Weekly Radar #291: The $418 Million Settlement, It Pays To Sign, Sustainability Arms Race
What's covered in this week's GEM Crystal Weekly Radar:
- Drew covers this week's $418MM NAR settlement and what it means for brokerage entities.
- How are buyers incentivized to participate in Redfin's new Sign & Save program? We cover the program details.
Geek Estate Blog Recap:
Geek Estate Team
Geek Estate Team
Geek Estate Team
Geek Estate Team
Transmission Recap:
Last week, Drew covered how innovation in lumber is underappreciated. Before that, Drew delved into the long and short of Zillbnb - what Zillow's announcement means for the future of short and long-term rentals.
REAL ESTATE
THE $418 MILLION SETTLEMENT
By: Drew Meyers
NAR "has agreed to settle a series of [commission] lawsuits by paying $418 million in damages and by eliminating its rules on commissions," according to The New York Times. Two big parts of the settlement mandates that MLS eliminate "any fields displaying broker compensation" and "places a blanket ban on the longtime requirement that agents subscribe to multiple listing services in the first place in order to offer or accept compensation for their work." Plus, from the NAR press release, buyers will be required to "enter into written agreements" with MLS participants, "go[ing] into effect in mid-July 2024." (H/T ❇️Kevin Oakley❇️). The settlement covers all brokerage entities with sales volume of less than $2 billion, but it specifically excludes HomeServices of America by name. Wholly owned MLSs are safe, and those MLSs not entirely owned by Realtor associations can also be included in the settlement if they agree to modify their practices and contribute a per-subscriber fee to the settlement fund.
A few thoughts...
- I have always thought of MLSs as compensation cooperation and compliance. With compensation off the table, their value proposition now appears to be compliance and legal protection. MLS insiders (I'm looking at your ❇️Greg Robertson, Sam DeBord, Timathy Dain❇️, etc), I'm all ears for a bull case for MLSs to maintain relevance and thrive without the ability to directly handle compensation.
- $418 million over four years is cheap. Very cheap.
- Every brokerage in the country now has no choice but to be members of NAR, unless they want to fight commission lawsuits on their own...which they will obviously not sign up for.
- Tour volume will go way down. Open house activity will go way up.
- The big technology winners are no doubt the offers platforms (Final Offer, Openn, Offer1, DecentRE Property Exchange (DPX), Homwel, and others), validating one of my 2024 predictions. Since commissions cannot be discussed/negotiated/shared on the MLS, it's inevitable they will move to another platform...unless we move back to a world where email, phone, and pen/paper are the tools to negotiate. If a broad coalition of MLSs chose to invest in one of these platforms as well as do deep integrations, a winner would be minted almost overnight.
- Going back to ❇️Greg Fischer❇️'s article, Burning the Agent Effigy Once and For All...and it's still true. There are a lot more expensive line items than the commission that need to be addressed in order to seriously reduce home prices for buyers. Going from 6% down to 3% (as a hypothetical) is still not going to enable first time buyers who can't afford a house today attain homeownership.
- You know what's coming? The "Zestimate" for commissions. Or, perhaps a broader Closing Costs Zestimate that also factors in estimated commissions.
❇️Robert Hahn and Greg Robertson❇️ discussed the news on a live-stream version of Industry Relations for those interested in hearing more analysis/opinions: