With only days before a judge will issue his final decision and close a historic (and frustrating) chapter in the history of residential real estate, plaintiffs who led the charge on commission class-action lawsuits and the two largest defendants in that case—HomeServices of America and the National Association of REALTORS® (NAR)—have laid out their final, comprehensive arguments in favor of sweeping settlement agreements that will effectively end the lawsuits.
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So… once the case is approved on Tuesday. Is that really the end of it?
Real estate people have used cooperative compensation for thousands of years. In ancient Rome real estate people would meet in the Forum. They had their own little corner there. There were drawings of villas, rough shacks, land, apartments, etc. and each property offered a finder’s fee if one brought a buyer. That was an MLS system no different (except for technology) than what we have today.
The MLS offers two benefits. First, it is a convenient way to see all the properties that are for sale, in a searchable format. Second, it specifies what compensation the Sellers are willing to pay to those who bring a buyer. Now that the compensation is no longer specified one has to ask… What is the use of the MLS? We can find a compendium of properties on Zillow, or many other sites. It would be nice to eliminate those constant MLS fees we all have to pay to prop up the system.
What is the use of NAR? We have paid mandatory fees to this association. What benefits do they offer? Their settlement does nothing but damage the industry. There will not be a reduction in commissions paid to real estate people. Prices might get higher. It would be nice to get something for nothing but that model doesn’t hold up for long. There are some real estate agents who would like to work pro bono, so it is hoped. Let see how long that continues.
Freddie Mac and Fannie Mae cut commissions during the 2007-2010 foreclosure mess as well as banks did the same. House prices were lower as well. Realtors get to have unstable financial situations throughout their careers based upon market conditions. Pure capitalism. It’s fine for the sellers (during inflated markets), lenders and lawyers to make big bucks but not Realtors. This lawsuit is just financial discrimination.