The National Association of Realtors (NAR) took another push back at last October’s verdict in the Sitzer/Burnett case, arguing that the verdict was fueled with “erroneous rulings by judge” while insisting the cooperative compensation issue raised in the trial is not anti-consumer.
In an editorial appearing in the Winter 2024 print edition of Realtor Magazine and reprinted online, Executive Editor of Digital Media Graham Wood stated that NAR “introduced evidence to show how the real estate marketplace works and how cooperative compensation benefits consumers. NAR also showed that its rules prohibit anticompetitive behavior and encourage the free market and competition.”
Wood questioned why the jury ruled in favor of the plaintiffs, arguing the jurors were misdirected in reaching a verdict.
“NAR believes this outcome was unsupported and was largely driven by legally erroneous rulings by the judge, including legal instructions that prohibited the jury from considering the vast procompetitive benefits that result from NAR’s policies and cooperative compensation practice,” he continued.
“NAR continues to believe cooperative compensation is good for consumers: Real estate sales agents provide a bona fide service to home buyers and sellers and should expect to know what they’ll be paid,” Wood added. “Cooperative compensation makes the process smooth and efficient while ensuring that buyers benefit from professional representation if they so choose. Cooperation benefits sellers by bringing more buyers to the market. And buyers, sellers and brokers benefit from the central source of accurate data on homes for sale.”
Wood stated a post-trial briefing will be complete in March and that NAR expected an appeal to be briefed and argued later in 2024.
;
Absolutely correct. The rate of compensation is pro-competitive since it allows the seller to establish the rate of compensation to be paid to the participating parties. Also seller is free to choose amongst many brokerages offering the lowest cost to consumers.
This is not good for the consumer, your reasoning is BS. Most buyers do not have the extra cash, and this is going to be a nightmare. I suspect this will all go away when you see how awful it is. Where is the forward thinking? Transparency was fine. Who pays your fee? Sellers pay my fee, let’s go shopping.
They are so ridiculous. They will not be able to finance it either. SO funny how we do not question 12k for an MRI but we are about to bring our entire profession down.
Why has it taken so long to reach out to the membership. My very unscientific survey concluded that few members knew little or nothing about the course of these proceedings! Two months later I found out that less than 5% of Realtor members had engaged their members with any meaningful information beyond pointing them to NAR publicity notices. The good news is that those that did take some time to dig were very well versed and were beginning to ask questions. Overall NAR response has been weak , not clear and offered almost no direction. Is the group really made of nearly 1.5 million folks? Does this organization have any money from its budget to better inform/educate/prepare the membership? Pathetic. Absurd. Unprofessional.
Sellers need to understand that it is a “win-win” for them since the Buyer is footing the entire cost of the transaction via the sales price – commissions are baked into the price; Buyer pays all – and we’re not even talking about any potential tax advantage to the Seller for “paying” the commission that was actually paid for by the Buyer!
Sorry but you’re misleading. The buyer is not paying any commission under current rules. The purchase price belongs to the seller.
Agreed! 100%. At least the buyer has representation now. In the old days, the buyer quietly paid the commission
Excellent point that the seller get the Buyer Agent commission as a write off when its paid thru the sales proceeds. The Buyers been paying their attorney cost & the Bank attorney cost for years where attorneys are used and no one has an objection that the bank needs to pick up their own cost for their attorney.
I will agree to disagree
If you want to grind the real estate industry to a halt end the cooperative commission system. Most buyers can’t or aren’t even allowed to pay an agent commission. I work with first time buyers all the time and they are clueless at the process and need an experienced agent who can walk them through it. Going back to the buyer-beware system of doing things is not pro consumer.
With KW snd REMAX settling it’s unlikely the case will be overturned though it’s likely there will be a modification of the ruling and the fine. Regardless agency is about to go through a fundamental change where more buyers will be encouraged to represent themselves in transactions .it won’t be a huge wave at first but over time more people will choose to by pass the agent for the savings it represents. Sellers too will welcome not paying the buyer side. I guess we’ll see but this was a body blow to traditional agency
They may welcome not paying the buyer’s side, and if the buyers decide to do this on their own, good luck! A couple of issues that come to mind if that were to happen is 1. The listing agent will be showing the house to all of the buyers, causing the listing fee to go up. (Sellers are not going to do this nor take the risk to show their house to strangers) and 2. The buyers have no idea how to draw up an offer, so they would never completely be doing this alone, which means someone will be getting paid to do that for them.
Comps will be used to determine listing prices in 2024. Those comps will have buyer commissions in the sold price. Sellers will not be adjusting their list prices downward factoring the buyers commissions. Therefore, buyers will be paying more not less for properties. Going forward there will be no way to know if the seller did or didn’t pay buyer commissions in comps.
Since the NAR is trying to make Real Estate transactions as transparent as possible, I would think that making the compensation in the MLS client facing. If there is compensation going to the Buyer’s agent it would be obvious at that point. If not, then the Buyer’s agent can make that apparent to their client and begin negotiations on the agent’s compensation.
Just like a whole lot of other issues, we go too far off the grid which of course, has to do with other group (attorneys) trying to make a living. Here’s where the sticky point is. Kill the consumer or give the consumer the tool to kill the service provider! It’s all about having choices. We can chose to do the buying and selling ourselves or, have someone to do it for us, just as we have a choice of fixing our car or take it to a mechanic. If we’re too lazy to shop around, then whose fault is that? By the way, attorneys get paid for their services! don’t they? Why shouldn’t we get paid for our services?