Competition in Real Estate

REALTORS® are mostly small business owners who work to ensure buyers and sellers have the greatest access, transparency and choice through independent, local broker marketplaces that level the playing field for all types and sizes of brokerages.

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Local Broker Marketplaces Foster Competition

Independent, local broker marketplaces create highly competitive markets that are friendly to small businesses and new market entrants.

Multiple Listing Services (MLSs) are independent broker marketplaces that focus exclusively on residential real estate in local real estate markets. Access to inventory and free advertising as well as the practice of the listing broker paying the buyer brokers’ commission incentivizes participation in these local real estate marketplaces and creates the largest, most accessible and most accurate source of housing information available to consumers. That levels the playing field among brokerages, allowing small brokerages to compete with large ones, and provides for unprecedented competition among brokers, including different service and pricing models
The MLS in Action

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Small businesses, cooperation bolster real estate market by maintaining affordability, equity

September 21, 2021 | By: Ron Phipps

Published in RISMedia

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.

When you consider this real estate economic “food chain,” many think of it as beginning at their housing search—the listings. Real estate listings aren’t simply picked up from websites or public sources, they are created, licensed, vetted, verified, marketed, publicized and shared by independent contractors and small business real estate professionals like me and my team, and then posted on localized data hubs. These hubs allow even the smallest businesses to immediately compete with large ones by creating and participating in this marketplace, where all have access to the same reliable and trusted data.

Part of an ongoing fight to maintain equitable accessibility to these listings for all consumers and a level playing field for small business brokerages has to do with so-called “pocket listings.” Such listings allow for the marketing of properties to select consumers before opening them up to all potential buyers. Addressing these types of private listings is critical to ensuring fair competition among small businesses and crucial consumer protection, especially in hot markets where properties sell extremely fast. New guidelines implemented in late 2019 ensure that listings must be submitted to the local marketplace within one business day of marketing a property to the public. This is important in supporting a transparent, pro-consumer market, benefitting both sellers and buyers.

Next, let’s consider house hunting and the choice of whom to work with throughout this important process. Another benefit of the real estate marketplace is that it spurs entrepreneurship and innovation and allows consumers to choose their business partners, whether they be small enterprises or large ones. This also allows for choice in service models and the fee payment options, including different commission options or flat fees. It is noteworthy that one of the compensation models, a success or contingent fee, is strongly pro-consumer. If the real estate agent does not sell the property, he or she does not earn a fee.

When it comes to the offer prices for properties and closing fees, the real estate marketplace also makes the transaction more affordable. The commitment to cooperation—in which the listing broker pays the buyer broker—allows countless first-time homebuyers and low- and middle-income Americans to be able to afford both a down payment and professional representation.

And we know that these savings go a long way. For many prospective buyers, saving for a down payment is difficult enough. The average American household has about $8,800 in the bank. That’s barely 50% of the average down payment for a starter home. Most lenders don’t allow real estate broker commissions to be financed. As a result, for every 1% of broker commission fees that first-time buyers might have to pay, the prices for their homes grow by another $2,000. Buyers, particularly first-time buyers, benefit from the advocacy and representation that licensees provide, particularly given the competition for properties and the complications of the home-buying process.

So, having celebrated small businesses in America last week and in the spirit of keeping that momentum going forward, I’m proud to be a REALTOR® who is one of the more than 4% of all U.S. small businesses. We’re out there each and every day participating in a real estate marketplace that advances small businesses and promotes equity for consumers.

Published in RISMedia

Published on nar.realtor

MLSs advance small business, equity in homeownership

September 10, 2021 | By: Charlie Oppler

Published in RealTrends

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.

Without the associated broker cooperation — where the listing broker pays the buyer broker — countless first-time homebuyers and low- and middle-income Americans would find themselves unable to afford both a down payment and professional representation if these homebuyers had to pay a buyer commission out of pocket at closing.

For many, saving for a down payment is difficult enough. For example, on average, American households have about $8,800 in the bank. That’s barely 50% of the median down payment on a starter home. And since most lenders don’t allow real estate broker commissions to be financed, every 1% of broker commissions that first-time buyers might have to pay out of pocket would put their home more than $2,000 further out of reach.

Clear Cooperation Policy

Together with the hundreds of MLSs around the country, NAR is working to ensure guidelines for the MLSs allow for that kind of affordability as well as accessibility that better enables all Americans the opportunity to achieve the American dream of home ownership.

Part of that ongoing fight is NAR’s recent adoption of its Clear Cooperation Policy (CCP), which was intended to promote transparency and fairness in the U.S. housing market by addressing concerns about so-called “pocket listings.” These listings allowed brokers to market properties themselves before placing them on a local market MLS.

The CCP requires a listing broker to submit his or her listing to the MLS within one business day of marketing a property to the public. The CCP is especially important in competitive markets where properties sell extremely fast, and also help protect against circumstances in which properties are only marketed to particular groups of people in America. NAR determined this guidance was needed as a crucial consumer protection, and it was overwhelmingly adopted by NAR’s board of directors in November 2019.

NAR believes everyone should have the opportunity to purchase the home of their dreams, wherever it may be. Local broker organizations and the CCP help facilitate that opportunity and promote equity and accessibility in the housing market while creating a fertile ground for small businesses to flourish. NAR is proud  our guidelines play a critical role in promoting the pro-consumer and pro-competitive American housing market.

Published in RealTrends

Published on nar.realtor

"I cannot think of any other industry that has more cooperation among competition for the good of the consumer than in real estate. … Local broker MLS organizations level the playing field among brokerages, enabling small brokerages to compete with large ones, and newer REALTORS® to compete with experienced top REALTORS® and so on."

– Anthony Lamacchia, broker-owner of Lamacchia Realty

"Real estate listings aren’t simply picked up from websites or public sources, they are created, licensed, vetted, verified, marketed, publicized and shared by independent contractors and small business real estate professionals like me and my team, and then posted on localized data hubs. These hubs allow even the smallest businesses to immediately compete with large ones...”

– Ron Phipps, Principal Broker at Phipps Realty Inc.

Consumer Access & Opportunity

Local broker marketplaces ensure equity, transparency and market-driven pricing options for the benefit of home buyers and sellers.

The U.S. model of local broker cooperation has long been – and is still – viewed as the best value for consumers around the world. Local broker marketplaces provide sellers equal access to the largest possible pool of potential buyers and create the greatest number of housing options for buyers in one place without hidden or extra costs. Sellers making offers of compensation to buyer brokers also gives first-time, low/middle-income and all homebuyers a better shot at affording a home and professional representation. The free market organically establishes commission costs within local real estate markets based on service, consumer preference and what the market can bear, among other things.
The Economics of Buying a Home

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How Real Estate Commissions Work

It’s important for consumers looking to experience the American dream of homeownership to understand how real estate agents are paid for the services they provide. At the outset, the seller and that person’s listing broker agree on the amount the listing broker will receive for the services it provides to the seller. The listing broker and seller also discuss and agree upon an amount that the listing broker will pay a broker who successfully closes the transaction with a ready, willing and able buyer. Here are seven additional things you need to know.

1. Commissions are always negotiable.

Commissions can be negotiated at any point throughout the transaction, including at the outset, after the results of a home inspection and after an offer has been made. Sellers negotiate with their broker what fee they are willing to pay for their broker’s services and what fee they are willing to pay a cooperating buyer broker for finding someone who wants to buy their home.

2. There are different commission models to choose from.

Buyers have many different choices about which broker they want to work with in terms of everything from the commission model to a real estate agent’s particular expertise to the agents’ customer service approach. In the full-service approach, commissions are negotiable at any point during the home buying process. The reduced service/discounted fee model allows for flexible offerings and pricing. The flat fee approach allows buyers to negotiate a set price per service.

3. Commission rates are set by the market.

The free market organically establishes commission costs within local real estate markets based on service, consumer preference and what the market can bear, among other things. National Association of REALTORS’® guidelines ensure that the listing broker advise all other participants in their local broker marketplace what the amount of compensation to the buyer’s broker will be for closing the sale. That amount is determined by the seller and the seller’s broker. Commissions fluctuate over time, including having decreased steadily in recent years and having fallen to a new low of 4.94% in 2020.

4. Commissions cannot be included as part of a mortgage.

The vast majority of mortgage lenders do not allow commissions to be added to home loans. For many, saving for a down payment is difficult enough. If buyers had to pay commissions directly on top of their closing costs, it would increase their out-of-pocket expenses in a way that would freeze out many from an already competitive market. That’s especially true for first-time and low- and middle-income buyers, and communities of color that disproportionately fall in those categories.

5. REALTORS® are bound by a strict code of ethics in the home buying process.

REALTORS® are bound by NAR's Code of Ethics to always further clients' best interests, including showing homes that meet buyers’ needs regardless of commissions offered. Additionally, in November 2020, NAR introduced its Fair House Action Plan, abbreviated ‘ACT,’ which emphasizes (A)ccountability, (C)ulture Change, and (T)raining in order to ensure America’s 1.5 million REALTORS® are doing everything possible to protect housing rights in America.

6. Broker cooperation keeps local broker marketplaces from fracturing.

Because of broker cooperation, buyer and seller brokers are incentivized to share their information in their local, independent broker data hub. Without it, lack of complete, transparent and accessible data for all would mean smaller brokerages and new entrants have to piecemeal information and couldn’t offer as many options to sellers and buyers, and larger brokerages would dominate local markets, creating emerging behemoths that would drive up costs.

7. Broker cooperation sets the U.S. real estate industry apart from the rest of the world.

The U.S. model has long been – and is still – viewed as the best option for consumers around the world. Buyers abroad are forced to wade through a complex and fragmented market where they have to work with multiple brokerages and where there is no exclusivity so sales can fall through. Generally, the homebuying process abroad is similar to buying a car in the United States where you have to go dealer to dealer, it’s very time consuming and impersonal. It’s also common for brokers to charge fees and taxes in other countries that add up to the equivalent or greater of costs associated with buying and selling property in the U.S., yet only provide a fraction of the services consumers receive here.

Homebuying Process Primer

Buying a home is for many the most complex and important transaction they’ll ever do. Key steps involved in the homebuying process include:

Check your credit

Your credit score plays a huge part in your ability to secure a mortgage and improving your credit score can take months of healthy spending habits and paying down debt. Check your credit with your credit card company, online, or with a major credit bureau such as Equifax or Experian. Typically, if your score is below 700, you will likely pay more for your mortgage1.  

Figure out what you can afford

You need to sit down and decide how much you can afford to spend on a down payment, monthly payments and expenses. A mortgage lending rule of thumb is that your total monthly home payment should be at or below 28% of your total monthly income before taxes2. However, lenders still have the ability to provide you more or less depending on your overall financial history.

Hire a professional

Having an expert, local professional to manage the process is more important than ever before. The internet only does so much--real estate agents help people traverse complicated, data-heavy and voluminous information, details and decisions.

Find your dream home

Through the Multiple Listing Service (MLS), Realtors® have instant exposure and access to the largest, centralized database of residential real estate listings in your area to find the perfect home for you within your budget. The MLS system makes it possible for all kinds of brokerage services to compete on a level playing field because they all have access to the same information. This gives consumers a lot of different choices about what broker they want to work with in terms of everything from the commission model to their particular expertise to their customer service approach.

Choose a lender and mortgage type

In a typical year, most buyers take out a mortgage to finance their home purchase, most commonly 30-year, fixed-rate financing using a conforming loan. However, there are other options including an adjustable-rate mortgage (ARM), where your payments often start out lower, but could increase over time. When choosing your mortgage you need to acknowledge and be aware of the risks you are taking on when making this decision.

Make an offer

Once you’ve found the right home and financing option, the next step is to make an offer to purchase your new home.

Home inspections

To ensure that the home is safe and won’t incur large, unexpected expenses in the future, be sure to get a home inspection before closing on your new home.

Closing

Once the inspection is complete and you’ve come to an agreement with the seller, you will then close on the deal and sign all of the necessary paperwork. It typically takes a couple of days for your loan to be funded.

1 https://homeownershipmatters.realtor/wp-content/uploads/2016/01/201503_cfpb_your-home-loan-toolkit-web.pdf

2 https://homeownershipmatters.realtor/wp-content/uploads/2016/01/201503_cfpb_your-home-loan-toolkit-web.pdf

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

"The commission trends seem to indicate that consumers have room to negotiate with their REALTORS®, a market reality that only intensified during the seller’s market of 2020."

– Jeff Ostrowski, senior mortgage reporter at Bankrate

"The continued decline in commission rates seems to reflect both rising housing prices, especially in higher-income urban areas, and an increase in consumer willingness to ask about these rates.”

– Stephen Brobeck, senior fellow at Consumer Federation of America

"Large numbers of real estate agents vying for a small number of deals also encourages REALTORS® to compete by cutting their fees. It’s supply and demand...”

– Mike DelPrete, real estate scholar at University of Colorado Boulder

REALTORS® Champion Wealth Building & Communities

REALTORS® are everyday working Americans who champion homeownership and property rights for the communities they serve.

REALTORS® are entrepreneurs—most often small business owners—who exemplify the spirit of this country. As expert, local brokers, REALTORS® help consumers navigate what is for many the most complex and important transaction they’ll ever do. Every REALTOR® is bound by a strict code of ethics based on professionalism, consumer protection and the golden rule. REALTORS® also are engaged neighbors committed to building and enhancing the communities they serve and fighting for fair housing.
The Essential Real Estate Agent

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3 Ways to Maximize the Value of Your Real Estate Agent

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"Brokers, who saw most of their open houses shut down during the pandemic, have been quick to adapt to technology as well, with many offering virtual tours and embracing tools like TikTok and Instagram to help market their homes."

– Debra Kamin, NYT journalist

"Buying or selling a house might be the biggest financial transaction you’ll ever make, which is why hiring the right real estate professional is vital to getting the best deal…The NAR says member REALTORS® work in the field for a median of eight years, so you shouldn’t have much trouble finding experienced agents.”

– Bob Musinski, Forbes journalist

"Part of your due diligence includes finding a real estate agent who is experienced in both buying and selling homes. They should also have a strong knowledge of the local community and relationships with other realtors in the area…”

– Michelle Fox, producer at CNBC

In the News
Following are stories that bring to life how REALTORS® advocate for consumers, how local broker marketplaces advance equity and access, and how small businesses are beneficiaries of these local real estate marketplaces.

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

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 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

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

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

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

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

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

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

What to know about homebuying with an agent in 2021

In 2020, home sales reached their highest point in 14 years. In the process, the number of consumers who did internet research about a home purchase reached an all-time high of 97%. So why do 9 in 10 people still choose to work with a real estate agent to buy a home?

“Buying a house is the largest and most important financial decision most people make in a lifetime, and there’s a lot more to it than what you see online,” said Charlie Oppler, president of the National Association of REALTORS®. “You can look up symptoms on the internet, but you need a doctor to diagnose and treat the condition, much like REALTORS® offer expert guidance to their clients on the complex financial, legal and community aspects of purchasing a home.”

FULL TEXT: What to know about homebuying with an agent in 2021 - My San Antonio

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

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

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

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

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

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

Key Questions Answered
Here are answers to some of the most common questions about competition and real estate.

Is there a “set commission” real estate agents charge consumers?

No. The market decides commission rates, and commissions are always negotiable. Consumers have the choice of who they want to pay and how they want to pay them. Because of the pro-consumer local MLS broker marketplace model, and options like a success fee, there is unprecedented competition among real estate agents, especially when it comes to the service and commission options available to consumers.

Why not require buyers to pay commissions directly to their broker instead of the historic practice of listing brokers paying the buyer broker?

Forcing buyers to take on the additional out-of-pocket expense would cause them incredible hardship and would freeze many, particularly first-time and low- and middle-income homebuyers, out from an already competitive market. That could also force homebuyers to forgo professional help during what is likely the most complex and consequential transaction they’ll make in their lifetime.

How does the U.S. model compare to other, international broker marketplaces?

The U.S. approach is the most consumer-centric model. By consolidating fees and the overall process, our nation’s model simplifies the experience, provides greater certainty of success to both buyers and sellers, and provides guidelines that ensure the accuracy of housing inventory made available to real estate professionals and consumers, all at comparable or lower total costs than those in other countries.

Why are MLSs needed when you can find listings for homes in so many places online?

The ability to find listings for homes online is made possible by virtue of local MLS broker marketplaces. Online home listing sites receive the vast majority of their inventory from these local broker marketplaces. That data exists because of real estate professionals and others’ commitment to cultivating comprehensive housing data reinforced by guidelines that ensure accuracy and transparency so consumers can confidently rely on the information.

What is NAR’s role relative to independent, local MLS broker marketplaces?

NAR provides guidance for independent, local broker marketplaces to ensure pro-consumer, pro-competitive marketplaces that facilitate the sale of real estate where buyers and sellers, and their agents, can work seamlessly and efficiently together. NAR regularly reviews those guidelines to maintain practices that increase transparency and improve the consumer experience. Without that, it would be the Wild West in residential real estate like it is in other countries.

Why should real estate professionals make the money they do in commissions when so much information is available online?

Real estate agents provide essential guidance as consumers navigate the legal, financial and community aspects of a purchase, including everything from determining property value to negotiating the price. They also make local broker marketplaces, which online housing portals tap into, possible because of all the information they input into those databases. And REALTORS®’ annual income is just $43,330 and 88% are small businesses, a majority of which are women-owned

How does NAR promote access to homeownership?

Everyone deserves the opportunity of home ownership – it is the American Dream. At NAR, we are working hard to make housing both more affordable and more accessible. This includes incentives to rehabilitate, build and convert properties to affordable housing, and a commitment to allowing first-time homebuyers and low-income Americans to afford both a down payment and professional representation.

How is NAR promoting equity in homeownership?

NAR is leading the industry in addressing an historically unjust system. Among other things, we advocate for policy change in Washington and increased funding for the Office of Fair Housing and Equal Opportunity. In 2020, we unanimously passed a Fair Housing Action Plan, which engages and mobilizes our 1.5 million REALTORS® to protect and advance housing in America. Also, local broker marketplaces that REALTORS® and other real estate agents feed into are a critical fair housing tool because they make the majority of inventory in a particular market available to all people regardless of race, income or other background.

How do real estate professionals advance the economy?

Homeownership benefits individuals and communities. Homeownership is the most common way the average family builds generational wealth – and, in turn, closes the gap between the rich and poor. Every home sale generates roughly $88,000 in local economic activity accounting for nearly 18% of the nation’s GDP, and every two home sales supports one American job. Those jobs include the 88% of REALTORS® identifying as small business owners.

What is happening with NAR and the Department of Justice?

In November 2020, NAR and the DOJ came to an agreement where NAR would more explicitly state the spirit and intent of our Code of Ethics and MLS guidelines with members in certain key areas. In July 2021, in an unprecedented move, the DOJ said it wanted to back out of that agreement. In September 2021, NAR filed a petition calling for the DOJ to honor its agreement. NAR is living up to its commitments – we simply expect the DOJ to do the same.

How has NAR moved forward on what it agreed to with the DOJ?

Despite the DOJ’s breach, and as is always NAR’s practice, NAR is considering updates to its guidelines, in this case to 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.

What’s happening with class action lawsuits challenging how local broker marketplaces work?

Class action attorneys are trying to position themselves for a payout if they can confuse enough people with misinformation and glaring omissions. The U.S. Courts have routinely found that local MLS broker marketplaces are pro-competitive and pro-consumer by creating efficiencies and equity in the homebuying and selling process.

What’s going on with lawsuits NAR is facing that challenge the Clear Cooperation Policy?

The Clear Cooperation Policy advances equal opportunity in housing by ensuring listings are widely available and accessible to all consumers and requires MLS participants to submit their listings within one business day of marketing the property to the public. Without the protections from the CCP, consumers would be disadvantaged because agents could refuse to give agents or customers access to those listings.

What is NAR’s thoughts on a certain industry participant who is regularly attacking NAR?

They are cloaking their true intentions in misleading claims of consumerism. The reality is that how commissions work in the U.S. and NAR’s guidelines give everyday Americans and small businesses critical advantages they otherwise wouldn’t get. That industry participant also wants the benefits of local broker marketplaces without participating or paying for them.