The copycat lawsuits are pouring in now, with attorneys from across the country looking to get their piece. The latest, called Batton 2 (other versions were filed previously), is for buyers from the last 27 years:
“All persons who, since December 1, 1996 through the present, purchased in the Indirect Purchaser States residential real estate that was listed on an NAR MLS.” For this class, the plaintiffs are asking for damages under “antitrust, unfair competition, consumer protection, and unjust enrichment laws.”
The class will include millions of people! If NAR goes out of business (which is likely), it won’t change much because we’ll still have state and local associations. We’ll have less lobbying, but lower dues!
All plaintiffs have momentum now, and the lead attorney from the first lawsuit doesn’t just want money. “One of our goals in filing the case is to make sure any changes are brought nationwide,” said Ketchmark. “We’re extremely focused on making sure any change that comes from this is real change.”
But the NAR is taking it lightly, just like they have from the beginning:
“We are currently reviewing the new filing, and it appears to be a copycat lawsuit,” Mantill Williams, NAR’s vice president of communications. “We continue to assert that the practice of listing brokers making offers of compensation to buyer brokers is best for consumers. It gives the greatest number of buyers a chance to afford a home and professional representation, while also giving sellers access to the greatest number of buyers.”
Here’s our corporate viewpoint:
Compass spokesperson Devin Daly Huerta said the company doesn’t comment on pending litigation, but provided comments from the company’s earnings call on Monday, saying the company “will respond accordingly to the complaints filed against us at the appropriate time” and that the company feels “confident that Compass is well-positioned.”
Compass pointed to rule changes at Northwest MLS that made listing broker compensation to buyer brokers optional and didn’t result in any decrease of offers of compensation or the amounts offered. “So we have evidence in a major U.S. market of what this change might look like that gives us confidence,” the company said.
“Secondly, we believe we are positioned well because we have the combination of some of the most productive agents and the only end to end technology platform in our industry. Third, we currently have agents that successfully ask their buyers to sign buyer broker agreements in order to work with them. We are in the process of launching trainings to all of our agents to empower them to successfully get buyer broker agreements signed with their buyers.
“Lastly, we operate largely in the luxury segment, where we think buyers will always want the help of an advisor through their home-buying journey.”
Similar statements from other brokerages are downplaying the impact. Yes, we will probably have better presentations of what realtors do and why we are worth the money, but anyone who thinks that will fix everything will be sorely disappointed. Consumers will be empowered to consider other options.
The only people who think that buyer-agents are needed are the agents. Buyers find homes for sale online, and they are proud about finding them before their agent does. They wonder why they need their own agent, when they can just contact the listing agent. The listing agents will be enouraging those thoughts!
Here’s a paragraph from the red team – the first to publicly mimic my prediction:
But if buyers’ agents become less common, Redfin will prosper in that world too. We run the largest brokerage website in America. We’ve built self-service technology for buyers to set up their own tours and to make offers. We’ll use that technology to market the properties listed by our agents directly to consumers, taking market share from other brokerages. We may open that platform to other listing agents who work with us as partners.
This is an opportunity for major changes to be implemented on how homes are sold, and these lawsuits are the disruption device. Realtors will roll out fancier graphics that tout the status quo, leaving it wide open for new ideas. Zillow and Homes.com have surged ahead of what should have been the dominant search portal, realtor.com, which NAR also screwed up when they sold it to an outside company.
Zillow has been amassing the pieces to build a super app, and create one-stop shopping for homes. If they add an auction component, it will be O-V-E-R for realtors.
Crying “copycat lawsuit” and continuing to stand by your previous position is what you do after you WIN in court.
I agree Gene! At least explain why NAR will prevail, or what will be different next time.
This is lame:
“We continue to assert that the practice of listing brokers making offers of compensation to buyer brokers is best for consumers. It gives the greatest number of buyers a chance to afford a home and professional representation, while also giving sellers access to the greatest number of buyers.”
What everyone thinks that statement says: “We are right, and we’ll keep being right that it’s best for consumers that agents steer buyers to homes based on the commission rate offered.”
Seller: I have a house I want to sell. How much will you charge to help me?
Buyer: I want to buy a house. How much will you charge to help me?
In the late 90s yahoo.com received more “eyeballs” then amazon.com by 100000x.
Also, in the late 90s yahoo auctions was considered a competitor to eBay.
NAR is the Yahoo of tech. It’s a place where you go when you don’t care if you’re replaced or outdone. Leadership will continue to be poor + they’ll get their paychecks but nothing will change + NAR will fade into obscurity.
More psycho-babble from the defendants’ side, and it won’t be enough. From the NAR president:
As the National Association of Realtors and brokerage franchisors prepare to appeal a jury’s decision to award approximately $5 billion in damages to 500,000 Missouri sellers, NAR President Tracy Kasper posted a five-minute video on Wednesday explaining how Realtors should navigate choppy waters.
“I know that there are questions about last week’s verdict, so I wanted to reach out directly. As a fellow Realtor, I get it. I’m a broker-owner. I list and sell properties just like you do every single day. I have employees and I’m getting those questions myself.”
“It is critical to maximize transparency with your clients about their choices and your terms,” she added. “Use your agreements with your buyers and your sellers to help them understand exactly what services and value you’re going to provide to them. Continue to express that commissions are negotiable and set between you, their broker and themselves. Explain clearly how you get paid and what you are charging.”
Kasper said NAR still believes in its cooperative compensation rule, which requires listing brokers to make an offer of compensation to buyer brokers in order to submit a listing to a Realtor-affiliated MLS. However, she said Realtors should be transparent with consumers about the negotiable nature of the rule, which allows listing brokers to continue to make an offer of compensation to buyer’s brokers or allows buyers to pay their broker directly.
“For buyers, this includes paying for your services directly, plus options to obtain some or all of that fee through other means, such as offers of compensation from a listing broker, all of which would be specified in your buyer representation agreement,” she explained. “For sellers, this includes options to allow offers of compensation to be made by their listing broker to a buyer’s broker, and if so, how much and under what terms, all of which, again, would be specified in your listing agreement.”
She added, “I also encourage everyone to express the incredible value that we as real estate agents who are Realtors bring as we guide our consumers through the financial, legal and community complexities of buying and selling a home.”
Kasper said the fight to keep the cooperative compensation rule is far from over, as NAR, HomeServices of America and Keller Williams prepare to appeal the Sitzer | Burnett ruling. Meanwhile, RE/MAX and Anywhere are still awaiting the court’s approval on their respective settlement terms for the Sitzer | Burnett, Moehrl and Nosalek suits.
“I was incredibly, incredibly disappointed by the verdict. The jury reached an outcome that was neither supported by the law nor the facts that were presented in this case,” she said. “The plaintiffs tried to portray this outcome as a win for consumers, but those of us in the industry know the opposite is true. This is one chapter in a very long legal process. We plan to appeal the verdict.”
Kasper said Realtors should be ready for “other legal developments” that could include a court order “that changes the rules about cooperative compensation.” The NAR president also alluded to Moerhl and a new lawsuit filed by Sitzer | Burnett plaintiffs’ counsel Michael Ketchmark last week known as “Gibson.” She did not, however, mention another new lawsuit filed Nov. 2 in a federal court in Illinois.
The Gibson lawsuit was filed Oct. 31 in the U.S. District Court for the Western District of Missouri and lists Compass, eXp World Holdings, Redfin, Weichert Realtors, United Real Estate, Howard Hanna Real Estate, Douglas Elliman and the National Association of Realtors as defendants. Gibson seeks $200 billion in estimated damages for Missouri homesellers — an amount that would be trebled to $600 billion.
“There are other legal actions pending and we may see additional plaintiffs come forward to make similar allegations in new cases,” she added. “In short, we are in the midst of a very complex legal situation and we are working around the clock to evaluate the situation and get the very best advice about a path forward.”
$10 million lawsuit in Washington DC filed against a big agent team for antitrust violations a la Sitzer.
Consumer groups and California want buyers to have representation Jim. How much they get paid will work itself out. Glad they aren’t suing the little guys. (Yet)
PS No plans to sell our home but if and when we do we will offer 2-2.5% to a buyers agent to attract as many offers as possible. I think most prudent sellers will offer something between 1.5 and 2%.
Just my opinion
Very nice of you to respond.
Let’s be civil about it. I’m only going to take listings where the buyer-agent gets paid 2.5% by the seller.
It is in the seller’s best interest to do so.
Could it get so crazy that sellers don’t have to pay 2.5%? Yes, and it’s why my listings will look so much more appealing.
It’s more than the 2.5% on the buyer side. I might not mind the 2.0% when representing buyers if I love the agent, but any agent I love is offering 2.5%. People underestimate the power of the network. I would much rather work with agents I adore, than agents I have never heard of, regardless of rate.
Will it get to the point where a seller demands little or no commission to the buyer-agent, and I’m forced to decide whether or not I’ll take the listing?
I’ll be compensated adequately, but will the buyer-agent still show the home? This is the crux of the conversation.
When I’m on the buyer side, I have no problem asking my buyer to make up the difference when warranted, and they don’t either.
All market forces are pushing towards single agency, and I’ll handle it fine. Will others? Probably not.
A realtor I knew back in the 80s had his own version of “buyer’s agent.” Buyers paid him a commission and he would represent their interests only and accept no commission from the seller side. He often cautioned me that in the absence of such an agreement, all agents – including the one handling your purchase as a buyer – were getting paid by the seller, and that the only things you should depend on your agent to look out for your interests about were those mandated by law.
As sellers, we really don’t care whether our agent is paying the buyer’s agent a share of the commision we pay, as long as we feel our interests are being looked after. As buyers, we are probably a lot of work to deal with, because we ask agents a c**pload of questions and look over their shoulders every step of the way.