{"id":3133,"date":"2022-05-23T19:38:01","date_gmt":"2022-05-23T19:38:01","guid":{"rendered":"https:\/\/preprod.realtrends.com\/blog\/2022\/05\/23\/nars-silence-on-lawsuits-frustrates-agents\/"},"modified":"2025-03-13T02:43:07","modified_gmt":"2025-03-13T02:43:07","slug":"nars-silence-on-lawsuits-frustrates-agents","status":"publish","type":"post","link":"https:\/\/preprod.realtrends.com\/blog\/2022\/05\/23\/nars-silence-on-lawsuits-frustrates-agents\/","title":{"rendered":"NAR&#8217;s silence on lawsuits frustrates agents"},"content":{"rendered":"\n<p>The <strong>U.S. Chamber of Commerce<\/strong> is worried. The pro-business lobbying group <a href=\"https:\/\/www.chamberlitigation.com\/sites\/default\/files\/cases\/files\/22222222\/U.S.%20Chamber%20Amicus%20Brief%20--%20Burnett%20v.%20National%20Association%20of%20Realtors%20%28Eighth%20Circuit%29.pdf\">filed an amicus brief<\/a> in a federal appellate court supporting the <strong>National Association of Realtors<\/strong> (NAR) this past Friday. A <a href=\"https:\/\/preprod.housingwire.com\/articles\/judges-ruling-its-heartland-homeowners-v-nar\/\">federal judge\u2019s ruling<\/a> that lets hundreds of thousands of housing consumers partake in a class action lawsuit against NAR is \u201can issue of concern to the nation\u2019s business community.&#8221;<\/p>\n\n\n\n<p>It affects \u201ccountless businesses,\u201d the Chamber of Commerce declared in the brief that supports NAR\u2019s appeal of class certification, namely co-defendant brokerages and the independent contractor agents who act as their own entrepreneurs. <\/p>\n\n\n\n<p>The lawyers representing NAR, and in turn their member agents, now face &#8220;crushing pressure to settle&#8221; a lawsuit that claims commission&#8217;s are &#8220;artificially inflated.&#8221; In other words, through these lawsuits, the 5-6% total commission of home sales may be drastically reduced. <\/p>\n\n\n\n<div class=\"wp-block-housingwire-piano-member\"><div id=\"membership-content\">\n<p>\u201cWe can\u2019t infer too much from class certification,\u201d said Erik Hovenkamp, a University of Southern California antitrust law professor. \u201cOf course, there are other signals the complaint may be meritorious, such as the fact that the DOJ is bringing its own antitrust case against the NAR.\u201d<\/p>\n\n\n\n<p>Yet, instead of using its annual legislative conference earlier this May to huddle with its members and plot a response, NAR almost entirely ignored the issue. The talk was not that hundreds of thousands of consumers in Missouri alone were now involved in a lawsuit against a trade group that is supposed to mutually benefit agents and consumers. <\/p>\n\n\n\n<p>Instead, NAR discussed a few legislative items with little chance of passing. And it reiterated support for improved diversity, equity and inclusion in the real estate industry.<\/p>\n\n\n\n<p>The event, combined with NAR\u2019s recent record of courtroom losses and stymied legislation, leave some of the organization\u2019s 1.5-million member agents puzzled about how these lawsuits affect them, and what concern they should have for the litigation. <\/p>\n\n\n\n<p>\u201cThe things they are using their advocacy for are not the most important concerns to their members,\u201d said Courtney Poulos, CEO of <strong>ACME Real Estate<\/strong> in Los Angeles.<\/p>\n\n\n\n<p>Poulos said that she wants more guidance about how these outside threats may harm her business. For example, could consumers have the power to claw back contractually agreed upon real estate commissions? <\/p>\n\n\n\n<p>However, she learns about NAR&#8217;s antitrust troubles through news articles, and not through her local NAR chapter, the <strong>Greater Los Angeles Realtors Association. <\/strong><\/p>\n\n\n\n<p>Other agents echoed this frustration. It&#8217;s not that they see these lawsuits as the end of the world, but they do have questions about them. <\/p>\n\n\n\n<p>\u201cThere is not a lot of education,\u201d said Darrell Hurdiburgh, broker at <strong>Real Estate for a Cause<\/strong> in Oakland, Michigan. \u201cSome of the agents don\u2019t even realize there\u2019s a lawsuit.\u201d<\/p>\n\n\n\n<p>NAR did not make executives available for an interview. But it did make available spokesperson Mantill Williams and Ron Phipps, the trade group\u2019s president back in 2011 and a broker at <strong>Phipps Realty<\/strong> in Warwick, Rhode Island, since 1978.<\/p>\n\n\n\n<p>The pair acknowledges that NAR simultaneously faces major litigation and a historic <a href=\"https:\/\/www.freddiemac.com\/research\/insight\/20210507-housing-supply\">low-inventory housing market<\/a>. But Phipps and Williams also indicate the trade group\u2019s focus on diversity coincides with their legal defense. &nbsp;<\/p>\n\n\n\n<p><strong>An alleged conspiracy and an inventory impasse<\/strong><\/p>\n\n\n\n<p>Under legal fire is <a href=\"https:\/\/preprod.housingwire.com\/articles\/the-100-years-war-over-real-estate-commissions\/\">NAR\u2019s policy<\/a> for agent and broker compensation. Currently, consumers sign contracts stating that a portion of the seller\u2019s commission is split between the seller\u2019s broker and buyer\u2019s broker. And the consumer selling the home pays all the commission costs, which are a percentage of the home sale price.<\/p>\n\n\n\n<p>Home sellers like Scott and Rhonda Burnett \u2013 the named plaintiffs in the Missouri lawsuit granted class action status \u2013 argue that NAR and top brokerages including <strong>Realogy<\/strong> (now <strong>Anywhere<\/strong>), <strong>RE\/MAX<\/strong>, <strong>Berkshire Hathaway HomeServices<\/strong> and <strong>Keller Williams<\/strong>, used the buyer broker agreement to engage in price fixing.<\/p>\n\n\n\n<p>Burnett\u2019s arguments are replicated in a Chicago case inching through the fact-finding stage. The commission debate is also in Washington D.C. federal court, where <a href=\"https:\/\/preprod.housingwire.com\/articles\/doj-needs-to-honor-agreement-with-nar\/\">NAR itself took legal action<\/a> for DOJ withdrawal\u2019s from an antitrust consent decree. DOJ claimed to back out in order to further investigate commission costs.<\/p>\n\n\n\n<p>Messages left with DOJ for this article went unreturned. NAR awaits a judge\u2019s ruling in its attempt to end the investigation, Williams said. \u201cNAR remains confident the pro-competitive, pro-consumer local broker marketplaces serve the best interests of buyers and sellers and that we will ultimately prevail,\u201d Williams said.<\/p>\n\n\n\n<p>Phipps, the former NAR president, had this to say about the organization\u2019s antitrust troubles. \u201cIs the leadership concerned about it?\u201d Phipps said. \u201cAbsolutely. I think they are disappointed it remains an ongoing conversation.\u201d<\/p>\n\n\n\n<p>One thing NAR wants to discuss instead is inventory shortfalls.<\/p>\n\n\n\n<p>There are less than 1 million homes on the market now, according to Lawrence Yun, NAR\u2019s chief economist, a figure that compares to 1.5 million houses at the pandemic\u2019s start. &nbsp;<\/p>\n\n\n\n<p>If NAR\u2019s lawsuits aren\u2019t registering with members, Phipps said, it\u2019s because, \u201cThe majority of our members are so focused on their clients,\u201d adding, \u201cThe number of sales will drop off this year, but not because of lack of demand.\u201d<\/p>\n\n\n\n<p>Indeed, more agents are likely concerned with today\u2019s inventory than tomorrow\u2019s possible lawsuit outcome. Ken Johnson, a real estate professor at Florida International University, held a question-and-answer session this week with the <strong>Greater Tampa Association of Realtors<\/strong>. Nobody mentioned the antitrust actions, Johnson said, but instead asked about inventory and what is going to happen now with the housing market.<\/p>\n\n\n\n<p>NAR\u2019s record on improving inventory is mixed.<\/p>\n\n\n\n<p>The Realtor\u2019s association <a href=\"https:\/\/www.nar.realtor\/advocacy\/federal-advocacy\/2021-nar-advocacy-success\">has a web page<\/a> \u201cadvocacy successes,\u201d chronicling \u201clegislative, executive and judiciary branch wins.\u201d<\/p>\n\n\n\n<p>There are a few notable items from 2021 and this year, including passage last February of the Equality Act, a prohibition on sexual orientation and gender identity discrimination that extends into housing. The American Rescue Plan, meanwhile, provided $10 billion in homeowner assistance. And, last August, the U.S. Supreme Court took the position of NAR and landlord groups in tossing out the <strong>Center for Disease Control\u2019s<\/strong> eviction moratorium.<\/p>\n\n\n\n<p>But most other items that NAR counts as \u201cwins\u201d \u2014 from real estate provisions in the failed Build Back Better infrastructure measure to a <a href=\"https:\/\/preprod.realtrends.com\/blog\/articles\/nar-looks-to-congress-for-action-on-housing-inventory\/\">bevy of bills<\/a> pushing for developer and community homebuilding tax credits \u2014 are stalled in Congress. &nbsp;<\/p>\n\n\n\n<p>At the legislative conference, NAR policy and legislative analyst Bryan Greene noted the struggle of working with a Congress passing few laws.&nbsp;For NAR\u2019s dues-paying agents and brokerages, it\u2019s a pricey struggle. NAR spent $44 million on lobbying Congress in 2021, <a href=\"https:\/\/www.opensecrets.org\/federal-lobbying\/clients\/summary?cycle=2021&amp;id=D000000062&amp;name=National+Assn+of+Realtors\">according to<\/a> <strong>OpenSecrets<\/strong>, and $12 million for the first quarter of 2022.<\/p>\n\n\n\n<p>One whisper at the conference is whether DOJ\u2019s investigation of NAR diminishes the trade group\u2019s clout on Capitol Hill. Phipps dismissed the chatter.<\/p>\n\n\n\n<p>\u201cLegislators are concerned about what the consumers are focused on,\u201d Phipps said, adding, \u201cEquity and fair housing are what the consumer is focused on.\u201d<\/p>\n\n\n\n<p><strong>Equity, fair housing\u2026 and antitrust<\/strong><\/p>\n\n\n\n<p>It was in November 2020, a year marked by the death of George Floyd and growth of the Black Lives Matter movement, that NAR apologized for its <a href=\"https:\/\/preprod.housingwire.com\/articles\/inside-the-governments-feeble-fight-to-end-redlining\/\">prior support of redlining<\/a>.<\/p>\n\n\n\n<p>\u201cWhat Realtors did was an outrage to our morals and our ideals,\u201d NAR\u2019s then-president Charlie Oppler declared at a virtual fair housing summit. \u201cWe can\u2019t go back to fix the mistakes of the past, but we can look at this problem squarely in the eye.\u201d<\/p>\n\n\n\n<p>Since Oppler\u2019s remarks, NAR has publicly focused upon diversity, with at least two concrete goals. One, Phipps noted, is <a href=\"https:\/\/preprod.housingwire.com\/articles\/why-there-are-so-few-real-estate-agents-of-color\/#:~:text=Factor%20One%3A%20There%20are%20fewer,of%20recording%20quarterly%20housing%20data.\">boosting the number<\/a> of non-white agents and brokers.<\/p>\n\n\n\n<p>Another goal is closing the gap between white and non-white homeownership. The 2020 homeownership rate for Black Americans was 43%, <a href=\"https:\/\/www.nar.realtor\/blogs\/economists-outlook\/racial-disparities-in-homeownership-rates\">according to a NAR analysis<\/a>, one percentage point less than in 2010, and far less than the 2020 white homeownership rate of 72%.<\/p>\n\n\n\n<p>The idea that the American dream of homeownership should be available to all \u2014 along with the agent and brokerage commissions that come along with it \u2014 is good business for NAR. It also meshes with NAR\u2019s legal defense for the current commission structure.<\/p>\n\n\n\n<p>NAR is \u201craising awareness of how local broker marketplaces ensure equity, transparency and market-driven pricing options for the benefits of home buyers and sellers,\u201d the organization wrote in a statement for this article. \u201cListing brokers making offers of compensation to buyer brokers gives first-time, low-to-middle income buyers a better shot at affording a home and personal representation.\u201d<\/p>\n\n\n\n<p>NAR is arguing that the buyer broker arrangement \u2014 ironically a policy that NAR devised a century ago when it often supported housing segregation and discrimination \u2014 today boosts first-time homeownership, including first-time minority homeownership, since there is no buyer\u2019s commission. \u201cThe pay structure we have incentivizes buyer\u2019s agents,\u201d Phipps said.<\/p>\n\n\n\n<p>Phipps was asked if NAR promotes its diversity commitment because it can double as a legal defense in the Missouri case and other antitrust actions.<\/p>\n\n\n\n<p>\u201cNo, it is unrelated to the lawsuits, investigations, or whatever,\u201d he said. \u201cWe are committed to DEI. If that all stops now, the commitment to DEI does not stop.\u201d<\/p>\n\n\n\n<p>Williams added that the American real estate market, \u201cReally does favor low-to-middle income buyers,\u201d and that the U.S. is \u201cone of the few places where you can start with lint in your pocket and become Serena Williams or Oprah Winfrey.\u201d<\/p>\n\n\n\n<p>A couple of agents interviewed contended the focus on diversity is disingenuous, noting NAR donates to office seekers such as <a href=\"https:\/\/www.gregabbott.com\/texas-association-realtors-pac-endorse-governor-greg-abbott-four-years\/\">Texas governor Greg Abbott<\/a> or former U.S. senator from Georgia <a href=\"https:\/\/www.opensecrets.org\/orgs\/national-assn-of-realtors\/summary?id=d000000062\">David Perdue<\/a>, who arguably do not prioritize inclusion, particularly based on sexual identity.<\/p>\n\n\n\n<p>\u201cNAR wants to look progressive and woke, while working in the background to keep the social and economic order in place,\u201d said one Texas real estate agent who requested anonymity so as to, \u201cnot upset NAR further.\u201d<\/p>\n\n\n\n<p>Other agents are taking a more supportive stance.<\/p>\n\n\n\n<p>\u201cI do feel that NAR\u2019s stated interests do reflect my interests most of the time,\u201d said Chey Tor, a <strong>RE\/MAX<\/strong> agent based in Scottsdale, Arizona. \u201cGenerally, we all share the same goals of getting as many individuals as possible to become homeowners to build their own wealth and achieve the American dream.\u201d<\/p>\n\n\n\n<p>\u201cWe may disagree on how to get there,\u201d Tor added, \u201cAnd that\u2019s okay.\u201d<\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>NAR&#8217;s legislative event left some of the organization\u2019s 1.5-million member agents puzzled about how these lawsuits will affect them.<\/p>\n","protected":false},"author":16592,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[736],"class_list":["post-3133","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.4 (Yoast SEO v26.8) - 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