A few days ago the National Association of Realtors (NAR) agreed to settle a series of lawsuits (awaiting court approval) with these key concessions:
NAR will pay $418 Million in damages spread out over several years.
NAR’s MLS systems will eliminate the “buyer broker” compensation field.
NAR’s rules will mandate buyer brokers enter into written agreements.
NAR will not require members to join the local MLS to receive compensation.
As of this writing, other large-volume brokers and some MLS Systems not included in this settlement are considering settling with plaintiffs on their own. A few brokers are continuing to litigate this issue, but I would expect most all to settle in the not-too-distant future.
As well, there remains the litigation involving the United States Department of Justice and NAR. As such, this current settlement is only a part of the ongoing legal problems for NAR, some brokers, and many MLS systems. You’re unfortunately being told it’s “settled,” but it’s not at all settled yet.
Regarding “settling” any lawsuit — despite what you’re hearing (the truth?) — it typically involves a party who sees their case is on the losing end, and wants to settle to avoid losing even more money and time. It’s usually not that they have a winning hand (or can rightly deny any wrongdoing) and settle to “preserve consumer choice and protect our members …”
Most notably for auctioneers, if you are not a “member” these rules do not apply to you. Your real estate license is administered by the state in which you practice, and NAR’s rules only apply if you choose to join. If you are not a Realtor, then basically nothing regarding this settlement matters to you.
What will likely result from this settlement? For certain, consumers will be more aware that commissions are negotiable (which they didn’t know before.) Will some brokers lower their fees? Possibly. Will some licensees leave the industry? Probably. Will licensees leave NAR? No question.
For auctioneers, this may be no better time to consider ending your relationship with NAR. For one, you can market property otherwise in several ways, and the antiquated “local” database model remains expensive and maybe now largely even more unnecessary. Many auctioneers realized this years ago …
What are these other methods? These [likely better] techniques include signs, emails, direct mail, social media, and other real estate websites in addition to your website. Auctioneers argue every day they prefer their own marketplace, so why use this especially antiquated and expensive platform?
This is hardly the only issue NAR has encountered in the last few years. Sexual harassment allegations have led to the resignation of the president of NAR, followed by the next president resigning shortly thereafter. The long-time chief executive also resigned. There are now even more other [nationwide] MLS-like systems being introduced providing licensees yet more choices.
We have written prior that NAR clearly doesn’t understand the auction business and/or promotes completely unsubstantiated claims, and about this group’s longstanding advocacy for a lack of efficiency, equitability, transparency, and affordability, which caused much of this subject litigation:
My advice for auctioneers selling real property at auction? Continue to market your property as I noted above without worrying about the property being in your local MLS (and all the related rules,) charge a buyer’s premium to benefit your seller, and have either absolute auctions or those with a disclosed minimum acceptable bid as clearly with more disclosure and the “prospect of a deal” you and your seller win.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at Mike Brandly, Auctioneer, Brandly Real Estate & Auction, and formerly at Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auction Association’s Designation Academy and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
Comments