The Jury Has Ruled on Commissions: What Are the Next Steps?

So many lawsuits, what happens next? The answer is: it depends. For now, agents need to pay attention to the information from their MLS and their association of REALTORS, and talk to their broker. Do not put too much into the articles you read in the real estate news, unless a lawyer is writing it. The case list is long – Morel vs. NAR, Leader vs. NAR, Nosalek vs. MLSPIN, Sitzer/Burnett vs. NAR, and more! Do not get drawn into the drama. Nothing has happened yet. When it does, listen to your broker and your MLS/association.

I have been mad about the Sitzer/Burnett case from the beginning. My opinion on Sitzer/Burnett is that the judge should be fired. Early in the case, he categorized it as a per se antitrust case rather than a rule of reason antitrust case. Every attorney that I have discussed this with has indicated that Sitzer/Burnett is a rule of reason case. That judge got it wrong. A per se violation requires no inquiry into the actual effect on the market, or the intentions of those individuals who engaged in the antitrust behavior. In this case, the market effect and intentions really matter… appeal! And yes, there will be an appeal, unless there is a settlement. The decision of appeal vs. settlement will absolutely be a measure of money – not law or the facts in the case.

The final settlement in the case, or the appeal – or whatever happens next – does not really matter unless you are named in the litigation. For everyone else, think about how you can change now to avoid this sort of business uncertainty in the future. It's not that hard to change.

Buyer's Agent Change Now

Update the "Submit Offer" form from the buyer to include a field for buyer agent compensation. Oh, and make sure the buyer's agent uses a buyer representation agreement immediately, on every lead, and early in the conversation with the buyer. If you don't get paid by the seller, the buyer will need to pay you.

Listing Agent Change Now

Notify the seller of your fees and discuss the optional offer of compensation to the buyer's agent. Make it clear that the seller is paying your agency fee to some amount or percentage, and that they can authorize you to negotiate with the buyer on the buyer agent fee, or not. Let's look at the seller agency carefully. The seller pays a commission for a job. How the listing firm does that job, and who they pay to do that job, is up to them as long as it is seller authorized.

MLS Change Now

MLSs have the opportunity to change now. Just remove the offer of compensation field all together. Buyer's agents can submit an offer that includes buyer agent compensation; get out of that. This will also remove all suspicion of steering.

Talk to Your Lawyer

If you are an MLS, association, or broker, then you better have a dialogue with your lawyer about what happens if you get sued. The impact of these cases will be different for many states, so don't hold your breath and hope for clean air in the future. Assess your liability, if any. If you can pay it, or some amount – you may want to do that. Otherwise, you may want to dispose of your company and start another one before it's too late.

NAR Dues

The National Association of REALTORS® has had to raise money for settlements before. Some of you might remember the CIVIXX case involving a company that had a patent on displaying a property icon on a map to represent a home for sale. NAR settled for $7.5 million. They sent an invoice to all of the MLSs. This is a large legal bill; expect a far larger dues increase. Shout out to my retired consulting colleague Ann Bailey for saving the industry's ass with CIVIXX.

Keep Selling

The most important thing to tell agents today is to keep selling real estate, and their value is impressive. I expect some great new technology to emerge to demonstrate the value of listing agents and buyer's agents. I have been keeping an eye on Rayse. Theirs is a website that tells you nothing about the product, but the mission is clear: value your expertise. Consumers need professionals to help them with real estate transactions. Be there for your client.

To view the original article, visit the WAV Group blog.

Next steps

• Read recent research on buyer's agent commissions
• See more articles on tips, tricks and tools for buyer's agents
• Explore Buyer's Agent tools in our Product Directory.