First, it was the Department of Justice suing the National Association of REALTORS®. That’s now grown to several other lawsuits, including the latest against Compass, Sotheby’s, Realogy, Keller Williams, RE/MAX and several others in the State of California. This suit alleges the “sharing of real estate commissions between listing and buyer brokers is a conspiracy in restraint of trade in violation of the Sherman Antitrust Act but for inflating buyer costs, not seller costs, in the form of higher home prices.”
The lawsuits are wrapped around the concept of the co-broker agreement, how they are disclosed and whether they need to exist or not. One lawsuit eluded to the fact that the clients didn’t receive the value for what they paid in their mortgage for the commission that was paid to their representing agent.
One change we see is more buyer-broker agreements being implemented. We also see Agents articulating their services in more detail during a listing appointment, making it clear why a buyer is adding to their mortgage for the service that they receive.
Previously, the order of importance was first the buyer, then the agent, and lastly the house. However, times have changed and the order of priority is still the buyer first, then the house, and lastly the agent. This role reversal is what’s causing a lot of lawsuits. It was very clear before because you couldn’t actually get into the houses without an agent. If a buyer wanted to know what was on the market, they couldn’t find them as easily as they can now.
With these lawsuits popping up more and more, and with attorneys talking amongst themselves, we are certain that policy changes are coming. The buyers’ agent, regardless of experience, value, or skillset gets a guaranteed commission amount no matter what they do. This is the only industry we see this structure. When the shift is made to getting paid for the work you actually do, then we’re more aligned with every other industry and the spotlight darkens. It’s clear that REALTORS® are under attack for underperforming in comparison against what they’re getting paid. Consumers feel that Agents are not transparent.
What we’re trying to do is raise the bar and the quality of agents and be a catalyst for more transparency within the industry. We need to deliver value above what we, as agents, get paid for. When we do this, we’ll set new standards within the industry to help avoid lawsuits such as what we’re seeing happening now.
Want to learn more?
Jeff Sibbach and Phil Sexton discussed the topic in their weekly podcast. Listen to the replay below and be sure to subscribe so you don’t miss an episode!
Press play to listen to the podcast episode:
…or watch the video below…
