Where Real Estate Gets Its Dirt

What was missing from NAR messaging regarding the commission lawsuits?

Brian Boero from 1000watt wrote a great post about how “the real estate industry’s responses to the Halloween jury verdict to be almost universally weak.” As usual he makes a lot of great points. You may have heard similar arguments if you listened to Rob and I on our most recent Industry Relations podcast with Sam DeBord.

In Brian’s post he states,

“Good arguments balance evidence with proper framing — framing that is usually constructed to activate the emotions of their intended audience.

Good arguments use language, and words, that ignite feeling and imagery. “Cartel” – a word used over and over by plaintiffs’ attorneys – is a great example.”

I thought I might take a stab at this. I wrote the following as if I was writing for the National Association of REALTORS. Hope you enjoy, and thanks Brian for the inspiration.

Why is the Biden administration so focused on attacking solo female entrepreneurs?

Recently a jury comprising of 6 non-homeowners handed down an award in what is known as the Sitzer | Burnett class action suit. The award was $1.8 billion dollars in a suit suggesting REALTORS were involved in a “cartel”, facilitated by the multiple listing service (MLS), to keep real estate commissions artificially high.  We, the National Association of REALTORS, and 2 other real estate franchisors are appealing this ruling.

It was also recently discovered that the plaintiffs in the case had been is close communication with the DOJ before, during and after the trial ended.

The average REALTOR is a 59 year woman and is classified as an independent contractor.  Selling real estate is commission only sales job with no salary, and no benefits.  Why do these 59 year old women strike so much fear in the heart of the federal government?  Surely there are other pressing issues facing our country.

Buying a home isn’t the same as buying a stock.

In a recent hit piece the WSJ cited that since the advent of the internet prices have been slashed on  “stockbroker commissions”, but not real estate.  What may seem obvious, to everyone but the WSJ, buying a home is not like buying a stock, or a book, or a plane ticket.  3 factors come to mind. 

1. Buying and selling a home is typically the largest transaction anyone does in their life. 

2. Buying and selling a home is not a transaction done often, statistics show it might be once every 10 years after you become an adult. 

3. And last but not least is that buying or selling a home is an emotional experience. 

Due to these 3 core issues consumers have chosen time and time again (in fact in 2022, more consumers choose to use a REALTOR than ever before) to hire a trusted advisor.

The 1.5% vs. 6% Lie

Plaintiffs in the Sitzer | Burnett case and others have highlighted that in other countries consumers pay closer to 1.5% for real estate commissions, where in the United States the number is closer to 6%. The truth is consumers in the US have always had choices.  Discount brokerages offer real estate services for much lower than 6%.  In fact very recently Redfin did a nationwide campaign with big red billboards all over the country touting a 1% listing fee, which is less than the 1.5% fee touted by plaintiffs.

So the 1.5% vs 6% is a lie.  Consumers can always negotiate a commission and there are many brokerages and agents offering discounted services.  Don’t believe us, just Google, “flat fee real estate services” and search the over 29 million results.

Would consumers prefer a world where they would have no idea what the house across the street sold for?

Since the birth of the World Wide Web, and the launch of portals like Zillow, real estate listing data is now readily accessible everywhere, a sharp contrast to the rest of the world.  This is mostly due to the multiple listing service (MLS).  The plaintiffs falsely say that the structure and ownership of the MLS forces higher commission rates. This is simply not the truth.  The MLS is one of this country’s greatest inventions and an essential tool of every REALTOR.  The MLS brings together sellers and buyers. It’s reliable. It helps hundreds of thousand agents make a living and brings families together. It’s the operating system of the American Dream.  

The federal government wants to shut down the MLS, which would create a environment of less transparency and bring us back to companies gatekeeping real estate data which would make it more difficult to make offers on properties for sale and finding properties on the internet.

We at the National Association of REALTORS will fight for our members, the open real estate market, and will not let the federal government destroy the American Dream.

The National Association of REALTORS

  1. I need a bucket for the vomit. So much effort defending the indefensible. What is easily defended is the concept that the buy side commission needs to be included as a financable cost.

    There is ZERO excuse for agents to not be required to educate buy side clients that buyer agent fees are always negotiable. The indefensible are all the excuses to make that other than BLATANTLY obvious.

    There is no excuse for the coercion involved in mandating Realtor membership for MLS access and participation.

    There is no excuse for the patheticly weak education and experience standards that afford the possibility for licensure. My cosmetologist had much more rigorous professional training.

    There is no excuse for continued leadership by those who deliberately turnec a blind eye to the many misbehaviors by senior people at NAR.

    There is no excuse for the blatant greed exhibited by NAR towards both its members and their clients.

    Finally the raw hubris exhibited daily by NAR has no defense.

    Pass the bucket.

  2. Your Title sounds a bit Inmanish. Too dramatic for the substance which points out many other issues (reporting of WSJ, etc),,,,,other wise, maybe NAR press reporting should be your next position……..thanks for your insight.

  3. “The average REALTOR is a 59 year woman and is classified as an independent contractor. Selling real estate is commission only sales job with no salary, and no benefits. Why do these 59 year old women strike so much fear in the heart of the federal government? ”

    This statement made me die laughing. While I agree with the point you’re trying to make, my first thought was “You have MET 59 year old women, right?” Most of them are pretty formidable and take no **it.

  4. I think referring to any commission rate that is less than 6% as “discount” contributes to negative public perception. But I wonder if there is disclosure in stock transactions of everyone who gets a piece of the
    Commissions generated by the transaction?? I am not sure why it is anyone else’s business how much of my commission I choose to offer to
    someone for bringing a buyer especially if I have a sellers written permission to do so. And to compare commissions to
    other countries makes no sense given the difference in the duties responsibilities and liabilities. Apples and oranges.

  5. Michael – not sure what state you are in but in my state we have rigorous testing education and continuing ed requirements. My cosmetologist daughters will tell you it is much more difficult. And in my state there is no requirement to be a member of NAR to have MLS access. You must be licensed.

    I am a 59 year old woman. I challenge anyone to go ahead and underestimate me. That will be fun. 😊

  6. Great comments @Suzanne, @Debbie K, and @Michelle! I meant no ageism or sexism here, I was just riffing off the “cartel” as a writing exercise. @Debbie K in regard to the commission question I think the cat is out of the bag so it has to be addressed but you make a great point.

  7. Maybe you should send this to defendant attorneys at NAR. Although I wasn’t in the courtroom for the Sitzer trial but I would imagine the NAR attorneys make a very logical and reasoned argument. The problem is, they should’ve matched the plaintiffs attorney in making a more emotional TV trial argument enough to make the jurors break out there hankies. Picture Suits, Boston Legal et al.

  8. Pingback: Industry Relations Podcast:The Future of NAR: Can This Industry Titan Be Reformed? - Vendor Alley | Vendor Alley

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