VENICE — A proposed settlement in a class action lawsuit against the National Association of Realtors and a number of major real estate brokerages isn’t expected to have a significant impact locally, according to area Realtor boards.
But, they caution, the settlement regarding agent compensation isn’t final. It still needs a judge’s approval, and an appellate ruling last week could bring the Department of Justice, which had reached, then undone, a settlement of its own with NAR previously, back into the picture.
The settlement would resolve numerous lawsuits accusing NAR and the brokerages of violating antitrust laws by setting a mandatory 6% commission in transactions.
Without admitting any wrongdoing, under the terms of the settlement, NAR would pay $418 million over four years to resolve all the claims against itself and most of its members; create a Multiple Listing Service rule barring offers of compensation on MLS; and create a rule requiring MLS participants working with buyers to enter into written agreements with them, because the sharing of a commission between a seller’s agents and a buyer’s agent would be optional.
The plaintiffs in the lawsuits alleged that using MLS to advertise commissions encouraged agents representing buyers, who generally split commissions with sellers’ agents rather than being compensated by their own client, to focus on selling properties that would earn them a bigger commission.
The settlement would allow seller and buyer agents to reach an agreement on sharing a commission as long as they do it outside MLS, which is what analysts say could trigger DOJ involvement.
The agency may consider the ability of agents still to negotiate commission-sharing arrangements to be an antitrust violation, analysts say.
The Florida Association of Realtors is already working on revisions to MLS and buyer’s agent forms and educating its members about the proposed settlement, local Realtors said.
Reactions
While expressing optimism that the industry might soon be able to move on from the lawsuits, local Realtors aren’t happy about news reports they say portray the settlement inaccurately.
The NAR is being portrayed as having engaged in price-fixing, which isn’t the case, said Leanne Walker, president of The Realtors of Punta Gorda-Port Charlotte-North Port-DeSoto Inc. There’s never been any price-fixing regarding commissions, she said.
Commissions have always been negotiable, said Lore Miller, president of the Venice Area Board of Realtors, with some brokerages offering rates higher or lower than 6%.
Rates are set by brokerages based on their own business model and that won’t change, said Tony Barrett, president of the Realtor Association of Sarasota and Manatee.
People looking for an agent should shop around and choose one based on the level of service they want, he said.
Some brokerages will list a property on MLS for a flat fee, he said, though that’s about the extent of what the seller gets.
Other brokerages incur expenses in making a sale — such as by hiring a photographer — that they can’t recoup unless they make a sale, said Brian Faro, immediate past president of the Englewood Area Board of Realtors.
He said that brokerages in other areas may have gotten “carried away” and told clients that a 6% commission was standard in the industry, but there was never a rule to that effect.
“You always have bad apples out there in every industry,” he said.
If there’s been an issue regarding commissions, it’s been a lack of transparency about how they’re shared, and it hasn’t been a problem locally, he said, because the level of transparency here has always been high.
And some buyer’s agents have been using contracts, Barrett said. Requiring them isn’t a bad thing, to enhance transparency, he said.
It could lead to more negotiating over compensation, said Marlene Merkle, VABR’s CEO.
All the associations have been adding members in bunches, their representatives said, and none of them sees the proposed settlement as a threat to the industry because people will always see value in assistance with real estate transactions.
“There are 150 things we do to keep things on the rails, legal and safe, to lead to a conclusion,” Walker said.
If there’s a negative impact, Faro said, it most likely will fall on agents who are unwilling to change, or slow to do so.
He said he always recommends that potential clients interview three agents and pick the one they see the most value in, even when it’s not him.
“We can still be friends,” he said. “We’re not all meant to work together.”
Real estate is a second career for many agents, Merkle said. She thinks few will leave the industry if the settlement is approved.
“We’re not worried,” she said. “The strong will survive.”
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