2023 Realtor Lawsuit: Impact On Traverse City And Leelanau Real Estate Market

So you've probably heard a little bit about this lawsuit with the National Association of Realtors. It is a huge lawsuit that's going to have huge implications for— in the real estate industry across the United States. But what is it and how does it affect you if you're looking to buy or sell a home here in Northern Michigan? Let's dig into it. This Realtor lawsuit has sent shockwaves throughout the real estate industry. The lawsuit known as Sitzer et al. versus the National Association of Realtors, or NAR, has raised significant concerns and questions. In this short video, we're going to talk about the lawsuit, the reasons behind it, the jury's decision, and also highlight a little bit about why choosing a knowledgeable, skillful, and independent broker may be the wiser choice for home sellers in the wake of this legal battle. The big box, uh, real estate companies versus a local independent. So let's talk about understanding the lawsuit. The plaintiff's argument. The plaintiffs in the NAR lawsuit claimed that the National Association of Realtors engaged in anti-competitive practices that limited choices for home sellers, and that led to artificially high commission fees. Specifically, they argued that the NAR's rules, including the requirement that sellers pay the commission for both their own agent and the buyer's agent, stifled competition and kept commissions artificially high. The jury's decision: after careful consideration, the jury ruled in favor of the plaintiffs, affirming that the NAR had indeed engaged in anti-competitive behavior. This decision marks a turning point in the real estate industry with potential consequences for both home buyers and home sellers into the future. Sellers, the biggest thing is sellers, you need to know that you're in charge. First of all, most agents don't even understand what this lawsuit is all about. Just ask them. And if most agents don't understand the reasoning behind the lawsuit, and what the outcome or implications are going to be, that, that likely means that most sellers out there don't know their options either. See, whenever I sit down with a potential client who is considering selling their home, at some point in that conversation they will ask, hey, what's your commission? Or what are the fees going to be? Or something along those lines. And with most agents over the last 30 or more years, the answer always just a simple 7%. 6%, 5%, whatever it was, and there wasn't a conversation about how that was going to be split between the seller's agent, or sometimes called the listing agent, and the buyer's agent. I can't believe how many sellers, when I talk to them, don't know how that all works and that they have a choice in all of that. By the way, I never answer my clients' questions in that way. Instead, I talk about my menu of services that I offer and the corresponding commission rate that I will charge in exchange for the, the choices that they make out of that menu of services. I don't have necessarily a standard rate because no property is standard, no client is standard. Each property is unique, each client has a unique situation. Because I'm an independent broker, I have more freedom. I'm not shackled by the rules bureaucracy of a big box broker. So I'm able to tailor that to my client's specific needs and to what they will choose out of the menu of services that I provide. Anyway, then we have a separate conversation about what, if any, and yes, I said if any, compensation they want to offer the buyer's agent. You see, the issue in the NAR lawsuit was that the compensation was already baked in, that the seller really had no choice but to offer the buyer's agent a share of the commission or the fee charged. And buyer's agents were telling their buyers that their services as their buyer's agent were free to them as a buyer, when in reality they were not, because those fees were baked in to that lump sum commission rate that I talked about before, whether it was 7, 6, 5%, whatever the total was the share of that was already baked in and going to go to the buyer's agent. That's so important to understand as the key behind what's going on with this lawsuit, that indeed buyers were paying for the services of their buyer's agent, but it was sort of hidden because it was baked in the compensation cake for the agents. At the core of this lawsuit was that buyers are paying their buyer's agent by paying X amount total amount for the home that they're purchasing. So you may be asking, why is this whole concept of the real estate commission being baked in so important? Well, the theory that the plaintiffs held in this case was that the fact that it was baked in, it really took away the opportunity from the buyer to negotiate directly with the buyer's agent on what commission, what fees would be charged directly to the buyer. If it's already baked into what the seller has to pay at closing, then it's not transparent and it's not open. And so also that the theory that the plaintiff held in this case was it was likely that the compensation to the buyer's agent was higher than what it would have been had there been the ability to have this direct negotiation between buyer and buyer's agent. And so this is going to have huge implications going forward for how much sellers have to pay at closing for the services of a real estate agent. And it's also going to have huge implications for buyers and how they engage with buyer's agents and how they pay those buyer's agents going forward. In financial transactions, when things aren't transparent and open, then there's a problem. So by the way, if you're curious about my menu of services, what that looks like, how I differentiate myself in my service to my seller clients, how I'm so much different than the big box bureaucratic brokerages that have all these rules that handcuff their agents and therefore handcuff their clients by extension, give me a shout out. I'd love to have a one-on-one conversation and go deeper into how that menu of services that I provide can be tailored to your specific circumstance. That brings me to my next point. If you're considering an agent who's affiliated with one of those big box brokerages, you're likely to get cookie cutter, pre-packaged, baked-in type offers. You see big corporate brokerages have to kind of dumb it down because they have hundreds and hundreds of agents who are affiliated with them. So they set a set of rules and procedures. They create the bureaucracy that their agents have to follow. And if their agents have to follow it, guess who else has to follow it? Yup, you have to follow it by default. So right now, I can guarantee you that the executives in these big box brokerages the fat cats, so to speak, um, they are running around right now frantic about what are we going to do as a result of this NAR lawsuit. They're consulting attorneys, they're drafting policies about how they're going to roll that out to their agents all across the United States because they have to come up with a new cookie-cutter system that likely isn't going to serve individual clients well. That's another reason to choose an independent local broker like me here in Northern Michigan, because they're able to break free of the chains that bind the agents that work with those big box bureaucratic brokerage. Brokers like me can offer more personalized, flexible services to your specific needs as a home seller. Two, cost efficiency. With an independent broker, you're likely to encounter lower commission rates. Compared to the traditional model. Independent brokers often have more control over their pricing structures, potentially saving you money on the sale of your property. Just think about what you're paying for when you work with an agent of the big box bureaucratic brokerages, the high-rise office buildings that no one ever seems to go into, by the way, the corporate offices in some far away city. Far away from your home and community. And the salaries of these big-box corporate executives who write these policies and procedures that actually limit your ability in your transaction by extension. They box you in. The big-box brokerage rules box you in as a client. Number 3, more expertise. Independent brokers, a broker has a higher level of education and license than just a regular old real estate agent. So you're going to, by dealing with a broker like me in Traverse City, in Leona County, they're just going to have a better understanding of business, the legal nuances, and marketing. Uh, number 4, transparency. Independent brokers just tend to be more transparent in their fees and services. With the increased focus on transparency following this lawsuit, Working with an independent broker can ensure that you have a clear understanding of all the costs involved in your transaction. Okay, so in conclusion, the Sitzer et al. versus the National Association of Realtors lawsuit has brought about significant changes and will bring about significant changes in the real estate industry. For home sellers in Northern Michigan, choosing the right partner to help you with the sale of your property is paramount. While traditional real estate agents affiliated with the big box bureaucratic brokerages continue to be an option, selecting a knowledgeable, skillful, and independent broker can offer you greater flexibility, cost efficiency, local expertise, and transparency. As you navigate the post-lawsuit real estate environment, stay updated on the lawsuit's impact on the housing market If you want to learn more specifics about this lawsuit, I'm going to post a series of articles in the description. You may want to check those out, read more thoroughly. It's really important if you're considering buying or selling a home or property into the future that you understand this lawsuit, the reasoning behind it, because it has a great impact on the fees that you'll ultimately pay as either a buyer or a seller of real estate. So it's important to be able to then choose a broker who's going to be transparent with you and walk you through so that you know exactly what it is that you're paying for. Ah, what a concept. So thanks a lot for tuning in. I hope you found this video useful. Would appreciate if you subscribe to the channel. When you subscribe, you get an automatic notification whenever I post a new video that has to do with real estate, or maybe it's of me and my dog DeeDee. Either way, it'll be a good one. Thanks a lot for tuning in. We'll talk to you soon.