NAR lawsuit update as of Dec 14, 2023

I've taken in a LOT of punditry on this issue the last few weeks and here are my current thoughts:

1. NAR's case on appeal appears to be pretty good. Several of the experts I listened to faulted NAR's defense during the trial, but they think NAR will be better prepared for the appeal, and there are some strong legal arguments on our side. If you ask a jury, "Do agents get paid too much?", they will likely say "Yes." But if you look at the actual legal merits of the case with an unbiased, legal view, we stand a good chance to have this overturned. And there was one particularly horrible interview between some industry experts that really swayed the jury, but this evidence was introduced without the appropriate notice to the defense. That may be enough to have the whole case thrown out (which just means they can try the case again with the exact same video but this time WITH the proper notice).

2. More and more states are making noises about doing away with mandatory CSO field in the MLS and/or will start requiring buyer-representation forms be signed for full transparency on the buyer's agent commission (unless buyer will represent themselves). Some (most?) sellers will agree to pay the buyer's agent's commission when an offer comes in requesting it, but it won't be required for the seller to post CSO. This will satisfy the main complaints of these lawsuits. That will of course mean some major changes for MLS systems and lenders as we work through the details of how that will work. VA and FHA especially will need to change their rules in regards to buyers paying the buyer's agent commission and the cap on credits.

3. There is the possibility for some nationwide settlement of this issue to clarify how we do business and put this issue to rest. NAR denies it, but I could see them doing a one-time levy on all of us to pay for a settlement, like what an HOA does when there is some unexpected repair. Hopefully that gets worked out BEFORE all these copycat lawsuits wreck havoc on the industry and the entire real estate transaction process. It doesn't do us any good if NAR wins the appeal in 2026, but in the meantime we all get sued and settled out of existence before then!

4. Agents who can't justify their worth to their clients will leave the business. Some people are predicting 30-60% of agents leaving the business over the next 3-5 years. Average US real estate does 4 deals per year. In Europe it's more like 16 deals per year. So while our real estate "pie" has shrunk the last few years due to fewer transactions, that may shake out OK if the marginal agents leave. IF NAR significantly raises dues, that may also be the final straw for some agents.

5. Here is my idea - Listing agents list sellers, and we negotiate our commission and marketing services. Buyer's agents do the same with buyers. On top of that, a seller can choose to include a "marketing fee" in the MLS that the seller is willing to pay out. It will probably wind up being around 2.5-3%, but entirely set by the seller. And it can be 0. That money can either go towards the buyer's agent, or it's a credit to the buyer, or the buyer can opt out and the price goes down by that much. If the buyer wants to buy a home where the seller opted to pay $0, they either need to pay their agent directly, or buy it without an agent. Both buyer and seller will know EXACTLY what their agent is making and will have the full opportunity to negotiate that fee. I believe it won't take long until the data shows that listings who offer less or nothing as a marketing fee will have fewer buyers interested as those homes take more cash from the buyer's pocket to buy, and they will sell for less money.

So the good news is that there are solutions to these challenges. It may just be a little messy getting from here to there...