No doubt you’ve read and heard lots of chatter around the lawsuits facing the National Association of REALTORS and in some cases, also some real estate corporations. I won’t be breaking all of that down for you here, but you can get all the information you need at nar.realtor and multiple real estate media outlets such as RisMedia and Inman News.
My question is, “What happens if we lose?” Understandably, many REALTORS and industry analyst are saying that real estate as we know it will be a thing of the past. How we receive compensation and from whom also will change forever! MLSs could also be in the rearview mirror along with our independent contractor status. It’s important to observe that other REALTORS and industry pundits are saying nothing will change, ever.
Now that I have your attention…What happens if we win? Honestly, a lot of the same stuff. Change is coming.
For over 100 years, as a profession we have made real estate transactions as smooth as possible for consumers. We neglect to share with them every effort we make on their behalf. We have done a horrible job of communicating our value. We’ve made it look so easy that we now have 1.5 million REALTORS and (according to the NAR 2023 Member Profile) almost 20% of them earned less than $10,000 in 2022. Before you cry “Foul!” and say those must be the assistants, 11% of broker licensees claimed they earned less than $10,000. As a point of reference, the Labor Department says the average income of an American in 2022 was $61,900.
On top of making it look easy, many practitioners have said to their buyers “You don’t pay anything. It’s free for buyers.” Most of you know that’s a load of pooey. Who is the only party who always brings money to closing? Unless the buyer side broker isn’t getting paid at all, it’s not free.
My point is, we brought this on ourselves. As an industry and as REALTORS we have an admirable system in place that protects consumers, promotes competition in real estate, and encourages private property ownership. Again, we’ve simply failed to keep the public informed about what we do. Sadly, many of our REALTOR members don’t understand it either. Friends, that is on us. We don’t need a national media blitz to tell people what we do. People don’t care until they’re talking to one of us about THEIR current real estate needs. www.competition.realtor is a great resource for dialogue and facts about these things we should be sharing with each other and our consumers. I encourage you to check it out.
Previously I mentioned that some believe MLSs will go away. Just so you know, I don’t think it will happen immediately. I do think it’s likely that the agreement for compensation in our MLSs will vanish soon. It’s my opinion that we should start handling compensation discussions and procedures as if there were no MLS. This means, have the conversation with your buyer and let them know if the listing brokerage is offering less than your fee. (You should have covered this with them in your written Buyer Representation Agreement before you looked at any property.) Let the buyer decide how they want to handle this. Don’t decide for them.
At least consider what your procedure will be for getting a written agreement for compensation from the listing broker before submitting an offer. Be sure and consider your conversation with your buyers and sellers as well. After all, no one can assume anything in an offer until there’s a legitimate compensation agreement in writing. Now it’s in MLS, but in the future…who knows?
Let’s tackle the Independent Contractor question. I truly have no idea if this will happen or not. There are people smarter than me who are really worried about it. There are also people smarter than me that just have their head in the sand. That tells me it’s a legitimate threat but again, I have no idea if it will really happen.
If it does, there are pros and cons. If we lose the independent contractor status, I think many brokerages will simply close. REALTOR membership will drop as the remaining brokerages will not put non-producers on the payroll. Also, many of us have an entrepreneurial spirit and won’t do well in an employee environment. Many of us can just go be our own brokerage but that would leave us without the benefits that come from being affiliated with a brokerage and/or franchise.
On a positive note, no more REALTORS who are uneducated and inexperienced with no supervision.
While I have some ideas, I do not have a crystal ball. I don’t know what life after the Department of Justice and litigation looks like for us. What I suspect is that whatever the outcome, change is coming and we, as a profession, will adapt.
People always need a place to work, shop, play, and to live. Private property ownership fills that need but it gets more complicated year after year. The consumer needs us as much as we need them.
My advice is pay attention to what’s happening and prepare as you can. Sticking your head in the sand will not serve you well. It most certainly will not serve your consumers needs either.
For a future conversation, let’s chat about bullying and harassment in our profession and what we can do about it. Until then…#BeNoble.
leighyork 
One response to “Bombshell Lawsuits, Department of Justice Scrutiny, New NAR Requirements – Has the Proverbial Real Estate Stuff Hit The Fan? ~Leigh York”
Great article and you are right. I think those who have their heads stick in the sand and not making any preparations at this time, will be sorely disappointed when they have to make drastic changes because of this lawsuit. It will not be business as usual.