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The Class Action lawsuit against the MLS, Re/Max, et al...does it have merit?  XML
Forum Index » Legislation, Licensing, Ethics, and Legal Issues
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Joined: 06/17/2014 09:32 PM EDT
Messages: 5244
Location: Carmel, IN

Here's a link in case you missed the news: https://www.apnews.com/Business%20Wire/041d62f40f104a56874c93b66e369712

I've been sitting on this quiet for a few days as I pondered the question that is the entire basis for the class action suit:

"Have (home) sellers been disadvantaged by the typical real estate commission structure and further has that structure been created by the MLS and large broker franchisors?"

The answer to that question, legally, will be determined by the courts and I’m not going to have myself or my legal team opine on whether the basis of the lawsuit meets the legal standards or requirements of an antitrust offense. We’ll let the parties work that out. As I sit here watching my email light up with emails from agents and other interested parties to real estate, there are many that seem to question the intent here and who might really be backing this thing. That also, is not my concern here and I’m not going to state an opinion there.

Instead, I want to focus on what I will call the “feelings” associated with this issue and the real liability that faces not just the named defendants but the industry as a whole. Do home sellers feel like they’re getting a “raw deal” and one that smells, tastes, and feels unfair? After the dust has settled in the lawsuit, that's when the real damages start adding up.

So first, let’s restate the legal position’s question to the client perspective:

“Am I (a buyer/seller) disadvantaged by the typical real estate commission structure and has that structure been created by the biggest players in the market?”

To answer that question, and as an industry we need to, we need to divide this into areas of “feelings” and make sure we aren’t offending our clientele first and foremost, regardless of which way a lawsuit in Chicago goes because that case stands to change perception even if it goes nowhere.

Part 1: Is Real Estate “Fair”?

Inman and online news outlets like to tout polls where people were asked if they “trust real estate agents” or if they “believe real estate agents are ethical” and oftentimes those numbers aren’t real good. Here’s an example:


The headline is absurd: “Consumers haven’t believed real estate agents are ethical for 40 years!”, and then when you get into the actual numbers there’s a very different picture. Real estate agents, if in that lunatic of a poll, are neck and neck with Lawyers and nearly double Stockbrokers.

But the poll was ridiculous. Let’s ask a different question… “Is YOUR agent ethical?” It’s not one that has really been promoted, except once and it was done indirectly. Here are home buyers stating that in over 95% of occasions they would trust their agent’s recommendations. You have to put together many components, but at the end of the day real estate agents are generally trusted by those they represent. Here’s that much better survey than what you’ll find on the internet generally:


Now do clients think the commissions we get paid in this industry are unfair? I haven’t seen that as an outcry. I’ve hired agents myself on dozens of occasions in my adult life (even when I had an active license…still hired one) and honestly they worked for every penny. If you’re one of those agents that works for every penny, goes out and gets educated and reads stuff thoroughly (just in the last hour I will give huge props to Kris Forsgren of Tennessee for going above and beyond for her clients), and going to give huge super extra credit to those that got their CPE Certification ( http://www.CPEcertification.com ), if you know you are earning your commission and show your clients every day then you are not part of the problem. I doubt your clients think you are either.

Here's the best part for a disappointed home buyer or seller: If you don’t think your agent/agents is working hard enough for you, ethically enough for you, protecting you, and earning every penny…you can fire them and get another. (And that happens)

What can we do to fix it: Not a lot to fix for many agents. Perhaps a subtle reminder that we appreciate clients hiring us, we intend to work for every penny, and they are in the driver’s seat if they ever want to fire us would go a long way in building trust.

Part 2: Does the consumer feel there is collusion?

This is an incredibly difficult one to gauge. As people in the industry, our ears perk up when we hear real estate news. We’re in the know about the local REALTOR board seeming to always have a member or two from each of the big local real estate offices in elected positions, and we get involved in the scuttlebutt. I’m not saying any of it adds up to or doesn’t add up to anything that would meet antitrust qualifications, I’m saying this stuff is invisible to the public.

What can we do to fix it: We’re in a real pickle here and at the same time the issue is virtually invisible and complex. It was fairly easy for big brokers to have “commission standards” and implement them across the board. It was pretty easy for all of them to land at virtually the same number, and that looks really, really bad. How that gets addressed from a PR standpoint will take a lot of thought from people smarter than I.

Part 3: Is there Exclusion of other options?

It’s hard to say, again, what a consumer might feel on this front being in the industry but we certainly know what that “exclusion” looks like from within the industry and we need to keep it from oozing out! This is the one area where I feel like agents/brokers/MLS’/Boards have really brought some bad Juju into the mix. We’ve seen MLS rules change to exclude discount brokerages, we’re now seeing feeds of data being cut off to Zillow. We see agents constantly being taught how to do listing presentations that don’t have any real features – they just bash the other guy’s when he is a discount broker or offers something like a sales guarantee. These certainly would work against us, in a perception as an industry, for clients that want to feel they’re getting a fair deal.

What can we do to fix it: Add some real reasons to your client presentations that you’re worth the fee. Don’t cut down the other options in such a way that reduced commissions are exposed as some sort of threat. Be awesome every day for your clients.

Part 4: Does the client feel injured?

Let’s say that we’re all serving clients that secretly hate us, do immense amounts of research and hang out at all of our events and know all the scuttlebutt and think the real estate illuminati are running their lives, and there was an uprising of clients looking to save a few hundred or thousand in commissions that couldn’t be convinced otherwise and pretended there were no other options in the market …yes, not only unlikely but a little crazy… then how do they feel about the injuries and damages we are thieving out of their pockets like lunch money robbing bullies?

I can’t imagine any of that and even if this bright shining light of litigation conjures such feelings from a few, it seems easily combatted. For this section, we will go straight to the fix.

What can we do to fix it: In the unlikely event any of this nonsense comes to be the mindset of clients (sellers), then we make sure they have options that are horrible for them not only available (as they are now) but also suggested as an option even though they are a ludicrously bad idea – set the Buyer’s Agent commission where you want to Mr./Mrs. Seller. Pick a dollar amount, a percentage, whatever you want. (Follow that with the obvious advise )

My best advice for agents at this moment: Ignore the noise. Be mindful of client perception. Do your best for your clients every day. Be worth every penny. Stop buying my competitor’s crappy warranties (sorry, had to throw that in there… http://www.ResidentialWarrantyServices.com ). Be ready to shift when the market does. And always, always come out on top.

This message was edited 2 times. Last update was at 03/14/2019 01:45 PM EDT

P. Nathan Thornberry
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