Realtors slam Realogy’s call to end NAR participation rule
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A day after Realogy publicly called on the National Association of Realtors to end mandatory commission sharing, realtors spoke out on the state-owned real estate company’s position, saying they feared the possibility of collapsing. withdrawing can confuse consumers, threaten buying agents or, worse yet, open the door to increased competition from search portals like Zillow and Redfin.
âCooperation was the original premise of MLS,â Rhode Island-based broker-owner Greg Dantas wrote in a comment under the original Inman Jan.6 article on Friday. “Otherwise, it’s a portal and it’s Zillow’s game, set, match.”
The fury over commission sharing comes a day after Realogy wrote the final chapter in a nearly three-year legal saga about buying commissions and who should be responsible for paying them.
In an unsealed legal file, and then in an interview with Inman, the president and CEO of the Realogy brokerage group, Mr. Ryan Gorman, said the company believed the National Association of Realtors co-op pay rule should be amended to make compensation offers on multiple listings of listing services optional. rather than mandatory.
âThe best thing for a seller in any event I can imagine is to offer compensation for the good job the buyers’ agents will do in getting a buyer to facilitate the transaction,â Gorman told Inman Thursday. âI think there is huge evidence to support it and the market will continue to support it. There is no reason why an offer of compensation should be a mandatory requirement for a home to be listed in MLS.
âSo this is really just the mandatory part of listing a house in MLS that we say unnecessary. “
Gorman also said MLS should “continue to offer a data field for compensation, but should not require it to be filled in for a home to be listed” and Realogy “was not asking that the rule be made optional. for MLS, which would allow MLS to continue to make the offering of commissions to buying brokers a requirement at their discretion. “
Agents and brokers responded forcefully on Friday, with many rebuffing Gorman’s claim that the market “would continue to prevail” if the commission-sharing requirement was removed.
“[The] the article should say, “Realogy and Gorman are loading Zillow shares into their retirement accounts,” Dantas wrote. “[Iâm] kidding obviously, but cooperation was the original premise of MLS. Otherwise, it’s a portal and it’s Zillow’s game, set, match.
While Dantas focused on what removing the commission-sharing requirement might mean for MLS, several other agents focused on what Realogy’s proposal would mean for buyers’ agents, who already believe they are getting the short term of the stick when it comes to commission splits.
âWhat Gorman is presenting is the WORST of both worlds,â said Illinois-based agent Jeffrey Olichwier. âIt will make things more confusing for the consumer. This will make the job of buying broker representatives more difficult. Buy brokers already receive poor commission allocations – and these cannot be negotiated by the buyer. “
Meanwhile, Florida-based agent Laura Michelis took it a step further and said this type of system could make buyers’ agents obsolete.
âAsking the buyer to pay the buyer’s agent commission will cause many buyers to go directly to the listing agent and not to use a buyer’s agent,â Michelis said. âLittle by little, buying agents will be non-existent, and MLS will be just a portal.
Others said buyer’s agents wouldn’t be the only ones stiffened if NAR implemented Realogy’s buyers commission plan. Buyers, especially low-income people, minorities or first-time buyers, could be permanently excluded from the housing market, as many are already struggling to save for down payments and other purchase costs.
âA lot of my buyers already need help with the down payment,â said Gerald Walsh, Minnesota-based agent. âUnder no circumstances can they afford buyer-agent commissions outside of the transaction. They are great people who dream of the opportunity to buy a house. This change could eliminate home ownership for hundreds of thousands of people.
South Carolina-based broker Dan Lang highlighted the precarious position of buyers using VA loans, whose use increased by 100% or more in 28 of the country’s largest cities in 2020, would be placed if the compensation offers became optional.
“Regarding. If this is implemented, VA buyers, in particular, will be forced to work with the listing broker with limited or no representation, as they may not be charged a brokerage fee by a buyers agent in accordance with VA guidelines, “he explained.” The FHA and other low down payment buyers will also be adversely affected. We now have buyer representation due to previous class actions where buyers were not not shown.
While some agents said the current rule should just stay in place, several said there may be other ways – besides Realogy – to make the commission process more transparent and understandable to consumers. .
âI am all for awareness and transparency,â said Olichwier. âI’m all for letting people know what they’re paying for. I would be happy if the compensation was totally separate. The seller pays the listing broker and the buyer pays the representative of the buying broker. Then it is clear who pays who and how much. It should then be incorporated into the mortgage, as it is now. “
“Then it eliminates the misallocation of commissions,” he added. âEveryone is paid by the people they represent what they think they are worth. “
Meanwhile, Pennsylvania-based agent John Rainville said MLS could clear some of the confusion about commissions with a database of buyers agency contracts. âThe real item MLS needs to do is have a database of ‘buyer’s agency contracts’ that are searchable so that realtors can ‘see’ if a buyer is already on ‘deal’, just like a property list, âhe said. âI see no problem with the costs going to who actually pays them. “
The battle over buying commissions is far from over, with NAR approving several multiple listing service policy proposals in November, one of which requires MLS to allow brokers and agents to display brokerage commissions. buyers. “[The proposal] enhances transparency and the existing obligations and practices of real estate agents to discuss with their clients the services they provide and how they are remunerated, âNAR said of the new policies.
As NAR continues to grapple with antitrust issues and the bomb buying commission trial, known as Moehrl and Sitzer, enters its third year, it’s unclear how the battle over commissions will go. unfold. Until then, Agent Phillip Cantrell has said agents need to focus on surviving in a shrewd real estate landscape where anyone could be right on target.
âThey are classic co-defendants who try to distance themselves from others. Depending on what happens in the discovery, you may see a complete turnaround against each other and possibly counter complaints, âhe said. âFor over 25 years, it’s been fun, and now, all of a sudden, it’s not. Hmmm. “
âI’m just sitting here popping the popcorn getting ready for the show,â he added. “Every man for himself, I guess.”
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