The Spitzer/Burnett Case
Undoubtedly, you’ve heard or read the news about the Spitzer/Burnett Case. If you haven’t, in short:
“The core of the lawsuit was over NAR’s rule that all listings on REALTOR® operated MLSs communicate an offer of compensation to the buyer’s agent. The class action argument against NAR was that the cooperative compensation rule created a conspiracy to keep commission rates higher than the market would otherwise have created. Essentially, the plaintiffs argued that NAR and the various MLSs worked together to ensure payment of Buyer Agents happened, thereby inflating the amount of total commissions paid by sellers. The trial was in the United States District Court for the Western District of Missouri and the outcome applies to all home sellers who listed homes on a number of MLSs present in the Missouri and Kansas region since 2015. ”
NAR is short for National Association of Realtors. Moving on…
“...in Sitzer/Burnett v. NAR, et al. on October 31st, 2023, after merely two hours of jury deliberation. The jury determined that NAR, Keller Williams, and HomeServices of America were guilty of colluding over commissions and ordered the defendants to pay $1.78 billion in damages, which can potentially be tripled by the judge to just under $5.4 billion.”
As of now, it seems that NAR, Keller Williams, and HomeServices of America will appeal and push this higher. Both RE/MAX and Anywhere Real Estate settled early on, for $55 million and $85 million respectively. (My opinion - they let their brokers/agents down.)
In the meantime, not much will change how real estate agents do business; however, depending on how all things considered shake out it can drastically change the way we (yes, we. I am a homeowner and have bought and sold properties before and whilst holding a real estate license) buy and sell homes. The current ruling is not in our favor - for either the buyer or seller.
All to say, I read this great article How the Sitzer|Burnett decision hurts minority homebuyers by Keller Williams Head of Inclusion and Belonging, Julie Sashay Israel, and it gets to the heart of who this lawsuit will really harm. This lawsuit is not about protecting the consumer. It will hurt the consumer, especially minorities.
“The Sitzer | Burnett commission case has the potential to reshape the dynamics of agent commissions and buyer representation, which could have a ripple effect on various aspects of the real estate industry. While discussions often focus on the financial implications for real estate professionals, what often goes unnoticed is its potential impact on fair housing, especially for minority homebuyers in pursuit of homeownership.”
Please give the article a read.
“Any changes to commission structures may influence the level of service and attention buyers receive. If these changes reduce agent resources or incentives to work with certain demographics, it could limit access to crucial information and representation for minority homebuyers, hindering their ability to make informed decisions. The additional expense of buyer representation may cause buyers to forego buyer representation altogether. When a buyer is unrepresented in a transaction, the listing agent may be the only licensed party in the transaction and thus solely represent the seller. The inability to pay for representation puts the buyer at a severe disadvantage.”
Side Bar/Another Day/Another Post:
Perhaps we need a history lesson on how we came about the buyer’s agent commission (BAC) and the reason it was set up the way it is set up?
A reminder on when the listing agent and seller are negotiating the listing agent’s fee/commission, that they are also negotiating how much of that will be shared with the buyer’s agent. The buyer who ultimately is paying for everything by showing (and bringing) the money to the table.
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If you care to read Oregon Realtors’ full summary quoted above: