In less than a week, attorneys in the unprecedented Burnett-Sitzer class action commission lawsuit will make their opening arguments before a jury in Kansas City, Missouri, beginning what is likely to be a landmark historic trial that touches on the foundation of real estate.
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My only question is who would represent buyers in future transactions. Most buyers can’t afford to hire anyone to represent them. With most buyer in order to get approved for a home they are required to have reseve funds in their account. I dont see a way where this helps the buyers at all.
It would become incumbent upon the buyers agent to negotiate their fees through seller concessions, paid from the proceeds of the sale.
Would this further deplete the ranks of ill skilled buyer agents in our industry? I would hope so.
This would be devasting to the USA RE world and will only hurt those who dont know how the homebuying process works…your avg fist time home buyer. I feel like a questions should be asked to the plantifs “how much did they pay their Realtor when they purchased their 1st home” SMH what is this world coming too!!
This is an important milestone prior to the start of the first trial from the perspective of the observer.
The filing of the trial briefs cuts through nearly two years of media hype, confusion, sub-par analysis, uninformed opinion, conjecture, and all manner of attempts, in good and bad faith, to sway public opinion.
When seeking to understand what’s going on with events as consequential as these, first remind yourself it’s all about money, nothing more, nothing less, with the consumers and workers of the industry (mostly the agents) on the sidelines looking for crumbs.
Tangentially, this is also about ownership and control of data. In the end, once these cases are settled, who owns and controls listing data will have also changed along with the changes to current business practices. This isn’t often talked about, but its the long term control of the listing data than will ultimately determine who wins here. They will create the marketplace where properties are transacted. If this concerns you, you should look into exactly what’s going on with your local MLS. You might be surprised to see what’s changed, or changing.
With regards to the trial briefs, the plaintiffs have summarized their argument that started this case. While I have not read the entire brief, and therefore will be missing important context and additional arguments, there is much to digest in the quotes provided in the article.
For example, the plaintiffs call the NAR’s mandatory offer of buyer agent compensation policy “a market-shaping and distorting rule that has severe anticompetitive effects, stifling innovation and competition.” That’s several very large words combined together into a sentence, so I will try to reduce to the People’s English.
“Market-shaping” – meaning the policy assists in creating a marketplace, which I agree it does. In this marketplace, it’s a fact that buyer’s agents provide a vast litany of services and solve countless problems to guide buyers from start to close, and beyond. It’s a service worthy of compensation.
“Distorting” – meaning creating chaos or noise in the system, typically undesirable unless you are Led Zeppelin. I get confused when I wonder how something can both shape the marketplace and also distort it. The distortion actually comes from the fact commissions are negotiable, the fact there are practically innumerable business models and fee options that exist within the marketplace, and the fact consumers do not have to use an agent to sell or work with an agent representing a buyer.
“Anticompetitive effects” – meaning suppressing or lacking competition, which is generally considered bad for consumers. However, it’s a fact competition exists between brokerages and agents with all manner of fee and representation models available to consumers.
“Stifling innovation” – meaning limiting change or progress, generally considered bad. I actually have no idea what this is referencing, maybe there are specific examples of where “innovation” is being hampered by the commission policy. Regardless, innovation comes with a cost, both time and money. Some of that money comes from buyer’s agents spending money they earn representing clients on products developed to improve the customer service experience for their clients or bring new efficiencies in time management affording more focus on the needs of each client. I do see that innovation and the proposed changes from the lawsuit will reduce that pool of money available for innovation.
“Stifling competition” – how is this not, for this argument, the same as anticompetitive effects? Isn’t stifling competition an anticompetitive effect? So, this part of the plaintiffs’ sentence flourish is actually just redundant.
I could go on, but I can’t get through what should be the plaintiffs power punch, the core arguments of their trial brief. The arguments are so thin, so devoid of broad and specific fact, and so reliant on fear, misunderstandings, misapplication of facts, and what I can only guess are willful distortions of facts, that I now see this as all a money play by a lot of different big players for a lot of different reasons.
It’s not about “righting a wrong” or protecting the consumer, it’s about redirecting money from buyer’s agents elsewhere, and changing the landscape of the marketplace, which will greatly empower some and harm others, including consumers, and changing the ownership and control of data.
Do you really want to help the consumer? Become a better agent. Gain more skills, become an expert in your field, be a servant-hearted, caring shepherd for your clients. Advocate honorably and admirably for them. Stay informed, speak up in defense of your industry, speak up in defense of private property ownership and a fair marketplace. We are legally, ethically, and morally charged with a great task, driving a key part of our social and economic fabric. Now is not the time stand by…
So if I am following the story, the plaintiffs don’t think buyers should have their own agent unless they want to pay out of pocket for that representation.
I wonder if the plaintiffs in this case are paying out of pocket for their legal representation or do the attorneys get paid out of the settlement like realestate brokers only get paid out of the completed sale. It seems like the same thing. The attorney says our service doesn’t cost you anything, we only get paid a percentage of what you are awarded. Compared to the buyer broker who says our service doesn’t cost you anything we get paid from the sellers side.
Shhhhhhhh… Not supposed to point this out
Exactly which consumer are they wanting to “protect”? The broker fee is built into the price of the home so when a buyer purchases said home, buyer is paying that broker fee. When a market analysis is done, does everyone remove the broker fee from the equation so that a house that sells at $150,000 really should be $145,500 and that $145,500 becomes the analysis price?
I don’t know what they do in Missouri, but if seniors, single parents, first time home buyers have to find an extra few thousand dollars to pay for representation of a buyer’s agent, is that really helping the buyer consumer? It does not appear so. Where are they going to find that money? Are we going to rewrite mortgage lending to include that in the loan costs?
If I represent a buyer, I am researching and digging for everything I can find out about this property to avoid any surprises for my client. I will measure the property, go over it with a fine tooth comb and do a rough walk through the deeds to find easements, etc. If we want to protect our consumers, maybe we need to start with the agents. We have a lot of agents who just put a sign in the yard and walk away or who show a house and write an offer without doing anything to protect their client. This isn’t a commission issue. It looks more like an issue of training agents to be more client focused and educating the public on what we do, what they can expect and how the home buying and selling process works.
Let’s talk the truth: When buyer brokerage began, it wasn’t for all the right reasons – to provide agent service to the purchaser with the fiduciary responsibility of care, confidentiality, loyalty, obedience, accountability, and disclosure. It was done for pure greed by the corporate real estate world. Buyers could float among the listed inventory and who knows where they would land. It was often with the listing broker and they managed to get both sides of the transaction. That had to be frustrating for the number crunchers in the corporate offices. How can that buyer become a revenue source that could be locked in? That was the conundrum. Buyer Brokerage was the answer. The only thing missing was consideration, one of the main elements of a contract. And everyone jumped on the bandwagon. Franchises, MLS Boards, NAR, and brokers and agents. Many disagreed with the policy, but the fallout to stand that ground was quite fierce. We knew this day would come soon, and here we are.
What could work and would be totally ironic – is if Buyers can wrap their Buyer Agents fees into the mortgage. Because how many Buyers have extra thousands to pay a buyers agent out of pocket?
all the really need to resolve is disclosure to the world that the Seller is paying brokerage fees for both buyer and listing agents. There is it – solved
Joe gave an excellent summary, then Jay hit the nail on the head.
Sounds more like the banks are trying to add more money to their pockets…
Don’t worry, you can just bake that couple percentage extra into the loan…. so your $9k commission will only cost you $22k over the life of the loan…
Seems realtors aren’t Ethical. The Realtor Boards ARE FOR PROFIT! They make HUGE salaries on the boards- In my Area too many agents have no clue about Real Estate Law –In real estate, price-fixing occurs when competing brokers agree to set a standard price for sales commissions, fees, or management rates. The Sherman Antitrust Act forbids any type of price-fixing in any industry. Reading comments it sure seems Realtors want to violate the law, around me it’s a daily occurrence- agents will only pay “SOME” companies one fee and another another fee or NO Fee- The Sellers are CLUELESS that their listing agents are black balling others. Seems legally the blackballed agents could sue the seller for Violating the Sherman AntiTrust Act and sue the brokers that engage in price fixing?