With recent happenings regarding several suits against NAR, two previous suits recently settled and then the jury verdict against NAR, HomeServices of America, and Keller Williams Realty, it is becoming clear that drastic headwinds will be pushing the industry in a different direction.

The two settled suits which involved a few larger and national brokerages, that also included NAR, making the claim that the defendants conspired to keep their fees higher and limited choices for the clients.

First, Anywhere Real Estate, formerly known as Realogy Holdings Corp., settled for $83.5 million in a case filed by plaintiffs regarding real estate commissions along with the allegation of price fixing. That suit also included NAR, yet NAR did not settle their side of the suit, as Anywhere did.

Soon thereafter, REMAX (as one of the defendants) settled and agreed to pay $55 million to resolve all claims against the company and offered several business practice concessions as part of the settlement. One of the concessions was to stop requiring that licensees and brokers obtain membership in NAR. That alone will have far-reaching implications.

In the case that went to trial, The National Association of REALTORS® and two co-defendants were found liable Tuesday November 7, 2023, in which the plaintiffs challenged MLS rules and the real estate compensation model. The eight-person jury also found liable, HomeServices of America and Keller Williams Realty, which were named in the lawsuit. The jury award of $1.7 BILLION is under appeal by the defendants.

And, once these flood gates opened, others are now playing follow the leader. A suit against NAR in South Carolina is arguing that the defendants artificially inflated home prices while not being transparent on who pays the commission.

OK, on the street today, what does this mean? Clearly, many of these verdicts will be appealed, which will drag on for years. But the common thread is the commission structure between the listing agent offering compensation to a buyer’s agent, and how the buyer agent explains to the buyer (if at all) how that structure works.

The Arizona Realtors Buyer Broker Exclusive Employment Agreement is largely ignored in Arizona, as brokers and agents are concerned that most buyers would not sign it, thus costing them business. Another concern of brokers is that their agents are not trained on how to “sell” the Buyer Broker agreement to buyers.

That being said, we could rapidly see the offer of co-broke compensation disappear. Some listing agents are already offering $25 or less. The initial reaction might be that the listing agent is doing a dis-service to the seller, as many agents will sadly ignore that listing (at their peril) even though it might be the best property for their buyer. So, the commission gets in the way of the buyer getting the best property at the best price.

If, however, the buyer signed a Buyer Broker Agreement with their agent, the buyer would be obligated to pay that agent a commission based on the commission noted in the Agreement. In many parts of the country buyers understand the concept, realizing they might be able to get a property at a lower price, due to the fact the seller now only has to pay the listing agent, with no co-broke. That saves the seller money, which could be built into the pricing of the property.

The time has come for Arizona brokers and agents to embrace the Buyer Broker Agreement, as the ability to get paid might hang in the balance. And realize that the Buyer/Broker Agreement is just like a listing agreement, the ER, Exclusive Right to Sell. Both are bi-lateral employment contracts, and they function the same way. Sadly, while every broker requires an Exclusive Listing agreement in order to work with a seller, they have rejected and often fear the Exclusive Buyer Agreement, for many reasons.

We have begun to offer classes on the Buyer Broker Agreement, since in the near future, that might be the only way a buyer’s agent gets paid.

Last point, stay tuned and pay attention. Listen to your broker. Access the local, state, and national Realtor websites. Follow the real estate news services, such as Inman News and others. Be prepared. While we might have significant lead time before anything becomes either mandatory or a standard of care, there is no value in waiting to the last minute. Learn the Buyer/Broker Agreement.