In the News

Following are stories about competition in real estate, how local broker marketplaces advance equity and access, and REALTORS® as consumer advocates.

Local Broker Marketplaces Foster Competition

NAR Board approved major MLS rule changes to take effect in January

To improve transparency in a time where forces are pushing to muddy waters, the National Association of REALTORS® (NAR) announced today that proposed changes to its guidance for local Multiple Listing Service (MLS) broker marketplaces have been approved by a Board of Directors vote…

…The following changes are set to take effect Jan. 1, 2022 (per NAR):

(1) Reinforce that local marketplace participants do not represent brokerage services as free. While REALTORS® always have been required to advertise their services accurately and truthfully, this change creates a bright line rule on the use of the word “free” that is easy to follow and enforce.
(2) Ensure disclosure of compensation offered to buyer agents. The change bolsters transparency and REALTORS®’ existing duties and practices to talk with their clients about what services they provide and how they are compensated.
(3) Ensure listings aren’t excluded from search results based on the amount of compensation offered to buyer agents. This changes wording to reiterate REALTORS®’ existing duty to inform clients about all relevant properties meeting their criteria.

FULL TEXT: NAR Board approves major MLS rule changes to take effect in January - The American Genius

Real-Estate fees and competitive cooperation

Regarding “Home-Sales Commissions Under Fire” (U.S. News, Sept. 21): Big Tech has trained us to expect near-zero transaction costs or at least have them hidden from view. It’s therefore no surprise that transparent fees or commissions associated with seldom-purchased, big-ticket items such as real estate seem antiquated.

But the current discussion ignores the benefits paid for by these transaction costs. The Multiple Listing Service (MLS) marketplace of residential-real-estate listings and historic data is unique to the U.S. and Canada. Agents enter billions of data points for millions of residential properties by the rules and regulations of the National Association of REALTORS® and state and local affiliates. This effort is largely self-organized and creates an incredible richness of transparency of data. Agents work mostly on commission and lack benefits such as healthcare, retirement or paid leave.

FULL TEXT: Real-Estate Fees and Competitive Cooperation - Wall Street Journal

National Association of REALTORS® files petition to oppose Department of Justice breach of settlement agreement

The National Association of REALTORS® today filed a petition to quash a request by the Department of Justice that reneges on the terms of a settlement agreement that was approved by the DOJ in November 2020. The DOJ attempt to withdraw from that fully binding agreement in July 2021, after NAR had already begun to implement its terms, is a breach of the agreement and the law.

"The DOJ action should be considered null and invalid based on legal precedent alone," said NAR President Charlie Oppler, a REALTOR® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby's International Realty. "The DOJ must be governed by principle, and NAR simply expects the department to live up to its commitments."

National Association of REALTORS® Files Petition to Oppose Department of Justice Breach of Settlement Agreement - NAR

The problem with antitrust litigation as a real estate business strategy

Litigation as business strategy is common in all industries. In fact, the very threat of litigation is often enough to elicit the desired response from one’s competitor. In the real estate industry, especially in the past few years, antitrust litigation as business strategy has become more prevalent.

Recent antitrust lawsuits in real estate

The most recent example of this thrust-and-parry game among brokerages is Compass’ lawsuit against REBNY, filed less than a week ago. A week earlier, it was REX suing Zillow for what it deemed anticompetitive practices.

In the preceding two years, it was different agent groups suing the National Association of REALTORS® and various MLSs for the adoption and implementation of the Clear Cooperation Policy (CC Policy), which requires brokerages to enter their listing within one business day of marketing the property to the public.

FULL TEXT: The Problem with Antitrust Litigation as a Real Estate Business Strategy - Inman

MLSs advance small business, equity in homeownership

A critical foundation of American homeownership is the Multiple Listing Service (MLS). These independent, local broker organizations create highly competitive markets that are friendly to small business while ensuring equitable home ownership opportunities, superior customer service and greater options for buyers and sellers.

Simply put, local real estate organizations provide sellers access to the largest possible pool of potential buyers while creating the greatest number of housing options for buyers in one, centralized location.

Leveling the playing field

For people trying to break into this real estate market, MLSs level the playing field, allowing small brokerages to compete with large ones by creating hubs of local real estate market information where all broker participants have access to the same reliable and trusted data. As a byproduct, these data hubs spur entrepreneurship and innovation, allowing consumers to choose the type of broker they want to work with and what fee options they prefer, including those who provide many different service and fee options, from varied commission models to flat fees.

FULL TEXT: MLSs advance small business, equity in homeownership - RealTrends

Charlie Oppler: DOJ needs to honor agreement with NAR

You should be able to count on the Department of Justice (DOJ) to honor an agreement. And yet, in a complete breach of commitment and legal precedent, the DOJ backed out of an agreement with the National Association of REALTORS® (NAR) that would more explicitly state the spirit and intent of NAR's Code of Ethics and MLS guidelines in some key areas.

NAR has forged ahead. At our Annual Conference in November, NAR's Board of Directors will consider motions by the Technology and Emerging Issues Advisory Board that reinforce greater transparency and disclosure of compensation offered to buyer agents, ensure listings aren't excluded from search results based on the amount of compensation offered to buyer agents, and reinforce that local MLS market participants do not represent brokerage services as free.

Yet, the DOJ filed a response last week balking again at any commitment to honor the agreement in response to our petition saying they should.

FULL TEXT: Charlie Oppler: DOJ needs to honor agreement with NAR - HousingWire

Why the U.S. MLS system is the envy of other countries

I have been following the discussion around the competitiveness, costs and consumer benefits of U.S. Multiple Listing Services (MLS) by those trying to disparage the system. As an Irish immigrant to the United States in 1996 who became a real estate broker in 2000, I can tell you this: The U.S. system has long been — and is still — viewed as the best by consumers around the world.

You don’t have to look very far for examples that illustrate why.

This past December, my mother and father closed on their home of 35 years in Limerick, Ireland, after 10 months “in escrow.” They also recently closed on their purchase of a new home. In the process, they had to rent a home for four months between their sale and their purchase given “simultaneous closings” are not a practice there. That kind of drawn-out timetable is typical for the majority of western nations that use the auctioneer system where a seller works with one, perhaps two, auctioneers.

FULL TEXT: Why the U.S. MLS system is the envy of other countries - HousingWire

 

Consumer Access & Opportunity

Bright’s 2022 On MLS Study

Between 2019 and 2022, 83.4% of all home sales transactions took place on-MLS and sold for an average of 13.0% more than comparable homes sold off-MLS, amounting to an additional $45,741 to the seller for the typical home sold on the MLS over that period.

In 2021, on-MLS homes sold for an average of 14.8% more than off-MLS properties, a $55,779 premium.

As the market cools, the advantage of the open marketplace continues to increase with on-MLS properties selling for 19.7% more, on average, than off-MLS properties during the first quarter of 2022.

FULL TEXT: Bright’s 2022 On MLS Study — Bright MLS

Real Estate Agents Brace for the Potential Demise of FHA & VA Loans

It appears that plaintiff and plaintiffs counsel’s goal is to force buyers to pay buyer agents directly (out of pocket) versus the buyer absorbing fees into a mortgage…

…Suppose buyers must pay their agent directly out of pocket up front versus absorbing fees into a mortgage. This eliminates the VA Loan program and drastically increases fees for consumers seeking FHA loans, comprising ~20% of loan originations.

The impact will disproportionately harm low-income buyers…

…the collateral damage from this case could cause this event. The real estate market could crash, harming the same sellers seeking relief.

FULL TEXT: Real Estate Agents Brace for the Potential Demise of FHA & VA Loans

Growth of technology makes it even more important to use a REALTOR®

In one sense, technology has made real estate more accessible for both buyers and sellers. And yet, while everyone can see detailed property records on their phones or computer within seconds, not everyone can be a negotiator, price setter or resource. Home buyers and sellers can have difficulty navigating the expanse of information available, leaving many unsure how best to use this data to their respective advantage…

… Bringing in an expert with a deep knowledge of the home buying process and marketplace is the most effective way for a homebuyer to ensure, for example, they can win a bidding war without overpaying for a home….

Technology today has provided consumers with access to more information than ever before, and for real estate agents, access to technology products and services enable a higher level of customer service. And in the process, consumers get the best of both worlds: Technology at their fingertips to get them started and real estate agents making sense of all that information and other technology to help people make the right choice about where to start a family, raise their children and build lifelong community.

FULL TEXT: Growth of technology makes it even more important to use a REALTOR® – Houston Chronicle

Biden administration brings a new focus on housing policies

First-time buyer tax credit

…The proposed first-time buyer tax credit of up to $15,000 is both advanceable and refundable, which means that home buyers would receive the tax credit when they make the purchase rather than when they file their federal income taxes the following year.

The biggest challenge for many would-be home buyers is saving for a down payment and closing costs, said Bryan Greene, vice president of policy advocacy for the National Association of REALTORS®.

“Once they get past this hurdle, paying the mortgage often costs about the same or less as paying rent,” Greene said. “Steep student loan payments, sky-high child-care costs and other factors, however, have made it increasingly difficult for most to accumulate the savings needed to cover initial closing costs.”

FULL TEXT: Biden administration brings a new focus on housing policies - The Washington Post

Real estate practices and REALTORS® in the US put consumers first

The editorial “REALTORS® must embrace fair rules of competition, lest their hands get forced” is replete with inaccuracies and mischaracterizations about local broker organizations, REALTORS® and the American real estate industry. In fact, local broker organizations ensure equity, superior customer service and greater options for buyers and sellers. REALTORS® are working Americans championing homeownership and property rights for the communities they serve. And the National Association of REALTORS®, or NAR, backs both up by regularly reviewing guidelines to maintain practices that increase transparency and improve the consumer experience.

In the latest example of advancing positive change, an NAR committee recently passed motions that more explicitly state the spirit and intent of NAR’s code of ethics and multiple listing service (MLS) guidelines in some key areas. The guidelines reinforce greater transparency and disclosure of compensation offered to buyer agents, they ensure that listings aren’t excluded from search results based on the amount of compensation offered to buyer agents and they reinforce that local MLS market participants do not represent brokerage services as free.

FULL TEXT: Real estate practices and REALTORS® in the US put consumers first - Chicago Tribune

How the agent commission structure benefits everyday Americans

Those attempting to attack the real estate agent commission structure are cloaking their true intentions in misleading claims of consumerism. These class action attorneys and those illegitimately trying to position themselves in the real estate market are looking for a payout if they can confuse enough people with misinformation and glaring omissions.

The reality is that the commission structure gives everyday Americans and small businesses critical advantages they otherwise wouldn’t get. Here’s what these self-serving parties are attacking.

They’re attacking a structure that makes it possible for more people to realize the American dream of homeownership.

The traditional commission structure where the listing broker offers to share his or her commission with the buyer broker ensures greater equity and equality for first-time, low-income and many other homebuyers who otherwise couldn’t afford a home and professional representation.

FULL TEXT: How The Agent Commission Structure Benefits Everyday Americans - Inman

Op-Ed: Small businesses, cooperation bolster real estate market by maintaining affordability, equity

As more than 31 million small businesses across the country were recognized during National Small Business Week, it’s a good time to look at how small, local operations drive so much of the economy and search for ways to continue to level the playing field for them and for consumers. When it comes to “buying local,” small businesses could not be more front and center than when it comes to purchasing a home. In fact, of the 1.5 million REALTORS® across the country, more than 1.3 million are small businesses like me who are focused on our local communities.

Of course, the local economic impact of housing is about more than just real estate agents. Preparing a home for the market often involves photographers, cleaners, landscapers, decorators and more, many of whom are small business owners themselves. Taken in total, small business has a significant impact on real estate—in fact, every home sale generates roughly $88,000 in local economic activity, and every two home sales supports one American job. Overall, real estate accounts for nearly 18% of the nation’s GDP.

FULL TEXT: Small Businesses, Cooperation Bolster Real Estate Market by Maintaining Affordability, Equity - RISMedia

6 reasons NAR's commission rules work

…I generally agree with Hanna that change is good, as he noted. It’s critical for the National Association of REALTORS® (NAR) to consider and reconsider how it supports transparency, competition and consumer choice in the real estate industry.

That’s precisely why NAR regularly reviews guidelines for local MLS broker organizations. A recent example of that is in September, NAR’s MLS Technology and Emerging Issues Advisory Board passed a series of motions that are designed to make sure multiple listing services best meet the needs of consumers, agents and brokers alike.

The changes would ensure local MLS market participants do not represent their services as free, do not restrict listings based on compensation being offered to a cooperating broker and disclose the listing agent offer of compensation to buyer’s agents. These motions also ensure participants are not filtering listings in any way by brokerage or agent.

FULL TEXT: 6 Reasons NAR's Commission Rules Work - Inman

Opinion: Changing Real Estate Compensation Harms Fair Housing

...This push toward “decoupling commissions” is a movement built on assumptions that have been dispelled — once again — by a recent, nationwide study that demonstrates the harmful effects this proposed change would have on the residential real estate market, particularly first-time homebuyers and those from minority groups. “Be Careful What You Ask For: The Economic Impact of Changing the Structure of Real Estate Agent Fees,” was conducted by two former Freddie Mac executives and a former senior advisor at the Department of Housing and Urban Development.

Using straightforward economic modeling, the researchers concluded that requiring buyers to come up with the additional funds needed to compensate their broker at closing would make it significantly less likely that first-time and other aspiring buyers could afford a home.

FULL TEXT: Opinion: Changing real estate compensation harms fair housing – Housing Wire

REALTORS® as Champions

184 Things Your REALTOR® Does For You

Pre-Listing Activities

  • Research all comparable currently listed properties
  • Research & verify legal description

Marketing The Listing

  • Review comparable listings regularly to ensure property remains competitive
  • Receive & review all Offer to Purchase contracts submitted by buyers' agents

The Offer and Contract

  • Counsel seller on offers. Explain merits & weakness of each offer
  • Negotiate all offers on seller's behalf, set time limit for loan approval & closing

Tracking the Loan Process

  • Follow loan processing through to the underwriter
  • Add lender & other vendors to your management program so agents, buyer & seller can track progress of sale

Home Inspection

  • Coordinate buyer's professional home inspection with seller
  • Explain seller's responsibilities & interpret any clauses in the contract

The Appraisal

  • Provide comparable sales used in market pricing to Appraiser
  • Assist seller in questioning appraisal report if it seems too low

FULL TEXT: 184 Things Your REALTOR® Does For You!—Kelly Baker Properties

First-Time Home Buyers: How Your REALTOR® Can Help You Win

Regardless of the market, buying a home is complicated. It involves expert negotiations and familiarity with contracts and extensive paperwork. A good Realtor will have a thorough understanding of the market. This includes providing a comprehensive report known as a comparative market analysis (CMA) to help you understand market trends and determine what price to offer. CMAs will also provide you with the important “need to know” facts such as how long the home has been on the market and whether the price has gone up or down. This information can be incredibly valuable when it comes to evaluating whether a home is a safe investment and worth the price you’ll pay for it in today’s market. In addition, there are often small problems with initial negotiations and paperwork that, if unnoticed, can put your entire transaction in jeopardy. Your Realtor or real estate agent will work with you closely to ensure nothing falls through the cracks.

FULL TEXT: First-Time Home Buyers: How Your REALTOR® Can Help You Win – The Mortgage Reports

Closing the Racial Homeownership Gap Must Be Part of Our Long-Term COVID Response

As Congress advances the biggest housing investments in decades and the Biden administration focuses more attention on housing issues, one policy matter should top the agenda: closing the racial homeownership gap. This persistent disparity not only limits the opportunity for individuals and families to build wealth; it also deprives our nation the opportunity for more robust economic growth…. 

Our country is making great strides in defeating COVID-19, but the pandemic's long-term fallout will be devastating for minority homeownership if we do nothing to counteract it. The policy reforms discussed here represent proactive steps to reverse trends that will only worsen if matters are allowed to run their course. We must act now to mitigate past harms exacerbated by a pandemic and unlock the benefits of homeownership for more Americans.

FULL TEXT: Closing the Racial Homeownership Gap Must Be Part of Our Long-Term COVID Response | Opinion - Newsweek

NAR reports REALTOR® association donations to communities doubled, volunteerism increased during pandemic

In the wake of the coronavirus pandemic, REALTORS®, real estate agents and their respective firms have increased their philanthropic and volunteer efforts, according to a new report from the National Association of REALTORS® (NAR). The median annual value of REALTORS® associations’ donations to communities doubled from $5,000 in 2018 to $10,000 in 2020.

The Community Aid and Real Estate Report—the CARE Report—offers insight into the monetary and volunteer contributions of members, broker/owners and association executives and multiple listing service staff. This year’s CARE Report found that, compared to the most recent 2018 study, food and monetary donations remain high and volunteering has increased among REALTORS®, while REALTOR® associations held more fundraisers for their communities.

FULL TEXT: NAR Reports REALTOR® Association Donations to Communities Doubled, Volunteerism Increased During Pandemic - RISMedia

Real estate still needs that human touch

Much of life moved online during the pandemic. That became true for even the most tangible of goods—real estate.

Over the past 18 months, virtual walkthroughs and three-dimensional tours have replaced many in-person showings and open houses. Even closing paperwork has moved online, propelling the industry through the pandemic. 

This new environment has led some to ask whether the real-estate agent profession is becoming obsolete. Why should someone pay an agent when they can browse properties online or reach buyers directly through an app?

The reality, however, is that modern technology is making agents and brokers more essential, not less.

Before the pandemic, homebuyers and sellers were experimenting with a new, online model of real estate—instant buying, or “iBuying.”

FULL TEXT: Bob Goldberg: Real estate still needs that human touch - Barron's

Expertise when Buying, Selling Home Matters Even More in Internet Age

Research shows 88% of those who start their home buying search online ultimately use a real estate agent as the process moves forward… Anyone can stake a “for sale by owner” sign in their yard, but it takes more than a quick online search to determine a competitive asking price for your home.

…Fact is, like millions of Americans, I own a small business. I’m a REALTOR®. Along with being licensed to do my job and guided by a professional code of ethics, I’m actively involved in my community.

FULL TEXT: Expertise when Buying, Selling Home Matters Even More in Internet Age - Medium