We recently did a video blog in our Mike Explains series on the DOJ’s Ruling on Real Estate Commissions. Since then, I have had a little more time to think about the changes in real estate practices that are being made in this agreement and it has been bothering me. While I don’t want to turn this Mike Explains into a Mike Complains, some aspects of this ruling and agreement are seriously concerning and need to be addressed.
If this settlement rolls out as agreed, two seemingly conflicting requirements will take place at the same time. Buyers will be required to commit to paying their agent a specific amount without regard to the seller’s willingness to participate. At the same time, the amount of agent compensation being offered is NOT going to be listed on the MLS, giving buyers and their agents less information to act upon. Am I the only one on earth who sees these two requirements conflict with each other?
On top of that, agents will not be allowed to even show a home without having a binding buyer’s agreement signed. There are dozens of new forms being drafted by the California Association of Realtors alone to try to accommodate this requirement and it’s a lot. This is too much, too fast to fix a problem that pretty much only existed in the minds of antitrust attorneys who have never sat around the kitchen table with a seller or drawn up an offer in a booth of a coffee shop with a first-time buyer.
The most concerning thing about this settlement is that the consumer is not being considered. At the end of this, the consumer is in a worse place than before the settlement. There will be more to sign, more to understand and more confusion further complicating real estate transactions. Buyers are particularly affected; hurting everyone involved. Let’s face it, part of what makes our real estate market strong is that it works well for the buyers which also benefits the sellers.
Unfortunately, people who are least able to understand this newly conceived complicated process are the most likely to be at a disadvantage. Who is this helping? Even seasoned agents are having a hard time wrapping their heads around this new process. Good luck to an English as a second language immigrant trying to achieve the American dream of buying a home. Just think of all the fair housing risks that will come up with this new system where the compensation is now not publicly disclosed.
I am sure part of NAR’s thinking in agreeing to this settlement included some kind of strategy to reduce the potential losses for the largest brokerages in the country. I have no doubt they were trying to do their best but it feels like there was an element of fatigue that caused this settlement to land the way it did.
Part of the beauty of the current system is that consumers can use an agent of their choice. The system may not be perfect but it works well. I can’t think of another industry where the government would make these drastic kinds of changes without real participation by the actual industry participants.
Who knows how it will all play out? I hope the DOJ and NAR reconsider this settlement but next time put the consumer first. Again, we will figure it out because we have to. To find out more about the settlement check out our blog The DOJ Ruling on Real Estate Commissions Explained along with Why Real Estate Commissions Are So High and Should You Buy Through the Listing Agent?
Hope you found this useful and informative. We will do our best to keep you informed. If you are looking for a real estate broker or property manager in Long Beach, Los Angeles, or Orange County, California, or you are just considering it and have a few questions about real estate, contact the Mike Dunfee Group today! We are happy to help.
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