420 – Bye Bye Realtors

by | Dec 29, 2023 | Podcast | 0 comments

National Association of Realtors Lawsuit & Buyer Representation

The Lawsuit – What's at Stake?

  • Moehrl v. NAR et al.: This class-action lawsuit alleges that NAR policies force home sellers to offer a commission to a buyer's agent, when listed in the MLS 
  • Antitrust Concerns: Plaintiffs argue that this rule reduces competition between buyer's agents by making it harder for discount brokerages or agents operating on lower commission structures to attract clients. They also argue that it inflates commission rates overall, as there's less incentive for negotiation.
  • Class Action: The lawsuit represents millions of American homebuyers who have allegedly paid inflated commissions due to NAR's rules. Potential damages could be in the billions of dollars, depending on the outcome.

Origins of the Dispute – Why Now?

  • Shifting Real Estate Landscape: The rise of online real estate platforms, discount brokerages, and flat-fee MLS listing services has challenged the traditional model of high commission rates. Buyers are becoming more cost-conscious and seeking alternative service models.
  • Consumer Advocacy: Increased media attention on high housing costs and concerns about hidden fees like commissions have fueled public scrutiny of the real estate industry. Consumer groups are pushing for more transparency and buyer-friendly practices.
  • Department of Justice Scrutiny: In 2020, the DOJ launched an antitrust investigation into NAR's policies, specifically focusing on the Buyer Broker Commission Rule and its potential anticompetitive effects. This investigation is ongoing and its findings could influence the outcome of the Moehrl lawsuit.

Part 3: Potential Outcomes and Implications

  • Scenario 1: NAR Loses: The court could overturn the Buyer Broker Commission Rule, giving sellers more flexibility in how they offer compensation to buyer's agents. This could lead to increased competition and potentially lower commission rates for buyers. However, it could also make it harder for some buyers to find representation, especially in rural areas.
  • Scenario 2: NAR Wins: The court could uphold the Buyer Broker Commission Rule, maintaining the status quo. This would likely benefit real estate agents and traditional brokerages, but it could also leave buyers feeling frustrated with limited choices and high costs.
  • Uncertain Future: The lawsuit is complex and ongoing, with multiple appeals possible. Predicting the final outcome and its long-term impact on the real estate industry is difficult.