Many industry professionals were outraged by a recent episode of “The Daily” podcast featuring Times real estate reporter Debra Kamin, where they discussed the changes in the real estate industry post-NAR settlement in August 2024.
‘The great real estate workaround’
Kamin discussed how agents have found ways to share buyer broker compensation offers outside the MLS, despite it being banned by the settlement terms.
NAR pushes back
NAR clarified that certain workarounds violate the settlement, but cooperative compensation is allowed. The settlement does not prevent sellers from offering buy-side compensation or agents from communicating about commission offers off the MLS.
NAR and other industry players criticized The New York Times for misinterpreting the settlement agreement. Some argued that the podcast was biased against the industry and misrepresented facts.
Where do commissions stand?
The podcast also discussed how agent commissions have remained steady, contributing to the lack of decrease in home prices. Data from a HousingWire survey showed that most agents reported no change in buy-side commissions, while listing agents reported typical sell-side commissions in the 2-3% range.
FSBOs and Zillow
Kamin highlighted the challenges faced by FSBO sellers, noting their struggles to navigate the real estate market without an agent. She shared the story of Michael Chambers, an FSBO seller in Boulder, Colorado, who faced difficulties in listing his property on Zillow due to state laws restricting MLS entry-only agents.
However, he soon realized that listing his property as an FSBO would result in it being placed in a separate search category from the MLS listings.
Although Zillow declined to comment on the Times podcast or the Chambers story, it is common knowledge in the real estate sector that Zillow had to implement a two-tab listing format in MLSs that adhere to NAR’s no-commingling regulation in order to access IDX feeds.
Recently, some MLSs have started repealing the rule, allowing Zillow to switch back to a single tab layout in those regions. By May 1, Zillow had started commingling listings in Boulder on its platform.
Other dissenters
While Kamin may be the most vocal critic of how the real estate industry has handled the changes mandated by the NAR settlement, she is not alone in her objections.
In October 2024, before the final approval of the settlement, University of Buffalo law professor Tanya Monestier raised concerns. She stated that the settlement was “the worst possible outcome” and its implementation had been a “disaster.”
Similar to Kamin, Monestier alleged that agents were finding ways to increase their commissions and confusing clients to secure higher payments.
According to Monestier, there was substantial evidence of agents persuading buyers to sign altered buyer representation agreements that allowed the buyer’s broker to raise their compensation to match the seller’s offer.
Furthermore, she claimed that some buyers were being asked to sign agreements permitting “seller-paid bonuses” if the seller was offering more compensation than agreed upon with the buyer and their broker. In other instances, agreements were tailored to align the buyer broker compensation with the seller’s offer.
NAR responded to these allegations in its motion for final approval of the settlement in November 2024. The trade group, alongside the Sitzer/Burnett and Moehrl plaintiffs, argued that Monestier’s objection was based on anecdotal evidence and lacked feasible alternatives to the business practice changes outlined in the settlement.
DOJ’s stance
Despite NAR’s settlement permitting agents to share compensation offers cooperatively and from the seller, the U.S. Department of Justice (DOJ) has expressed a desire to see this practice discontinued.
During a May 2024 status hearing for the Nosalek commission lawsuit, DOJ attorney Jessica Leal stated that the department believed “offers of compensation should not be made anywhere, but certainly not on the MLS.”
This statement came after the DOJ called for a ban on cooperative compensation in its statement of interest in the Nosalek case.
While the DOJ objected to the settlement, its concerns did not revolve around how agents could share commissions. It remains to be seen if the department will take further action on this matter.