Good Wednesday AM on this best day of the week,
Not much data yet again.
The party starts tomorrow with GDP, Unemployment claims, and Durable Goods. In the meantime, bonds are pulling bak from some recent gains. Nothing to worry about for the moment but it is never a straight line up or down..
The news I think is important to share is on the Lawsuit over Real Estate Commissions. Below is a pretty good write up. Take note of the bold piece from the State of New York. I think NAR has an uphill struggle with a very murky future. As always, I am happy to discuss any questions/comments/thoughts.
Ed Groshans with Compass Point Research & Trading LLC did a fine job of spelling out the latest potential case that not only real estate agents are following, but lenders as well. The Department of Justice (DOJ) is considering filing an antitrust suit against the National Association of Realtors (NAR) centered on NAR’s Participation Rule and the Clear Cooperation Policy, which governs broker commission agreements.
“At present, DOJ has appealed a court decision requiring it to adhere to a settlement reached with NAR and approved by a court. It is unclear if DOJ will initiate a new antitrust lawsuit while the prior case is still pending. Should the NAR prevail on appeal, it could negatively influence a separate DOJ antitrust lawsuit.
“Whether it is another DOJ lawsuit or a civil lawsuit, it is clear that decoupling broker commissions is a likely outcome, especially in light of NAR’s recent policy change permitting listing brokers to not compensate buyer brokers. Last week, it was reported that the Real Estate Board of New York will prohibit listing brokers from paying buyer brokers beginning January 1, 2024. The end result of decoupling broker commissions is likely higher upfront costs for homebuyers. It is also expected to reduce the number of licensed real estate agents in the U.S. If first-time homebuyers are affected and there are less real estate agents, then it could result in fewer annual home sales.
“NAR settlement with DOJ may yet stand. In 2020, NAR and DOJ reached a settlement on NAR’s Participation Rule and the Clear Cooperation Policy. In 2021, DOJ notified NAR that it was withdrawing from the settlement. NAR sued the DOJ and in 2023, the district court agreed with NAR, nullified the DOJ’s revised Civil Investigative Demand (CID), and required DOJ to abide by the 2020 settlement. DOJ appealed the decision, and the case is currently in process. The appeal has been fully briefed and oral arguments have been scheduled for Friday, December 1.
“In 2022, NAR changed its Multiple Listing Policy Handbook in accordance with the 2020 settlement. It was reported that NAR changed its policy again in 2023 to permit listing brokers to offer buyer brokers $0.
“Buyers may have to pay broker commissions. At present, the listing broker usually splits the commission 50/50 with the buyer broker. The NAR policy change and pending lawsuits could result in buyer brokers having to be compensated directly from the homebuyer. At present, rolling the buyer broker fee into a mortgage. Which does not appear to be permissible, would have implications for loan-to-value calculations.
“NAR faces multiple commission-related lawsuits. The NAR’s June 2023 Legal Update lists several private suits that are currently in process including the Moehrl and Burnett lawsuits… our expectation is the decision will be appealed regardless of which party wins or loses. For Moehrl and Burnett we would not expect an appellate court ruling until 2025.” Thank you, Ed!
From NAR’s perspective, it is “standing up for business practices and rules that protect consumers’ interests, drive efficiency and transparency, and provide an equitable experience for consumers and brokerages competing in local MLS broker marketplaces.”
Please remain safe and healthy, make today great!