⚖️The NAR Lawsuit Isn’t as Earth Shattering as You Think
Happy Monday!
Here is an Idea, an Action, and a Question to consider this week.
Idea
As you know, last week a jury found the NAR and two brokerage firms, Homeservices of America and Keller Williams Realty, liable for $1.8 billion in damages for conspiring to keep commissions artificially high. In the lawsuit, the plaintiff accused these entities of conspiring against consumers, compelling them to unfairly pay for a buyer's agent representation. With a ruling involving billions of dollars, the lawsuit could reshape industry norms, particularly around commission structures.
Despite the lawsuit's potential for change, I believe the immediate impact on our industry will be minimal. These legal processes are lengthy and complex, resembling the slow movement of an iceberg rather than a swift tide change. If you’re worried about your job security as an agent, I’d say it’s an unsubstantiated concern.
Looking globally, countries like Australia and several European nations offer insights into different real estate practices. In some regions, buyer representation is less common, and listing agents are compensated only if they bring the buyer. This shift has unique implications for both sellers and buyers, with potential disadvantages for buyers in need of robust representation, such as military personnel. It’s possible that in the future, the American real estate industry will look more like the real estate industries in Australia and Europe. But if that’s the direction we’re headed, we’ll all have time to prepare for such a shift.
A critical aspect of the debate centers around who truly benefits from the current system. If sellers can no longer legally pay for the buyer's agent, as is the norm, this might disadvantage VA buyers, who, under current guidelines, are not permitted to pay for a buyer's agent even if they wanted to.
The lawsuit underscores the need for greater transparency and professionalism among agents. This includes clear communication about commission structures and the roles and responsibilities of buyer's and seller's agents. It's an opportunity for agents to strengthen their ethical practices and client relationships. This business is a relationship business. If you’re not building trust with your clients, you’re not going to be successful––whether there’s a shift in the way the industry works or not.
Here’s the bottom line: While the lawsuit raises important questions and may prompt changes, the fundamental nature of real estate transactions will likely remain unchanged. Houses will continue to be bought and sold, and the industry will adapt to any new norms. Ironically, the lawsuit seems to benefit the attorneys the most. The substantial legal fees suggest that the real winners of such legal battles are often those representing the parties, rather than the consumers or homeowners themselves.
As we navigate these complex waters, it's crucial to stay informed and adaptable. The real estate landscape may evolve, but our commitment to serving our clients and community remains steadfast.
Action
Call your most trusted advisor in the real estate industry. Ask them how they think the recent lawsuit will affect the industry. In times like these, it’s important to be informed and think critically. Don’t let the drama get in the way of the truth.
Question
If the worst case scenario happens (which IMO is that it becomes illegal for a seller to pay a buyer’s agent) in the industry, how will you adapt so you can still succeed?
See you next week,
Matt “Roar” Gardner
Real estate investor-agent, Author of Supersonic Real Estate: Light Your Afterburner to Accelerate Your Investor-Agent Career (Coming Soon!), and keynote speaker.
