from further claims in this specific litigation, it does not extend to Berkshire Hathaway Energy or its affiliates, maintaining their exposure to potential liabilities.
The recent $250 million agreement contributes to a total exceeding $943.25 million in settlements reached in related cases over the past year. Earlier settlements include a $418 million agreement with NAR in March 2024, and others involving major industry players such as Anywhere Real Estate, RE/MAX, Keller Williams, Compass, and Real Brokerage Inc., underscoring a significant reform movement within the real estate brokerage sector.
“These settlements mark a pivotal moment for American home sellers, who have historically been burdened with excessive commission fees,” remarked Benjamin D. Brown, Managing Partner of Cohen Milstein Sellers & Toll. The lawsuit originated from Moehrl, et al. v. National Association of Realtors, which challenged the NAR’s policy requiring home sellers to offer non-negotiable compensation to buyer brokers, significantly affecting the cost transparency and fairness in real estate transactions.
For more detailed information on the implications of these settlements and how they might affect your next real estate decision, consider consulting with a knowledgeable professional at MORE, REALTORS®, whose agents remain at the forefront of industry standards and practices.
Additional Resources:
The complete details can be found in the courts order below.
Since the National Association of Realtors (NAR) and the plaintiffs in the following lawsuits—Christopher Moehrl v. The National Association of Realtors et al., Rhonda Burnett (originally Sitzer) v. The National Association of Realtors et al., Dawin Niel Umpa v. The National Association of Realtors, et al., and Don Gibson v. The National Association of Realtors—reached a settlement agreement on March 15, 2024, which is still pending court approval and thus preliminary at this point, the topic has dominated industry conversations. The focus of these lawsuits on buyer’s agent commissions has attracted more media attention since mid-March than it seems to have received in the over 40 years I’ve been in the business before that. Don’t get me wrong, I’m not saying all this attention is bad. In fact, I believe it is beneficial. I’ve long advocated for educating consumers, feeling that the more home buyers and sellers know, the better decisions they can make. This is why I’m rapidly approaching the milestone of 3,000 articles on the topic of real estate in St. Louis on this site.
Now, I don’t do this solely for altruistic reasons; sharing the information and knowledge I’ve gained either through experience or research is also self-serving. As a broker-owner of MORE, REALTORS®, I’ve put forth just as much effort in sharing knowledge with our agents, and I am blessed to be surrounded by real estate professionals who are as eager as I am to increase their knowledge and hone their skills to better serve clients. Here’s the reward for me: informed and knowledgeable consumers seek out better and more professional agents, like the ones we’re in business with, creating a win-win situation.
Having said all that, while the attention from the media is beneficial, unfortunately, there is a lot of incorrect information out there and assertions being made that don’t seem to be based on facts, but rather on opinion. Oh yes, I have opinions too, plenty of them, many of which are shared on this site, but to the extent possible, I try to base them on facts and include the sources of my opinions.
A Recurring Theme in Real Estate Litigation
The intertwining of Realtor association membership and MLS access has been a contentious issue, sparking several lawsuits over the years. This relationship, critics argue, creates barriers to competition and innovation in the real estate market.
Significant Legal Precedents
A pivotal moment in this ongoing discourse was the “Thompson v. Metropolitan Multi-List, Inc. Lawsuit,” where the 11th Federal Circuit Court of Appeals in 1991 ruled against restricting MLS access to Realtor members in Georgia. This case set a significant precedent, affirming that such practices could violate federal antitrust laws if the MLS wielded “market power” in the relevant geographic market.
Further complicating the landscape, California courts in the late 1970s found similar restrictions in violation of state antitrust statutes, thereby requiring Realtor associations in the state to open their MLS to non-members.
Looking Ahead
As the real estate industry continues to evolve, the relationship between REALTOR® associations and MLS access remains a focal point for legal scrutiny and industry reform. The implications of these legal battles extend beyond the courtroom, potentially shaping the future of real estate transactions, market competition, and consumer choice.
While the NAR settlement and recent lawsuits highlight different facets of the industry’s challenges, they collectively underscore a broader call for transparency, fairness, and innovation in real estate practices.
Conclusion
The dialogue surrounding MLS access and REALTOR® association membership is far from concluded. As legal actions continue to unfold, stakeholders across the real estate spectrum must remain vigilant and adaptable to the changing regulatory and business environment. At MORE, REALTORS®, we’re keenly aware of these potential shifts and are proactively strategizing to ensure our agents are well-positioned to navigate any changes that may arise. Our focus remains steadfast on providing exceptional service to our clients, irrespective of the evolving industry dynamics. As always, we’re committed to transparency, adaptability, and unwavering professionalism.
The Department of Justice (DOJ), through its Antitrust Division, initiated an investigation into NAR’s policies, which culminated in a settlement in November 2020. This settlement aimed to address four out of six policies identified by the DOJ as potentially anticompetitive. Crucially, it also included the issuance of a closing letter by the DOJ, indicating the closure of its investigation into two key NAR policies: the “Clear Cooperation Policy” and the “Participation Rule.” These policies relate to the operation of multiple-listing services (MLSs) and the commission structure within real estate transactions, respectively.
However, in a dramatic shift, the DOJ reopened its investigation into these policies in July 2021, leading to a legal challenge by NAR. NAR argued that the DOJ’s action breached the settlement agreement, which, in their view, included an implicit assurance against reopening the investigation into the specified policies.
The Appeals Court, in its decision, highlighted the legal nuances of the settlement agreement and the scope of the DOJ’s commitments. The court concluded that the settlement did not preclude the DOJ from reopening its investigation. This decision not only emphasizes the DOJ’s ongoing authority to regulate and scrutinize industry practices for anticompetitive behavior but also signals to real estate professionals the importance of adaptive compliance with evolving regulatory landscapes.
This ruling carries profound implications for the real estate industry, reinforcing the principle that regulatory oversight is a dynamic process, subject to revision and reassessment in light of new information or changing circumstances. For homebuyers and homesellers, the decision underscores the government’s commitment to ensuring fair and competitive practices within the real estate market, aiming to protect consumer interests and promote market transparency.
United States Court of Appeals Judgement – NAR vs United States of America
(click on image below to access entire judgment)
The Core Allegations:
At the heart of Wang’s lawsuit is an objection to how MLS access — a critical tool for buying and selling properties — is tied to membership in the NAR. This arrangement, according to the lawsuit, perpetuates a non-competitive environment where commission rates are kept uniformly high due to lack of market-driven pricing. This system, the plaintiff argues, indirectly forces buyers to absorb the cost of buyer’s agent commissions, which are embedded in home purchase prices, in violation of antitrust laws.
Legal Objectives:
- Seeking Class Action: The lawsuit aims to achieve class action status, offering representation to a broad swath of home buyers potentially affected by the described practices.
- Injunctive Relief and Damages: Beyond seeking damages for alleged overpayments, the complaint calls for judicial intervention to prohibit the continuation of tying MLS access to NAR membership, alongside the existing commission practices.
Industry Implications:
This lawsuit adds another layer to the ongoing discourse on real estate commission models, specifically targeting the structures that underpin agent access to essential market information. By challenging the linkage of MLS access to NAR membership, the case prompts a reevaluation of how such policies impact competition, pricing, and ultimately, consumer choice.
Reflecting on the Bigger Picture:
From an insider perspective, this case illuminates the complex interplay between professional associations, access to market information, and how commissions are structured. It calls into question whether current practices best serve the market’s needs or if they inadvertently constrain competition and innovation. As the real estate industry continues to grapple with these issues, the outcome of this lawsuit could have significant repercussions, potentially catalyzing shifts towards more transparent and consumer-friendly practices.
Hao Zhe Wang v The National Association of REALTORS®
(click below to view the entire complaint)
The Council of Multiple Listing Services (CMLS), representing over 200 Multiple Listing Services nationwide, has filed a brief supporting the settlement reached between the parties in the lawsuit against MLS Property Information Network (MLS PIN). While this is not the settlement announced last week by the National Association of REALTORS® (NAR), it involves one of the several lawsuits tied to the NAR settlement.
CMLS filed their brief in response to the one filed by the Department of Justice (DOJ) in February, which opposed the MLS PIN settlement, arguing that it did not go far enough to change existing practices to lower commissions and increase competition. In their brief, CMLS points to data showing that a similar rule change adopted by the Northwest Multiple Listing Service (NWMLS) in 2019 saved homebuyers an average of $1,000 per transaction by reducing buyer agent commissions.
The DOJ has opposed the MLS PIN settlement, asserting that it would not meaningfully benefit consumers. CMLS contends that the DOJ’s analysis is flawed and that its preferred solution – an outright ban on buyer agent compensation – could disrupt the real estate market and harm consumers.
It is doubtful that the judge will make a ruling in the MLS PIN case while the NAR settlement is pending. However, the briefs filed by the DOJ and CMLS in the MLS PIN lawsuit may have an impact on the decision regarding the NAR settlement.
CMLS Amicus Brief
(click to view entire brief)
One of the issues receiving significant attention following the announcement of the REALTOR® commission suit settlement is the topic of buyer commissions, specifically regarding whether a buyer has to pay them and how lenders will treat the commissions.
In a recent letter to the Federal Housing Finance Agency (FHFA), Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac, NAR and MBA sought confirmation on the treatment of buyer agent commissions following a proposed settlement agreement in the Burnett et al and Moehrl et al cases.
What does this mean for homebuyers? Under the settlement, cooperative commissions will no longer be displayed on Multiple Listing Services (MLS), but listing brokers and sellers will still be able to offer compensation for buyer broker services through other means. Additionally, the settlement does not prohibit home sellers from paying buyer agent commissions directly.
NAR and MBA believe that FHA and Government-Sponsored Enterprise (GSE) policies should continue to exclude seller or listing agent payments of buyer agents’ commissions from Interested Party Contributions (IPCs). IPCs are concessions from the seller to the buyer for items traditionally paid by the buyer, such as loan closing costs or rate buy-downs. Maintaining this practice is essential to ensure that the flow of mortgage capital to homebuyers remains uninterrupted.
As a homeowner or potential buyer, it’s important to stay informed about these developments and how they may impact your buying or selling process. NAR and MBA have requested confirmation from the FHFA, FHA, Fannie Mae, and Freddie Mac as soon as possible to prevent any confusion and potential disruptions that may cost you money or even jeopardize your home purchase.
The MBA and NAR Letter
(click to view entire letter)
Eligibility Criteria and Key Details:
Moehrl v. NAR Eligibility:
- Sold a home between March 6, 2015, and December 31, 2020.
- Utilized a real estate agent or broker affiliated with specific defendants, including Keller Williams, RE/MAX, and Anywhere Real Estate, among others.
- Paid a commission for the sale listed on a covered Multiple Listing Service (MLS) in certain areas.
- Filing Deadline: The deadline to submit a claim is May 9, 2025.
Burnett et al. v. NAR Eligibility:
- Sold a home within the eligible date range specified in the Long Form Notices.
- Listed the sold home on an MLS in any part of the United States.
- Paid a commission to any real estate brokerage in connection with the sale.
- Not restricted to homes sold using agents from Anywhere, RE/MAX, or Keller Williams.
- Filing Deadline: The deadline to submit a claim is May 9, 2025.
Next Steps for Eligible Home Sellers:
- Verify Eligibility: Sellers should review the detailed eligibility criteria on the settlement websites to determine if their home sale qualifies.
- Submit a Claim: To be considered for a payment, eligible sellers must file a claim by the May 9, 2025 deadline. Claim forms are accessible by clicking the links below:
- Consider Opting Out or Objecting: If you wish to opt out of the settlement, the deadline to opt-out or object to the settlements is April 13, 2024.
You’ve probably heard about these changes happening with real estate commissions, right? It’s been all over the news lately. You might have seen headlines like “Real estate commissions are being slashed!” or “Selling your house will now be less expensive!” Sounds pretty exciting, doesn’t it? And the media has a great track record, right? Let me tell you, there’s a lot more to it than meets the eye.
Even the most informed of us agents and brokers out here are scratching our heads because the lawsuit changed gears so quickly. Nobody really knows exactly how it’s all going to work yet. And those flashy headlines? Well, they’re a bit misleading because the truth is, nobody knows for sure if commissions will go down or up. I can easily make a case for both up and down.
Here’s the deal: if this settlement gets approved by the courts, sellers won’t be able to advertise agent commissions anymore. But they can still offer them, just not in their listing. And for buyers, they’ll have to sign a written agreement with an agent if they want representation—like Missouri License Law has said for over 20 years.
But before you get too excited about saving some cash, there are a few things you should consider. For sellers, allowing your listing broker to offer commissions might still be in your best interest. And buyers, well, going it alone might not be as easy as it sounds. You’ll still have to do all the legwork and negotiations yourself AND the biggest risk in, likely, your largest transaction: you don’t know what you don’t know. Remember, unless the listing agent is hired as a transaction broker, the listing agent represents the seller first and foremost. If they are a transaction broker, they cannot give you advice.
So, while these changes could be a big deal, the reality is, we’re all still waiting to see how it shakes out. If you’re feeling curious or worried about what’s coming, your best bet is to chat with your trusted real estate advisor. They’ll be able to give you the lowdown and keep you in the loop as things progress. And it they can’t, the agents and brokers here at MORE, REALTORS ® certainly can. We’ve been covering this issue since 2019.
Bottom line? Don’t believe all the hype just yet. Real estate, in general, is a wild card. While we’ll just have to wait and see how it all plays out, just know that we here at MORE, REALTORS® have been on top of this issue for years and have been adjusting accordingly. Oh yeah, remember, you can keep your doctor too. 😉
Last week, I wrote an article about the settlement reached by the National Association of REALTORS® in pending litigation concerning buyer agency compensation. This includes the “Sitzer” (now Burnett), “Moehrl,” and “MLS PIN” suits, among others. As mentioned, this is an early stage in the process; the settlement agreement, although agreed upon by the parties involved, has not yet been filed with the court. Given these are large class action lawsuits alleging antitrust violations, numerous hurdles must be overcome. These could necessitate changes to the settlement terms on the path to court approval—if the court approves it at all.
Hurdles include the court holding a fairness hearing to assess if the proposed settlement is fair, reasonable, and adequate for class members. This hearing allows class members to express objections and concerns. Moreover, antitrust class action lawsuits like this one, which impact market competition and consumer protection, prompt the court to consider broader public interest implications when approving settlements. This attention often draws input from professional associations, consumer organizations, and, as seen in the MLS PIN suit, the United States, giving their opinion on the settlement’s sufficiency.
Ultimately, the decision rests with the judge, who will consider all these aspects.
I should have led with this, but I am not an attorney, and this is not legal advice. As a real estate broker with over four decades in the residential real estate industry, I have a keen interest in the legal facets of our business and the issues at hand, closely following these cases since 2019. I’m a staunch advocate for transparency and education for real estate professionals, clients, and everyone involved. The more accurate knowledge consumers have about buying and selling a home, the better choices they can make. This is especially true when selecting a real estate agent, as not all are created equal.
Back to the matter at hand.
What will the DOJ say about the NAR Settlement?
Assuming the Department of Justice files an amicus brief in this case, as they did with MLS PIN—a safe assumption, in my view—it’s intriguing to speculate on their comments regarding this settlement. While I lack a crystal ball or insider information, considering the DOJ’s Statement of Interest filed on February 15, 2024, in Nosalek V. MLS Property Information Network (MLS PIN), and assuming their opinion hasn’t shifted in the last five weeks, offers a logical foundation for analysis.
I sought an objective analysis from my trusty AI Assistant, which, for the sake of this discussion, is an outstanding attorney specializing in antitrust law (or at least that is what I’ve told it to think of itself as). Applying the DOJ’s recent statement to this settlement, here’s what it suggests the DOJ might say:
- Inadequate Address of Core Antitrust Concerns: The settlement’s proposed rule changes fail to resolve the fundamental antitrust issues raised in the complaint fully. While allowing $0 cooperative compensation offers and requiring commission negotiation disclosures, the continued practice of blanket unilateral compensation offers to buyer brokers by sellers and listing brokers could perpetuate steering risks and obstruct genuine price competition.
- Broad Release of Potential Antitrust Claims: The extensive release of antitrust claims against a wide range of parties, including NAR, REALTOR® associations, MLSs, and individual brokers and agents, is concerning. Given the settlement’s limited injunctive relief, this broad release might inadequately serve class members.
- Insufficient Monetary Relief: The $418 million settlement fund, potentially inadequate for the damages at issue, may not ensure compensation for class members after litigation expenses and attorney’s fees. The settlement lacks a clear mechanism for maximizing class member payouts.
- Potential Chilling Effect on Future Antitrust Challenges: The settlement could deter or complicate future anticompetitive practice challenges by immunizing modified rules from further scrutiny, making subsequent lawsuits more difficult.
- Comparison to MLS PIN Settlement: Despite more extensive practice changes than the MLS PIN agreement, the settlement doesn’t effectively address core antitrust concerns, marginally improving over the MLS PIN agreement.
In conclusion, despite offering more monetary relief and practice changes than the MLS PIN agreement, the settlement inadequately addresses fundamental antitrust issues. The court must weigh whether the settlement’s limited benefits justify the broad release of claims and the potential chilling effect on future antitrust enforcement. As in the MLS PIN case, a more effective remedy might prohibit the seller-paid buyer broker commission model, fostering genuine market competition.
This is all based on publicly available information. We must wait to see the DOJ’s stance and whether the judge deems the settlement adequate.
Key Points of the NAR Settlement Agreement
- Broad Coverage: The settlement class is expansive, including home sellers who listed properties on MLSs anywhere in the U.S. during specified date ranges and paid a commission to any brokerage. For the St. Louis region, sellers are covered if they sold homes between October 31, 2018, and the date of the official Class Notice.
- Released Parties: The settlement releases a wide range of parties from future claims related to broker commissions, including NAR, REALTOR associations, and MLSs that adhere to the required practice changes. Brokerages with 2022 transaction volumes under $2 billion are also released if they comply with the new rules.
- Practice Changes: The agreement mandates significant shifts in industry practices, including:
- “eliminate and prohibit any requirement by the National Association of REALTORS®, REALTOR® MLS, or Member Boards that listing brokers or sellers must make offers of compensation to buyer brokers or other buyer representatives (either directly or through buyers), and eliminate and prohibit any requirement that such offers, if made, must be blanket, unconditional, or unilateral;”
- “prohibit REALTOR® MLS Participants, subscribers, other real estate brokers, other real estate agents, and their sellers from (a) making offers of compensation on the MLS to buyer brokers or other buyer representatives (either directly or through buyers) or (b) requiring that offers of compensation be made on the MLS to buyer brokers or other buyer representatives (either directly or through buyers);”
- “require that REALTOR® MLS Participants who work with buyers enter into written agreements with their buyer clients that specify the broker compensation and how it will be paid, including if it will be paid by the buyer;”
- “require that REALTOR® MLSs and REALTOR® MLS Participants provide, with any MLS listings that include a listing broker’s offer of compensation to a buyer broker or other buyer representative (either directly or through buyers), (i) disclosure as to the amount of that offer of compensation and (ii) a searchable field that displays buyer broker compensation offers;”
- “prohibit REALTOR® MLSs, REALTOR® MLS Participants, and REALTOR® Member Boards from taking any adverse action against any Person making offers of compensation to buyer brokers at any price, or no price, either on or off the MLS;”
- Financial Payout: NAR will pay a total of $418 million over four years to resolve the claims, with the first payment of $5 million due within 30 days of preliminary approval of the settlement. What This Means for St. Louis
What This Means for St. Louis
For homeowners in the St. Louis area, this settlement could bring more transparency to the commission structure when selling a home. By removing the requirement for listing brokers to offer buyer broker compensation through the MLS, the agreement aims to give sellers more control over how commissions are negotiated and paid.
Real estate agents and brokerages in our region will need to adapt to these changes, focusing on educating clients about compensation options and ensuring compliance with the new rules. At MORE, REALTORS®, we’ve been preparing for these shifts and are ready to guide our clients through the evolving landscape.
The full text of the NAR settlement agreement can be found below. As always, I’ll continue to keep you informed about how these developments impact our local market.
The Proposed NAR Settlement Agreement
(click on image to view entire agreement)
Kevin Sears, NAR President
This morning, Kevin Sears, President of the National Association of Realtors (NAR), unveiled a proposed settlement designed to bring to a close the contentious litigation surrounding broker commissions, a move that could significantly alter the landscape of the real estate industry. This development comes on the heels of the Sitzer-Burnett verdict, which cast the traditional practices of real estate professionals, particularly those concerning hiring and compensation methods, into the spotlight, sparking a series of lawsuits and raising questions about the future of the industry.
A Closer Look at the Proposed Settlement
The core aim of the proposed settlement is to resolve the ongoing litigation against NAR, its members, and associated real estate entities by addressing the claims related to broker commissions. Key components of the settlement include:
- Liability Release: More than one million NAR members, along with various real estate entities, will be absolved from liability for claims akin to those highlighted in the lawsuits.
- Compensation Offers: A pivotal change involves the elimination of compensation offers from MLS listings, a rule set to take effect in mid-July 2024.
- Written Agreements: Starting mid-July 2024, MLS participants working with buyers will be required to engage through written representation agreements.
- Financial Implications: NAR has committed to paying $418 million over a four-year span, a significant financial undertaking that will not result in an increase in the 2024 membership dues according to the release. (Noted is the fact they didn’t commit to no increases as a result beyond 2024)
Kevin Sears Weighs In
Sears articulated the objectives of the settlement, stating, “This proposed settlement achieves our goals to reduce strain on our members and chart a path forward for the industry.” He further emphasized the industry’s resilience and adaptability, expressing confidence that the agreement “allows us to move forward, preserving the right to real property for all.”
MORE, REALTORS® Prepared for the Future
Yes, this might come off as a shameless plug, but it would be a disservice not to mention how myself, alongside our brokerage’s leadership team, brokers, and agents, have been proactively preparing for the anticipated changes. We’ve delved deep into the issues raised by these lawsuits, identifying practices in need of rectification, regardless of the legal outcomes. Thus, while the shift away from MLS compensation offerings may catch many off guard, our team stands ready. We’re equipped to demystify the compensation process for our clients transparently, dedicating our focus to their needs. Discover more about our exceptional team at MORERealtors.com.
The Proposed NAR Settlement Agreement
(click on image to view entire agreement)
Kevin Sears,
2024 NAR President
At a real estate conference in Boston on February 1, 2024, NAR President Kevin Sears addressed a pressing issue facing the National Association of Realtors (NAR) and its members. Sears candidly discussed the aftermath of a $5.4 billion verdict against NAR, drawing parallels to a sports scenario to highlight the disappointment of a loss despite believing in the righteousness of their policy and actions. He emphasized the importance of moving forward, focusing on the legal appeals process and the ongoing challenges with the Department of Justice (DOJ), which has been a persistent adversary for NAR.
Sears detailed the history of NAR’s interactions with the DOJ, including a settled agreement in 2020, which the DOJ later contested, leading to further legal battles. He highlighted a specific case involving MLS Property Information Network (MLS PIN) in Massachusetts, which faced a “copycat lawsuit” and encountered DOJ objections to settlement agreements, underscoring the DOJ’s significant influence on the real estate industry’s operations.
Kevin Sears provided a comprehensive overview of the National Association of Realtors’ (NAR) complex and ongoing interactions with the Department of Justice (DOJ), painting a picture of an enduring legal struggle that has deep implications for the real estate industry. He began by recounting a pivotal moment in 2020 when NAR reached a settlement agreement with the DOJ, a moment that seemed to mark the beginning of a resolution to their disputes. However, this sense of resolution was short-lived as the DOJ later contested the terms of the agreement, reigniting a series of legal challenges that have since persisted.
Sears’ narrative then shifted focus to a more recent and illustrative example of these challenges: the case involving the MLS Property Information Network (MLS PIN) in Massachusetts. This particular case, described by Sears as a “copycat lawsuit,” mirrored the broader issues at stake between NAR and the DOJ. The lawsuit led to a proposed settlement agreement between MLS PIN and the plaintiff’s attorneys, which, in a turn of events characteristic of the DOJ’s recent interventions, faced objections from the DOJ. The federal department’s refusal to endorse the settlement underscored its readiness to closely scrutinize and influence the outcomes of legal disputes in the real estate sector.
Through these examples, Sears emphasized the DOJ’s significant and active role in shaping the operational landscape of the real estate industry. He highlighted the DOJ’s apparent commitment to altering traditional practices within the industry, particularly those related to the compensation of buyer’s agents through commissions offered by sellers. This ongoing legal saga between NAR, its members, and the DOJ not only reflects the complexities of antitrust law in real estate but also signals a potentially transformative period for industry practices and professional relationships.
Key Points Made by Kevin Sears:
- Acknowledged the $5.4 billion verdict against NAR, emphasizing the need to move forward through legal appeals and post-trial motions.
- Highlighted the longstanding challenges with the DOJ, including a contested settlement and ongoing legal disputes.
- Discussed the specifics of a lawsuit involving MLS PIN in Massachusetts, illustrating the DOJ’s active role in scrutinizing industry practices and settlements.
- Stressed the importance of adapting to changes in the real estate industry, particularly regarding how businesses operate and how realtors are compensated.
- Urged the audience to consider the future of the industry and the necessity of embracing change, whether willingly or as a result of external pressures.
Since the suit was first filed in 2019, I’ve been following the the Sitzer v. National Association of REALTORS® case closely and sharing my thoughts on the potential impact it could have on the real estate industry, as well as on home buyers and sellers. This task has been far from dull, as the litigation has been filled with action, especially since the Missouri jury’s ruling in favor of the plaintiffs in October. The past week has seen an increase in legal activity from the defendants, making the situation even more intense. Below is a breakdown of the latest events and their implications, from my perspective (bear in mind, I’m not an attorney, just a real estate broker):
Key Motions Filed:
- National Association of Realtors Seeks a New Trial: This motion contests the fairness of the original trial, highlighting potential procedural and evidentiary errors that might have skewed the jury’s decision.
- Calls for Judgment as a Matter of Law: Various defendants, including Keller Williams and BHH Affiliates, have challenged the verdict based on the argument that it contradicts the evidence presented. They point to possible legal oversights, such as flawed jury instructions.
- Questioning the Class Action Status: A notable move by BHH Affiliates and HomeServices of America, this motion disputes the class action’s suitability, arguing that individual differences overshadow commonalities crucial in such lawsuits.
Analyzing the Legal Landscape:
- The Frequency of Post-Verdict Motions: In complex cases like this, it’s quite typical for defendants to pursue motions for a new trial or a judgment reversal. These legal steps, while common, underscore the high stakes involved, especially in a sector as impactful as real estate.
- Prospects of These Motions: Historically, the success of such motions varies. They can occasionally lead to new trials or judgment alterations. However, overturning a jury’s decision is often a challenging hill to climb, given the U.S. legal system’s respect for jury findings. These motions are more likely precursors to an appeal.
- Real Estate Industry at a Crossroads: The decisions on these motions are critical. Their outcomes could prompt significant changes in how real estate transactions are conducted, especially regarding agent commissions and competitive practices.
What Does This Mean for Home Buyers and Sellers?
Now, you might be wondering, “All this legal talk is great, but how does it affect me as a home buyer or seller?” Well, I have some thoughts on that as well:
- Changes in Commission Structures: The heart of the Sitzer case is about how real estate commissions are handled. Depending on the outcome, we might see a shift in how agents are paid. This could mean more flexibility or different options when it comes to commission rates.
- Increased Transparency: The case also touches on transparency in real estate transactions. We could be looking at a future where there’s more clarity on how agents operate, which means you, as a buyer or seller, would have a clearer picture of what you’re getting into.
- Potential for More Competitive Pricing: If the verdict leads to changes in how commissions are structured, this could open the door for more competitive pricing in the real estate market. It could mean better deals for buyers and more options for sellers.
In short, this trial isn’t just about big real estate companies; it’s about potentially changing the playing field for everyone involved in buying or selling a home. It’s about making sure that the process is fair and transparent for you, the consumer. So, stay tuned – the decisions made in this courtroom could be game-changers for how we buy and sell homes.
Compilation of Motions Filed In The Past Week in Sitzer v NAR
(click below to access the document containing all the motions filed)
The residential real estate industry is facing yet another antitrust lawsuit targeting the long-standing practice of home sellers paying the commissions of buyer’s agents. Filed on December 27th in Missouri federal court, Daniel Umpa v. National Association of Realtors alleges the NAR and large national brokerages like Compass and Keller Williams conspired to maintain inflated buyer agent commissions through anticompetitive practices.
This latest suit comes on the heels of the Department of Justice’s ongoing investigation into potentially anti-competitive industry practices related to real estate commissions and access to MLS listings. It also follows similar buyer broker commission lawsuits brought in the past two years by home sellers against NAR and large brokerages. The new complaint alleges the defendants worked together to enact NAR policies like the ‘Buyer Broker Commission Rule’ which required listing brokers to make blanket, non-negotiable commission offers to buyer brokers. This rule allegedly discourages lower commissions and impedes market competition to the detriment of home sellers.
If successful, the plaintiff seeks injunctive relief under antitrust laws forcing changes to current industry practices, as well as damages related to overcharges paid by class members stretching back to late 2019. With the DOJ investigation ongoing and buyer broker commissions under continued legal scrutiny, pressure mounts for transparency and reform in how real estate agents are compensated. Though the industry justifies maintaining the status quo to ensure access to listing data critical for buyers and sellers, critics argue new technologies make this argument increasingly dubious. One thing is clear – more antitrust litigation is brewing which could profoundly reshape residential brokerage.
Umpa vs The National Association of REALTORS, et al
(click on image to view entire complaint)
Recently, the real estate industry has found itself under increasing legal scrutiny, with multiple lawsuits challenging established norms. A critical point of debate is the REALTORS’ Clear Cooperation Policy. This policy mandates that within one business day of marketing a property to the public, agents must list the property on the MLS. While designed to promote transparency and cooperation among real estate professionals, it’s worth asking: Is this policy partly to blame for the industry’s legal challenges, or does it genuinely foster a fair and open market in compliance with the Sherman Antitrust Act?
The Sherman Antitrust Act, a cornerstone of U.S. antitrust law, prohibits any contract or combination that restrains trade. The Clear Cooperation Policy, by restricting agents’ freedom to market properties outside the MLS, potentially limits competition. Centralizing all listings within the MLS could be seen as creating a monopolistic environment, contrary to the principles of free trade the Sherman Act seeks to protect. On the other hand, proponents argue that the policy ensures equal access to property listings for all agents, thereby benefiting consumers by offering a comprehensive market view.
As legal battles unfold and regulatory bodies like the DOJ and FTC weigh in, the real estate industry awaits clarity. The coming months are crucial, and they will likely reveal whether the Clear Cooperation Policy aligns with the ethos of the Sherman Antitrust Act or contradicts it. As we navigate these complex legal waters, stay tuned to St Louis Real Estate News for the latest developments and insights. We’re committed to keeping you informed about how these critical issues will shape the future of real estate marketing and market fairness. Moreover, you can rely on the professional agents at MORE, REALTORS. They possess not only the knowledge and expertise to navigate through all the rules and regulations but also deliver exceptional results to their clients.
Highlights of the Clear Cooperation Policy
- Mandatory MLS Listing: Properties must be listed on the MLS within one business day of public marketing.
- Scope of Public Marketing: Includes flyers, yard signs, digital marketing, and more.
- Office Exclusive Listings: Allows keeping listings off the MLS if not publicly marketed.
- Filing Requirement: All exclusive listings must be filed with the MLS if publicly marketed.
- Enforcement: Imposes fines and reporting mechanism for non-compliance.
Key Components of Sherman Antitrust Act Relevant to the Policy
- Restriction on Trade: Prohibits practices that restrain trade or commerce.
- Legal Consequences: Includes fines and imprisonment for violations.
- Focus on Competition: Aims to maintain free and competitive markets.
- Application to Real Estate: Includes practices affecting inter-state commerce.
- Interpretation in Courts: Requires judicial determination on trade restraints.
Earlier this week, on Tuesday, December 19, 2023, the Moehrl v. National Association of Realtors (NAR) lawsuit saw a flurry of activity. Motions for summary judgment were filed by the remaining defendants, including the National Association of REALTORS® (NAR), Keller Williams Realty, Inc., BHH Affiliates, LLC, The Long & Foster Companies, Inc., HSF Affiliates, LLC and HomeServices of America, Inc. Notably, two other defendants, Realogy (now known as Anywhere) and Re/Max, had previously reached a settlement agreement with the plaintiff, which is currently pending court approval.
With the exception of Keller Williams Realty, Inc., all of the real estate brokerage defendants jointly filed a single motion for summary judgment. In contrast, Keller Williams Realty, Inc. submitted their own separate motion, which, while distinct, shares similarities with the collective motion of the other brokerages in its arguments and legal stance.
- The National Association of Realtors defended its model rules and policies, asserting they’re not conspiratorial and are instead standard practice in the industry, aiming to facilitate transparency and efficiency in real estate transactions.
- Keller Williams Realty, Inc. focused on their lack of involvement in the alleged conspiracy, emphasizing no direct role in NAR’s Cooperative Compensation Rule.
- BHH Affiliates, LLC, The Long & Foster Companies, Inc., HSF Affiliates, LLC, HomeServices of America, Inc. similarly argued for their non-participation in any actions related to the NAR rule they’re accused of conspiring to adopt.
As I’ve mentioned in many previous articles, this legal battle, along with other similar cases across the country, is poised to have significant implications for the real estate industry and profession. At the heart of these challenges lies a foundational method of conducting residential real estate transactions, including the compensation of agents (particularly buyer’s agents). Regardless of the outcomes of these lawsuits, the industry is set to undergo significant changes. This is partly due to the heightened attention these cases have attracted, which will likely lead to a better understanding of the transaction process by home buyers and sellers, as well as greater transparency, especially in terms of the roles and compensation of real estate agents involved. Personally, I believe these developments are positive. They will benefit dedicated, professional agents and their clients, and may disadvantage those who are underperforming or, frankly, should not be in the business in the first place.
Find complete information on this lawsuit as well as all the other related lawsuits as well as a wealth of information on the St Louis real estate market at the MORE Resource Center by clicking this link or the button below.
In yet another pivotal moment for the real estate industry, oral arguments were made yesterday before a three-judge panel at the United States Court of Appeals for the District of Columbia Circuit in the ongoing battle between the National Association of REALTORS (NAR) and the Department of Justice (DOJ). The panel, consisting of Circuit Judges Henderson, Walker, and Pan, will now deliberate and make a ruling in the future, a decision that could significantly impact the industry.
The case centers on NAR’s attempt to prevent the DOJ from reopening an investigation into the organization’s commission-sharing policies. The dispute revolves around a 2020 closure agreement, which NAR interprets as barring any future investigations. However, this interpretation faced scrutiny from the judges, particularly Judge Florence Pan, who questioned the permanence of the agreement.
Representing the DOJ, Frederick Liu argued that there was never an intention to indefinitely halt the investigation. He emphasized that during the negotiation process, the DOJ’s antitrust division did not make explicit commitments to end the probe permanently.
This legal showdown is crucial for NAR, an association with more than 1.5 million members. Just last month, NAR, along with other defendants, lost a nearly $1.8 Billion anti-trust lawsuit here in Missouri (Sitzer v NAR) and NAR is currently facing multiple other antitrust lawsuits, including a substantial class-action suit in Illinois, potentially leading to damages of $40 billion.
NAR’s attorney, Christopher Michel, stressed the significance of the closure agreement, arguing that reopening the investigation would render it meaningless. Judge Justin Walker, however, highlighted the inherent risk NAR took in depending on the continuity of the DOJ’s personnel after the election.
The decision by this appellate court will be closely watched, as it could herald significant changes in how real estate transactions are conducted, affecting agents, buyers, and sellers alike. Stay updated with St Louis Real Estate News for the latest on this critical legal development.
In a remarkable turn of events, just minutes after the jury sided with the homeseller-plaintiffs in the landmark Sitzer | Burnett trial, attorney Michael Ketchmark wasted no time in launching another legal salvo against the real estate industry. This new class action lawsuit, filed on behalf of three new homesellers, aims to further scrutinize the practices surrounding agent commissions.
The Defendants
This new lawsuit expands the list of defendants to include: Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna, and Douglas Elliman. Notably, the National Association of Realtors is once again named as a defendant, marking its continued entanglement in legal challenges related to commission structures.
The Allegations
The plaintiffs in this new case echo the grievances aired in the Sitzer | Burnett lawsuit, claiming they have been adversely affected by a “real estate industry conspiracy” that artificially inflates agent commissions. The suit alleges that this practice has a cascading effect, ultimately driving up costs for homesellers.
Legal Venue
The lawsuit has been filed in the United States District Court for the Western District of Missouri, the same jurisdiction that recently saw the Sitzer | Burnett plaintiffs awarded $1.785 billion in damages.
What This Means for the Industry
The filing of this new lawsuit so swiftly on the heels of the Sitzer | Burnett verdict could signal a wave of legal challenges aimed at traditional real estate commission models. Industry stakeholders will undoubtedly be watching closely as this new case unfolds, given its potential to further disrupt established practices and financial structures within the real estate market.
I’ve been discussing and writing about the Sitzer v National Association of REALTORS®, et al, lawsuit since it was originally filed in 2019. My previous articles on this case, as well as the Moerhl suit—a similar lawsuit filed in Illinois—can be found at the links below, which are in chronological order with the most recent first:
- Do Agents Steer Homebuyers?
- National Association of REALTORS and Big Brokerages Dealt Another Blow In The Moehrl Class Action Lawsuit Today
- How the real estate industry is going to be turned upside down and why sellers may no longer have to pay buyer agents
- Appellant Court Overturns Lower Court Dismissal of Anti-Trust Lawsuit Against the National Association of REALTORS®
- Sitzer vs NAR (National Association of REALTORS) – Good or bad for consumers?
- Coming Soon To A REALTOR® Near You; Commission Transparency
- Who Pays The Buyers Agent?
Today marks the end of the second week the trial has been underway, and it’s time to take stock of what has transpired so far.
Key Developments
Motions and Counter-Motions
- Motion to Enforce Court Order: BHH Affiliates, LLC, HSF Affiliates, LLC, and HomeServices of America, Inc., filed a motion to enforce a court order. This motion was subsequently denied by District Judge Stephen R. Bough.
- Deposition Designations: The court overruled most of the defendants’ objections regarding the deposition of Kevin Goffstein, allowing most of the deposition to be part of the trial record.
- State Statutes and Regulations: A significant ruling came when the court prohibited the defendants from using state statutes and regulations as exhibits.
Legal Maneuvers
- Pro Hac Vice Admission: Ian T. Hampton was allowed to appear pro hac vice to represent HomeServices of America, Inc.
- Motions in Limine: Multiple motions in limine were filed by both parties, aiming to limit the evidence that can be presented during the trial.
- Motions for Judgment as a Matter of Law: Both the National Association of Realtors and Keller Williams Realty, Inc., filed motions for judgment as a matter of law, which were denied by the court.
Trial Proceedings
- Jury Trial: The jury trial has been ongoing, with proceedings taking place almost daily. The court has been in session for extended hours, indicating the complexity and importance of the case.
- Witness Withdrawals: Plaintiffs withdrew David Liniger and Jay Papasan as witnesses to be called by videotaped deposition.
- Jury Instructions: Various motions and objections were raised concerning the jury instructions, including a specific motion by Keller Williams Realty, Inc., for a Jury Instruction on Missouri State Law.
The first two weeks of the trial have been action-packed, with both sides employing various legal strategies. The court has been diligent in its rulings, aiming to ensure a fair trial. As we move into the next phase, it’s clear that the outcome of this case could have far-reaching implications for the real estate industry. Stay tuned for more updates as the trial progresses.
Seller impersonation fraud, also known as deed fraud, is a growing concern in the real estate industry. This type of fraud involves forging the property owner’s signature to illegally transfer ownership of the property. A recent case in the City of St. Louis serves as a cautionary tale for homeowners.
A Disturbing Case in St. Louis
Bernadette Brown, a member of the Royal Realty Group LLC, recently discovered that a property owned by the LLC at 1129 Penrose Street, St. Louis, MO 63107, was conveyed to Keith Brown via a Quit Claim deed. Bernadette Brown claims her name was forged on the deed, which was then notarized by a non-existent notary. This alarming incident underscores the need for homeowners to be vigilant in monitoring their property records.
How to Protect Yourself
Fortunately, there are several ways homeowners can protect themselves from becoming victims of deed fraud:
Property Fraud Alert Services
Many counties offer free services that alert property owners when deeds or other documents related to their property are filed. Property Fraud Alert is one such service, available in 23 counties in Missouri, including the City of St. Louis, St. Louis County, St Charles County, Jefferson, and Franklin. These alerts can serve as an early warning system, allowing you to take immediate action if you suspect fraudulent activity.
Title Reports
If you have concerns about your property, you can order a title report from a local title insurance company for a modest fee. M&I Title* in St. Louis, MO, is one such company that can provide this service. A title report will confirm the name under which the property is registered and identify any deeds of trust against it.
REALIST Reports
Agents from MORE, REALTORS can assist you by pulling a REALIST report from the MLS at no charge. This report will provide some basic information about your property, offering another layer of protection against fraud.
For more insights and advice on the St. Louis real estate market, stay tuned to StLouisRealEstateNews.com.
*Disclosure: I have a financial interest in M&I Title.
As I’ve previously discussed, the National Association of REALTORS¬Æ (NAR) is grappling with a myriad of challenges. These range from multiple class-action lawsuits to scrutiny from the Department of Justice (DOJ). This past week, the organization faced two more setbacks.
First, a scandal erupted involving NAR’s President, Kenny Parcell. Reports suggest that Parcell was accused of sexually harassing women within the organization. While this news began circulating about a week ago, it gained significant momentum when the New York Times published an expos√© last Saturday. The report prompted industry-wide calls for Parcell’s resignation. Consequently, Kenny Parcell stepped down as President of NAR yesterday. President-elect Tracy Kasper immediately assumed the role of President.
In another blow to NAR yesterday, the United States Court of Appeals for the Ninth Circuit overturned a lower court’s dismissal of a lawsuit. This lawsuit was filed by Top Agent Network, Inc., accusing NAR of violating the Sherman Antitrust Act through its “MLS Clear Cooperation Policy.”
Indeed, it’s been a challenging week for NAR, and it’s only Tuesday.”
Top Agent Network, Inc. v. National Association of REALTORS, et al Original Lawsuit
(click below for entire document)
I’ve been in the real estate business since I was 17, which means it has been 45 years of experiencing various market conditions, including recessions, inflation, 18% mortgage rates, the burst of the housing bubble, and a myriad of other good and bad things. However, I can confidently say that I have never witnessed a real estate market quite like the one we have been experiencing in the past couple of years.
So, what makes the current real estate market so unique?
First and foremost, I’ve pondered this question extensively, and I honestly can’t recall a time in this industry when the supply of homes for sale was not at least 4 to 6 months’ worth. Although there was a brief period in 2015 when the inventory of homes in St. Louis fell below 4 months, it quickly returned to nearly 5 months. From 2016 until early 2020, the inventory fluctuated between approximately 2 and 3 months, and then began a downward trend, hitting a record low of less than a 1-month supply in the latter part of 2021. While the supply has slightly increased since then, it still hovers around 1 month.
Months of Inventory – St Louis 5-County Core – 2013 – 2023
This situation showcases the basic law of economics—supply and demand. The supply of homes for sale in St. Louis is exceptionally low, and even though the number of home buyers in the market has seemingly declined significantly over the past few years, there still isn’t enough supply to meet the demand of the remaining buyers. Consequently, in accordance with the law of supply and demand, prices tend to rise when supply is insufficient to meet demand. While it’s easy to increase widget production to meet demand, it’s not as simple to suddenly add thousands of homes to the market in the St. Louis real estate market. Factors such as a lack of available land for development in high-demand areas, lengthy approval processes for new developments, labor shortages in the trades, difficulty in controlling construction costs, and the significant time required to bring a substantial number of homes to the market contribute to this complexity. As a developer, I can attest that the development process is lengthy enough for the market dynamics to change entirely before the first home hits the market.
So, where did all the houses go in St Louis? Why aren’t there more homes for sale?
Let me begin by saying that I’m not a sensationalist, nor am I an advocate for everything I write about. Additionally, I am not an attorney, so this not a legal opinion. I am simply a real estate broker that has been very active in the profession and industry for over 40 years now. I strive to stay on top of industry and market changes so that the agents in our firm, MORE, REALTORS®, and their clients can avoid surprises and be prepared. Another reason I do this is to share what I have learned with consumers. I believe that by sharing good, relevant and accurate information to consumers, they will be equipped to make better decisions when it comes to buying or selling real estate, including how to choose an agent to best represent them.
So, what is going to turn the real estate industry upside down?
Yes, I made a rather bold statement in my headline, but I believe it to be an accurate depiction of what is coming to the world of residential real estate, including right here in St Louis. The source of this disruption is not a single entity, but rather many. While there is a common theme to the multiple threats, they are coming from different sources. Over the past few months, I have written about all the issues I’m referring to, so below is a summary of them and links to the original articles:
- Moerhl v NAR Lawsuit. 3/22/2019 – This suit was filed against The National Association of REALTORS® (NAR), Realogy Holdings Corp, HomeServices of America, Inc, Re/Max Holdings, Inc and Keller Williams Realty, Inc. The suit alleges that the defendants were “conspiring to require home sellers to pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law.” At the heart of this claim is the NAR rule that requires sellers to offer compensation to the buyer’s agent in order to be eligible for listing in the MLS.
- Department of Justice (DOJ) Complaint against NAR. 12/01/2020. The DOJ filed a complaint against NAR, as well as a settlement agreement, focused on two primary issues; 1. Allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free; 2.Enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered and to exclude homes with lower commissions from consideration by potential home buyers;
In an article published yesterday, I referenced the Sitzer vs National Association of REALTORS law suit and said I would have a more in-depth discussion about that suit and here it is. The lawsuit was filed by Joshua Sitzer, Amy Winger, Scott and Rhonda Burnett and Ryan Hendrickson on June 21, 2019 against the National Association of REALTORS® and the parent companies of major real estate companies and franchises including Coldwell Banker, ReMax, Keller Williams and Berkshire Hathaway Homeservices.
The Sitzer lawsuit was filed in the United States District Court for the Western District of Missouri sought to be certified as a class action lawsuit on behalf of “all persons and entities who listed properties on one of four Multiple Listing Services…and paid a broker commission from at least April 29, 2015 until the Present…“. The four MLS’s listed in the suit that this applies to are:
- Heartland MLS (Kansas City, MO)
- MARIS MLS (St Louis, MO)
- Southern Missouri Regional MLS (Springfield, MO)
- CBOR MLS (Columbia, MO)
Last Friday, April 22, 2022, Stephen R. Bough, a Federal Judge for in the Western District of Missouri, issued an order granting the class action status for the lawsuit the Plaintiffs sought.
What does the class action ruling change?
Continue reading “Sitzer vs NAR (National Association of REALTORS) – Good or bad for consumers?“
In December I wrote about multiple class-action lawsuits filed against the National Association of REALTORS® (NAR), as well as some of the largest real estate brokerages, like ReMax and Keller Williams as well as a Department of Justice (DOJ) complaint filed again NAR over issues related to the lack of transparency in the home buying process.
The aforementioned complaints claim, among other things, that there has been an effort by the defendants to force buyers to pay an “inflated” price for a home as a result of the buyer not realizing the seller was forced to offer a commission to a buyer’s agent in order to get their listing in the MLS. In addition, they claim that NAR and its members misrepresented to buyers that a buyer’s agent’s representation and services were “free”, when in fact their agent was being paid a commission, which came from the seller and as a result, they claim this expense inflated the cost the buyer was forced to pay for the home.
I’m not here to address the accuracy of the claims made in these complaints nor get into an analysis of the legal merits of the case, but instead just want to address the changes I see that have already taken place or will take place in the home-buying process. NAR has already reached a settlement with the DOJ in which they (NAR) agreed to make several changes, so those are pretty easy to predict and I think I have a reasonable idea of some other changes that will come along in the comings months as well.
[xyz-ips snippet=”Homes-For-Sale”]
So, what are these changes I see coming to the home-buying process in terms of transparency?
Below are some of the changes I already see or expect to see:
- Buyer’s agents aren’t FREE, nor should they be. NAR has already agreed to prohibit their members from claiming their services are free as they are not. A good buyer’s agent is invaluable to a home buyer and not only will earn the commission they make but in many cases, will “pay for themselves”. What I mean by this is their guidance and advice to their clients, which comes from their knowledge of the market and process, as well as experience, will help their clients avoid pitfalls and to make informed, good decisions.
- Commission transparency. Prior to the lawsuits, many MLS’s around the country, including the one that serves the St Louis area, prohibited the amount of commission being offered to a buyer’s agent by the seller from being shown on broker’s real estate search websites. MARIS, the company that provides the MLS for St Louis area REALTORS® was quick and pro-active in this area and began allowing brokers to display buyer’s agent’s commission on their websites. I’m happy to say that my company, MORE, REALTORS® was, I believe, one of the first brokerages in the area to begin displaying this information. On STLMLS.com consumers can find the amount of commission being offered to buyer’s agents on listings. In the interest of full disclosure, I should mention I’m on the board of directors for MARIS and I’m an officer and shareholder of MORE, REALTORS.
- Sellers won’t have to offer to pay a buyer’s agent to get in the MLS. While the first two bullet-points above are things that have happened, now I’m predicting what will happen. I believe that soon, perhaps as soon as “months” or as long as a year or two, the MLS requirement that a seller offers compensation to a buyer’s agent to have their listing be in the MLS will be dropped. This is nothing that should cause panic as buyer’s agents won’t go away nor work for free, it’s just the structure of the transaction will change. The changes made will no doubt provide a much greater level of transparency to the buyer though as I believe they will have a clear picture of the process including how their buyer’s agent is getting paid.
- Agents won’t have to be REALTORS® to be part of the MLS. Even though this is already true in several parts of the country, most MLS’s require that agents be a REALTOR® (so be a member of the National Association of REALTORS® (NAR)) to join the MLS. I believe that all MLS’s in the country will be forced to allow participation by all licensed real estate brokers and agents and not just REALTORS®. I think my prior prediction will come to fruition sooner and this one will follow so it will likely be a couple of years at least before this happens.
The bottom line is some obstacles exist today for the real estate industry as well as there are changes taking place and more coming. While many folks don’t embrace change, call me a Pollyanna, but I think the result will be positive both for the real estate professional as well as the consumer that is buying or selling a home.
I’ll close with a quote on the topic of obstacles that I frequently share on a coaching session I do for our agents that is from Victor Kiam (the Remington razor guy) – “….there is little difference between obstacle and opportunity…”
The National Association of REALTORS® (NAR) has come under attack over the past few months as a defendant in two class-action lawsuits, Christopher Moehrl v The National Association of REALTORS® and Joshua A. Sitzer and Amy Winger v The National Association of REALTORS® filed in March and April of 2019 respectively, and, most recently, a complaint brought by the Department of Justice, United States v National Association of REALTORS® filed this month. The latter came with a pre-arranged proposed settlement with NAR. I should also mention the two class-action lawsuits have as additional defendants Realogy Holdings Corp (the own and operate several franchises, some of the local ones include Coldwell Banker-Gundaker, Better Homes & Gardens, ERA, Sotheby’s, and Century-21), HomeServices of America, Inc. (owner of Berkshire Hathway Home Services), Re/Max and Keller Williams.
While there are additional issues raised in the lawsuits and DOJ complaint, central to them are buyer’s agents’ commissions. Issues raised include:
- From the DOJ complaint:
- Allowing buyer brokers to misrepresent to buyers that a buyer broker’s services are free;
- Enabling buyer brokers to filter MLS listings based on the level of buyer broker commissions offered and to exclude homes with lower commissions from consideration by potential home buyers;
- From the lawsuits:
- Sellers of residential property have been forced to pay inflated costs to sell their homes through forced payments of commissions to buyer brokers;
- Home sellers have been forced to set buyer broker commissions to induce buyer brokers to show the sellers’ homes to prospective buyers;
- Price competition has been restrained among brokers seeking to be retained by home buyers, and by brokers seeking to represent home sellers; and
- Defendant Franchisors and their franchisees have inflated their profits by a significant margin by the increased total commissions and increased buyer broker commissions.
[xyz-ips snippet=”Homes-For-Sale”]
[xyz-ips snippet=”Seller-Resources—Listing-Targeted”]
Continue reading “Coming Soon To A REALTOR® Near You – Commission Transparency“
Opportunity Zones were created by the 2017 Tax Cuts and Jobs Act that President Donald J. Trump signed into law on December 22, 2017. Opportunity zones were established to help communities that are economically-distressed and work by promoting private investment and development through the use of tax incentives. There are a total of 8.760 designated Qualified Opportunity Zones in the U.S. and there are 140 Opportunity Zones in Missouri.
Opportunity zones appear to have had a positive impact on the housing market in several opportunity zones in the St Louis area. According to data just released by ATTOM Date Solutions, 10 of the 19 Opportunity Zones in the St Louis area have seen at least double digit increase in home prices in the past year and two of them triple digit increases!
You can find complete information about Opportunity Zones, including an interactive map for Missouri Opportunity zones, a complete list of all opportunity zones in the U.S. videos from webinars hosted by the Missouri Department of Economic Development (DED) and more at MissouriOpportunityZones.com
St Louis Area Opportunity Zones 4th Quarter 2019 Median Home Prices
Yesterday, the board of directors for the National Association of REALTORS® (NAR) approved a new policy dubbed the “Clear Cooperation Policy” which goes into effect January 1, 2020, and Multiple Listing Service’s (MLS) have until May 1, 2020, to adopt and implement.
While the vote by the board of directors, 729 in favor of it to 70 opposed, may not reflect it, there is a lot of controversy about this policy among real estate agents and brokers that are members of NAR. The two main changes this new policy bring about are that agents would be mandated to put, for all intents and purposes, 100% of their listings in the MLS system within one business-day of marketing the listing (marketing is defined to include putting a sign in the yard, telling someone about the listing, etc) and “MLS-exempt” listings will no longer be permitted.
Better for the consumer?
Proponents of the new NAR MLS policy say that this will be better for consumers by:
- Making all available listings show in the MLS;
- Giving more exposure to sellers of their listings by not permitting “MLS exempt”, “off-MLS”, “Coming Soon” or other marketing methods that may not include putting the listing in the MLS, or at least not initially;
- Leveling the playing field, making all listings available to all consumers since listings could no longer be marketed through just social media, private networks, etc, but, instead, would be required to be put in the MLS;
- Eliminating practices that may violate Fair Housing Laws by limiting what audience a particular listing is exposed to;
Opponents of the new NAR MLS policy argue that it is not better for consumers because:
- It eliminates the opportunity for an experienced listing agent to determine, in cooperation with their seller client, the best means and methods to market their home to obtain maximum exposure and the highest price;
- Pre-marketing, such as a coming soon promotion on social media before the listing is ready to go in the MLS in an effort to generate buzz and hype over the listing, would be prohibited. This is a method of marketing that, in our current low-inventory market, has been extremely effective in getting maximum exposure, and the highest price, for the seller.
- Agents would not be permitted to quietly “test” the market to see how the listing, and/or it’s price, will be received by the market. This is often done by marketing the home before entry in the MLS to establish the right price. Once in the MLS, the days on market start working against the seller, as do price reductions, so coming into the MLS at the right price is essential for the seller.
- It prevents a seller from using a REALTOR® when they wish to have their property marketed in a private manner and not publicly. This happens often when the seller is a high-profile individual that for security and/or privacy reasons, does not want photos and details about their home (including that they are selling it) publicly known. It can also occur in the case of a divorce, a distressed-type sale, etc;
Time will tell whether this proves to be good, or bad, for the industry and the consumer.
Stay tuned.
