Agents Decoded: The future is uncertain — but don’t panic!
NAR’s proposed settlement in the commissions cases has quickly led to a flurry of headlines — many of them wrong. Here’s what agents need to do.
The direction of your business depends on decisions you make every day. Agents Decoded can help you by presenting the perspectives of seasoned pros who have been there, made mistakes, and found success.
Everyone take a deep breath. Inhale, exhale, repeat.
Unless you've been living under a rock for the last five days (well really, since 2019, when the first of many antitrust cases were filed), you're well aware that change is afoot in the real estate industry.
On March 15, news broke that NAR entered into a proposed settlement with plaintiffs in the Sitzer/Burnett antitrust lawsuit.
Within minutes, the mainstream media (MSM) coverage began. Headlines like this were popping up everywhere:
Powerful Realtor Group Agrees to Slash Commissions to Settle Lawsuits (NY Times)
Realtors' settlement could dramatically change cost of housing sales (Washington Post)
Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes (Wall Street Journal)
The 6% commission on buying or selling a home is gone after Realtors association agrees to seismic settlement (CNN)
National Association of Realtors settles $418M lawsuit that will eliminate 6% commission fees (Fox News)
The huge $418 million realtor settlement means you can find a home online without having to pay a buyer's agent commission (Fortune)
It goes on and on and on.
Many agents and brokers freaked out, and are continuing to do so. Confusion reigns. Misinformation — and flat out wrong information — keeps rolling in, much of it fueled by agents themselves.
Stop. Just stop. It is time to step back, assess, and learn what is happening.
Clearly, much of the MSM news is misguided and wrong. But real estate consumers don't know that. And it's those very consumers who read the clickbait headlines and listen to newscasts proclaiming that home prices will fall, commissions are gone and agents will quit real estate in droves.
What can agents do?
First, we need to stop speculating, stop assuming, stop spreading misinformation, and to be frank, stop making things up. We must educate ourselves on what is actually happening instead of reading too much into sensational headlines.
One source of information is your broker. There are amazing brokers out there who have been following these cases since their inception and truly understand what is happening. Unfortunately, there are also brokers who have either ignored what's been happening or brushed off these lawsuits in the belief that they will just go away. You are going to need to determine which of those segments your broker falls into.
You should also be listening to your local, state and national Realtor associations. Lamented by many, the associations understand how real estate works — far better than the MSM.
No, the associations don't have all the answers. No one has all the answers, yet.
You are also going to have to step up and educate yourself. But how?
The single best thing you can do is read the full proposed settlement agreement, available on NAR's facts site with no login required.
Yes, it is 108 pages long and filled with legal jargon. It is not an easy read, but it is an important read and the definitive source for what is happening in these critical cases. Every agent and broker should read it. It answers many questions. It will also raise more questions.
Understand that the settlement agreement is not final and must be approved by the court. I have talked to three attorneys who feel it's likely the settlement will be approved with little if any modification in "three months or so." That doesn't mean they can't be wrong.
The elephant in the room is the Department of Justice (DOJ). While my understanding is that the DOJ does not have the power to actually approve the proposed settlement agreement, they most certainly can — and I suspect will — file a "statement of interest" outlining their opinion and objections to the settlement. A little over a month ago, they did exactly this in the Nosalek case.
In that statement, the DOJ made it crystal clear they are looking for these cases to prohibit "sellers from making commission offers to buyer brokers at all."
The proposed NAR settlement doesn't come close to this DOJ expectation. In fact, it clearly allows for cooperative commissions. There is no reason to believe the DOJ has changed its stance on this in the last month. They almost certainly will have something to say about this agreement, and we'll all have to wait and see what that is.
Which leads to the second thing agents need to do.
Have patience. That is really hard. This proposed agreement is less than five days old. It will result in changes to how you do business. Exactly what changes, and how to deal with them, is not clear. Yet. You can't expect to have all the answers just days after a sweeping legal settlement comes into play.
Hard as it may be, you need to give your associations and brokers time to wade through the details and develop new plans, forms and disclosures.
Again, take a deep breath. Try to relax. Educate yourself.
Should you be worried about your career?
Change is hard. The unknown is even harder.
But this much is true: People will always buy and sell real estate. It's a complicated, expensive, personal, infrequent process for virtually all consumers. You, whether you are a buyer or seller's agent — and most likely you are both — play a crucial role in real estate. People want expert representation. People need expert representation. That isn't changing. In fact, it is becoming even more important.
Yes, your clients and prospects will be reading the mainstream media, but you can help them understand what is truly happening. And that's a valuable position to be in.
Breathe in. Breathe out. Continue to hone your craft. Continue to learn. Continue to provide an amazing customer experience. Now more than ever, you have an important job to do.
Disclosure: I am not a lawyer, and nothing I say should be taken as legal advice. I am a broker, but I am not your broker. I have followed these cases closely for almost five years, but my opinions here are only that — opinions.
Jay Thompson is a former real estate agent, broker-owner and industry outreach director. He is currently an industry consultant and sits on several boards. The views expressed in this column are solely those of the author.