Interest rate fluctuations…low inventory…sky-high home prices…all vexing issues facing residential real estate in 2024. But for experienced REALTORS® who have been through challenging times, they know that with such cycles there’s always an upswing coming, while newer agents can lean on longtime brokers for guidance.
However, this year is unique in one very sobering and borderline scary way: the Burnett trial outcome and blizzard of new copycat lawsuits are dominating the news, potentially threatening buyer agent commissions and staining the public’s view of the industry.
Jessica Edgerton, chief legal officer and executive vice president of industry and learning for Leading Real Estate Companies of the World®, offered key strategies for agents and brokers to neutralize the negativity and succeed in 2024.
She first discussed the ongoing lawsuits, particularly those involving the National Association of REALTORS® (NAR), and the plaintiffs’ argument that NAR’s rule requiring offers of cooperation is a national conspiracy to eliminate price competition among buyer agents. She emphasized the industry’s counterpoints, such as the negotiability of commissions and the pro-consumer benefits of the MLS system.
She then talked about the potential changes in how offers of buyer compensation are made via the MLS before strongly advising real estate professionals to stay informed, be transparent with clients, and prepare for potential shifts in the industry. She encouraged agents to focus on their value proposition and adapt to the changing landscape, stressing that the industry will survive and thrive despite the legal challenges.
“The jury came out in October with a negative result for our industry,” Edgerton said. “Right now, we are still very much in heavy post-verdict motions, which leaves us with a lot of unknowns. We are nowhere near the end of this road. And for those feeling doom and gloom about the appeals, NAR and the remaining defendants have incredibly strong arguments on appeal, so this certainly does not mean an end to buyer agency right now. Buyers in this market and in every market need representation from you now more than ever.”
Pro-industry counterpoints that Edgerton pointed out were not allowed to be introduced at the Burnett trial, but could be germane to an appeal include:
- Commissions are negotiable.
- Commissions are determined individually by agents/brokers and their clients.
- Our MLS system provides the broadest exposure for, and access to, housing inventory, thus creating an open, pro-competitive market.
- Offers of cooperation and compensation via MLS allow otherwise-disadvantaged buyers to have representation, broadest access to inventory and the opportunity to participate effectively in the marketplace.
“I also want to emphasize that nobody is going out of business here,” she said. “Putting a bunch of brokerages out of business wouldn’t be a win for anybody. Most particularly, it wouldn’t be a win for the plaintiffs if everybody ends up in bankruptcy court. We are going to survive, and we will continue to thrive.”
Edgerton then provided three vital action points for agents to follow that will simultaneously keep them above the legal fray while also spurring business opportunities.“
First of all, know your forms and contracts like the back of your hand,” she said. “Recognize that there are going to be changes here. There have already been some changes to forms and contracts. Practice how you will talk through those forms and contracts with your clients with an eye to transparency.
“Next, double down on transparency with your clients regarding commission obligations, who gets paid for what, when, how and why. And third, stay religiously up to the minute on your local market and the national economic climate. The more you are aware of what’s happening with the market, the more you can talk through all of this with your consumers.”
While mostly addressing buyer agents, Edgerton also had two pieces of advice for listing agents.
“Number one, make sure your listing clients understand that they’re in control of commissions,” she said. “Number two, stay aware of agency and ethics parameters. You may be dealing in greater numbers with unrepresented buyers no matter what state you’re in. Make sure you know your dual agency laws and restrictions.
“Our industry is all about change,” she said. “Your real job as a real estate professional is to be there to help your clients navigate the biggest change of their lives. Change is our bread and butter if you take it as an opportunity. This is a change in our industry for those who study it, who embrace it and who innovate through it. Your consumers need you at your best right now, more than ever.”
Access your free replay of this session: Getting Ahead of the Lawsuits: Preparing for the Compensation Conversation
