Podcast Summary
NAR's Control Over Real Estate Market Challenged: The NAR's control over real estate market costs is being challenged, potentially leading to more affordable buying and selling processes for consumers.
The National Association of Realtors (NAR), a powerful industry group that has controlled the real estate market for over a century, recently suffered a significant blow when their rules regarding how much buyers and sellers pay to agents were challenged. This collapse of NAR's control has led to a decrease in costs for consumers. NAR, which owns the term "realtor" and makes it difficult for non-members to sell homes through their multiple listing services (MLS), has grown to 1.5 million members and has made it nearly impossible in practice to sell a house without being a member. The recent development marks a major shift in the real estate industry and could lead to more affordable home buying and selling processes.
NAR's Control Over Real Estate Industry and Commission Fees: The National Association of Realtors (NAR) holds significant control over the real estate industry in the US, including the perpetuation of a 6% commission fee, access to lockboxes, and use of certain technologies. Critics argue this control creates a monopolistic or cartel-like environment, with high fees being a major point of contention for home sellers.
The National Association of Realtors (NAR) holds significant control over the real estate industry in the US, particularly the 6% commission fee that is widely regarded as a major expense for home sellers. Although NAR doesn't set the fee itself, it has established rules and regulations that have perpetuated this industry standard, making it challenging for those who attempt to change it. NAR's influence extends beyond the commission fee, as they control access to lockboxes used to show homes to potential buyers, and they require agents to use their technology in many markets. This level of control, which has been in place for over a century, has led critics to label NAR as having monopolistic or cartel-like power. The high commission fee, which amounts to a substantial sum for high-value homes, remains a significant point of contention, with many home sellers expressing dissatisfaction at the large portion of their sale proceeds that goes to real estate agents.
A Missouri Lawsuit Challenged NAR's Monopoly in Real Estate: A group of home sellers and a lawyer successfully sued NAR for misrepresenting non-negotiable listing fees, marking a rare victory against the powerful real estate giant.
The National Association of Realtors (NAR) holds significant power in the real estate industry, acting not just as a trade group but also as a political action committee. This power allows NAR to quash competition through lawsuits and political influence, making it challenging for private companies or the government to challenge their monopoly. Despite this, it was a group of five home sellers and a personal injury lawyer from Missouri who successfully sued NAR for misrepresenting the non-negotiability of listing fees, marking a significant victory against the real estate giant.
Hidden Real Estate Agent Fees: Unknowingly Overpaying Sellers: Consumers may have been misled about the negotiable nature of real estate agent fees and unknowingly paid for both agents' commissions
Many home sellers have unknowingly overpaid real estate agent fees during the sale of their properties. The National Association of Realtors (NAR) states that fees are not negotiable, but in practice, consumers are often told they cannot negotiate. Discovering this after the fact, some sellers have found that their contracts allowed for lower fees, and others were charged more without their knowledge. Moreover, sellers unknowingly pay the fee to the agent representing the buyer in the negotiation. The 6% fee, which is split between the seller's and buyer's agents, is often hidden from consumers. In response, a class action lawsuit was filed against NAR by an attorney, Michael Ketchmark, in Missouri. The lawsuit alleges that consumers were misled about the negotiable nature of agent fees and the split of those fees between agents. The revelation of this issue, coupled with the recent sexual harassment scandal involving NAR's president, has brought increased scrutiny to the organization.
NAR Faces Major Scandal and Lawsuits Over Price Fixing: NAR and other real estate companies faced multiple lawsuits for price fixing and conspiring, leading to a $1.8 billion damages verdict and significant changes to the real estate market, introducing competition and eliminating the 6% commission rule.
The National Association of Realtors (NAR) faced a major scandal and legal battle when they were accused of price fixing and conspiring with large corporate real estate brokers. This came to light during a trial in which a Kansas City jury found NAR and others guilty, resulting in a $1.8 billion damages verdict. Following the verdict, a class-action lawsuit was filed against NAR and other companies on a national level, affecting every homeowner who sold a home in the past four years and paid a 6% commission. The floodgates opened with almost 20 lawsuits filed against NAR, all alleging monopoly and antitrust violations. Facing these lawsuits, NAR finally agreed to settle, leading to significant changes that will introduce competition into the real estate market and eliminate the rules that led to the 6% commission.
Potential decrease in real estate commission fees could impact housing market: New rule change may lead to $20-$50 billion decrease in annual real estate commission spending, potentially resulting in lower housing prices
The potential elimination of the 6% real estate commission fee could lead to significant changes in the housing market. This fee, which amounts to approximately $100 billion in annual spending in the US, has historically been an immovable cost in buying and selling a home. However, with the entry of new competitors into the market, fees are expected to decrease, leading to a potential drop in housing prices. The National Association of Realtors (NAR) has recently implemented a rule change that prohibits seller's agents from offering commissions to buyer's agents on MLS databases. This means that buyer's agents will no longer be able to only show homes where they are guaranteed a commission, potentially leading to increased competition and lower fees across the board. Economists forecast that this change could result in a drop of $20 to $50 billion in annual real estate commission spending. Overall, this is a significant shift in the housing industry that could result in lower costs for home buyers and sellers, and potentially lower housing prices.
Real Estate Industry Settlement: Homeowners May Receive Payments for Alleged Commission Collusion: Homeowners who sold homes between certain years may be eligible for a payout due to a real estate industry settlement involving commission collusion between buyers, agents, and seller agents. The exact amount each homeowner will receive is yet to be determined.
The recent real estate industry settlement marks the end of the long-standing 6% commission structure and an alleged collusion between buyers, agents, and seller agents. This settlement, which applies to almost every homeowner in America who sold a property in the last few years, will result in a potential payout for affected individuals. The exact amount each homeowner will receive is yet to be determined and will depend on the number of people who respond to the letters they will receive asking if they sold a home and paid commission. The settlement's impact on the real estate industry is uncertain, with some predicting a revolution while others see a slow transformation. Regardless, this settlement represents a significant change in the industry, and homeowners who sold their properties within the specified timeframe should keep an eye out for the letters to determine their potential eligibility for a payout.
The end of NAR's monopoly in the housing market: The NAR antitrust settlement could lead to a more consumer-friendly housing market by weakening NAR's lobbying presence and influence on pro-landlord policies.
The antitrust settlement against the National Association of Realtors (NAR) could lead to a more consumer- and tenant-friendly housing market. This is because the settlement is expected to cause a significant loss of members for NAR, resulting in a weaker lobbying presence in Washington and potentially less influence on pro-landlord policies. This change could have far-reaching effects, as NAR has historically controlled access to listings and commissions, making it a powerful force in the housing market. The settlement's impact on the housing market dynamics is likely to unfold over time, and it marks the end of an era for an organization that had a stranglehold on the industry for decades, despite controlling a significant portion of the American dream - homeownership. It's surprising that it took so long for this monopoly to be broken up, but the settlement's ripple effects are expected to bring about a fairer housing market for consumers.
Underdog home sellers win legal battle against NAR: Ordinary home sellers, with a lawyer's help, won a significant settlement against the NAR, potentially benefiting many Americans and showcasing the power of perseverance
A group of five ordinary home sellers in Kansas City took on the National Association of Realtors (NAR) in a legal battle and, with the help of a personal injury lawyer, won a significant settlement. This underdog victory, which is expected to receive final approval from a federal court soon, could benefit many regular Americans by impacting the housing market. The lawyer, who saw himself as the "little guy" going up against a giant, even quoted a biblical David versus Goliath passage to describe the situation. This story highlights the power of perseverance and the potential for change, even in the face of seemingly insurmountable odds. Other news includes Israeli Prime Minister Benjamin Netanyahu's plans for a ground invasion of Rafa, despite US warnings. The episode was produced by Diana Nguyen, Shannon Lynn, and Sydney Harbour, among others.
