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Michael Ketchmark, the lead attorney in the landmark Sitzer-Burnett case, filed a new lawsuit last October within minutes of the jury finding in favor of the plaintiffs and awarding approximately $1.8 billion in damages against NAR and its co-defendants. This copycat lawsuit, dubbed the Gibson case, named 9 large brokerages including Compass, Redfin, and others who had not been named parties in the Sitzer-Burnett case. According to Inman:
“As with many similar cases, the plaintiffs alleged that the defendant firms violated the Sherman Antitrust Act by enforcing rules requiring listing brokers to offer compensation to buyer brokers in order to submit a listing to a multiple listing service. This practice, the plaintiffs argued, artificially inflated broker commissions … A judge overseeing the Gibson commission case on Thursday granted final approval for nine settlements involving companies including Compass and Douglas Elliman. Judge Stephen Bough granted the final approval. In addition to Compass and Douglas Elliman, the settlements involve The Real Brokerage, @properties, Redfin, Realty ONE Group, Engel & Völkers, HomeSmart and United Real Estate. Collectively, the companies will pay $110 million.”
The plaintiff’s attorneys are seeking one-third of the damages, claiming to have spent over 100,000 hours on the case over the last five years.
(Source: inman.com)
Tuesday, October 29th was the deadline for formal objections to the NAR settlement to be filed. According to RISMedia:
“While about half a dozen parties came forward, including plaintiffs behind other commission-focused lawsuits and a law professor who has written critical analyses of the industry, one voice was noticeably absent: the Department of Justice (DOJ). But that shouldn’t necessarily be viewed as an implicit endorsement, or a sign that law enforcement won’t have anything to say on the settlement. Brian Schneider, chief counsel at Bright MLS, previously told RISMedia that he doesn’t believe the DOJ are bound by the deadline, and that Judge Stephen R. Bough, who is overseeing the settlement process, is ‘almost certain’ to allow them extra time.”
(Source: RISMedia.com)
While we haven’t officially heard from the DOJ, a handful of formal objections to the proposed NAR settlement were filed, urging the federal judge not to approve the terms of the negotiated agreement at the upcoming hearing scheduled for November 26th. The most comprehensive objection was filed by Tanya Monestier, a University of Buffalo law professor. According to her 132-page objection:
“If there is anything that anyone agrees upon, it is that this settlement has caused mass confusion for both buyers and sellers … It is an example of something concocted by lawyers without a full appreciation of how this would play out in the real world.”
According to HousingWire:
“Monestier took issue with the business practice changes, saying they don’t do enough to protect consumers. She also objected to the fees that are expected to be paid out to the plaintiffs’ attorneys … In her objection, Monestier claims there is ‘ample evidence’ of agents asking buyers to sign modified buyer representation agreements, which allow the buyer’s broker to increase their agreed-upon compensation to whatever the seller is offering … Monestier claims that the ambiguity around this practice in NAR communications, and the settlement itself, have allowed for this practice to occur.”
(Source: HousingWire.com)
A Buyer representation agreement is a contract between two parties… A buyer, and a real estate brokerage. Just like any other contract, it can be amended at any time, but only with the mutual agreement of the parties. Yes, it’s possible to amend an existing buyer representation agreement to increase or decrease the amount of compensation, but both parties have to agree and sign for that change to go into effect. Tanya Monestier claims that if some agents end up earning more compensation than what was originally agreed to by the buyers through a modification of the agreement, this is a violation of the settlement, but I disagree. Before the settlement, oftentimes buyers would have no idea what their agent was earning until they saw the itemization on the settlement statement, but with the new rules in place agents are forced to have the conversation upfront, which creates more transparency and puts the buyer more in the driver’s seat. For example, if an agent asks a buyer to modify the terms of the agreement because the seller of a particular house that the buyer is interested in happens to be offering a higher rate of compensation than what the agent previously outlined in the buyer representation agreement, the buyer is the one who has to sign off on that. And instead of agreeing for the agent to earn excess compensation, that buyer may choose to negotiate for that difference to be applied toward their other closing costs instead.
Back in August, two brokers and three agents affiliated with a Sotheby’s franchise in Michigan filed a lawsuit against NAR over the mandatory membership requirement in order for them to gain access to a NAR-affiliated MLS. According to the suit,
“The requirement of membership in the (named REALTOR®) organizations constitutes a conspiracy to monopolize the use of the MLS and creates barriers to the market for all REALTORS®, agents and brokers who seek to enter the market but who do not wish to belong to one of the (named REALTOR®) organizations,”
According to RISMedia:
“Besides NAR and the Michigan Association of REALTORS®, the lawsuit names two local REALTOR® boards, with the plaintiffs claiming that they had to join all of these organizations in order to access the MLS. It also targets Realcomp II, the software company that manages and regulates the MLS.”
NAR posted a response to the lawsuit with a blog post on their website, saying:
“Limiting MLS access to REALTORS® is legitimate and lawful, and … litigation challenging the MLS membership access rule can be successfully defended.”
(Source: RISMedia.com)
Now a similar lawsuit has been filed in Pennsylvania by a broker named Maurice Muhammad. According to RISMedia:
“Muhammad, representing himself, is suing the National Association of REALTORS® (NAR), the Pennsylvania Association of REALTORS® and the Greater Lehigh Valley MLS (GLVMLS) for $5.6 million over the requirement that he become a REALTOR® in order to be able to access the MLS.”
(Source: RISMedia.com)
My thought is that just because an MLS exists doesn’t mean that you’re entitled to its data. For example, I’m a member of the Greater Greenville Association of REALTORS®. My main reason for joining was to get access to the Greenville MLS. However, in order to join the Greater Greenville Association of REALTORS, I had to also join the South Carolina Association of REALTORS® and the National Association of REALTORS®. Altogether, the dues for those three organizations cost $575 per year, and the Greenville MLS costs $145 per quarter. That’s really not a very big barrier to entry. Real estate is a unique business because the cost to get up and running is incredibly low when compared to the upfront investment required to get started in other industries. And at the end of the day, I have a choice. If I want access to the Greenville MLS, I need to be a member of these REALTOR® Associations. Or, I could choose not to join. Every real estate brokerage in my area has to do a cost-benefit analysis and decide for themselves if the value they get from having access to the MLS is worth the cost of joining GGAR, SCAR, and NAR.
CoStar Group (parent company of CoStar, LoopNet, Apartments.com, Homes.com, and a handful of other websites) recently announced revenue growth of 11% for the third quarter, and reaffirmed its commitment to continue investing in the Homes.com residential real estate portal which it acquired in 2021.
The Homes.com team made a big marketing push in 2024, and invested a lot of money in direct mail, social media and TV advertising, including Super Bowl commercials featuring a handful of celebrities. They plan to keep the same marketing budget for 2025, while continuing to hire hundreds of sales reps.
According to RISMedia:
“CoStar Group Founder & CEO Andy Florance told investors on an earning call this week that the company is bullish on its Homes.com business despite a drop in bookings … Florance pointed to larger shifts in the real estate landscape as being favorable to the Homes.com model, continuing to criticize the ‘lead diversion’ businesses favored by rivals Zillow and Realtor.com®. He also pointed to both the NAR settlement and the pressure to change Clear Cooperation as a potential boon … During the call, Florance fielded questions from investors, allaying concerns by emphasizing the long-term viability of the Homes.com model … Florance also reiterated his belief that Homes.com’s ‘your listing, your lead’ model is what both consumers and agents actually want in the long run.”
(Source: RISMedia.com)
While other portals like Zillow and Realtor.com make their money primarily by selling leads from consumers who request information or tours on listings to Agents who buy-in to particular zip codes, Homes.com’s business model is to deliver all leads directly to the listing agent for free but to charge agents for increased exposure of both their agent profiles and their listings.
According to Inman:
“The surprising strength of the U.S. economy has quelled fears of a recession — but [that] also means home prices are likely to keep rising and mortgage rates may not come down as quickly as previously expected, Fannie Mae economists said Thursday … Rather than a recession, Fannie Mae’s Economic and Strategic Research (ESR) Group sees economic growth (as measured by gross domestic product, or GDP) slowing from 3.2 percent in 2023 to 2.3 percent this year and 2.0 percent next year.”
(Source: Inman.com)
According to RISMedia:
“The U.S. stands out as a growth outlier compared to other major economies, with the Federal Reserve likely to keep interest rates higher for longer than its global peers.”
(Source: RISMedia.com)
While the U.S. economy has so far been able to avoid the recession that many have been predicting since the Federal Reserve began tightening its monetary policy to combat 40-year high inflation, there are still risks. Higher interest rates have brought renewed attention to the ballooning cost of our national debt, and bond investors are nervous that the Fed may have begun easing its policy before the inflation problem has been fully solved.
As long as the economy keeps humming along, the Fed may feel more comfortable with taking their time to bring rates down rather than loosening too quickly.
According to HousingWire:
“The Federal Housing Finance Agency has expanded the eligibility for alternative appraisal methods on purchase loans by increasing the maximum loan-to-value (LTV) requirement. The announcement was made on Monday during the Mortgage Bankers Association (MBA) Annual Convention & Expo in Denver, Colorado … The maximum LTV ratio will increase from 80% to 90% for appraisal waivers and from 80% to 97% for inspection-based appraisal waivers.”
(Source: HousingWire.com)
The advances in AI have made automated valuation models more accurate than they used to be, there is still a legitimate risk to removing or minimizing a licensed, human appraiser from the equation.
An Idaho broker named Mark Fitzgerald has come under fire, no pun intended, for offering to sell ‘liberal’ homeowners’ properties for free if they’re relocating out of state, and is offering to provide conservative buyers moving into the state with a free AR-15 at closing. Regardless of your political ideology, you have to give this guy credit for this creative marketing stunt. Some are accusing Fitzgerald of violating Fair Housing laws with his offer, but political affiliation is not a protected class, at least not at the federal level.
(Source: Inman.com)
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