This question came as a result of the pending lawsuits filed against the National Association of Realtors, Re/Max and Anywhere “the parent company of Coldwell Banker, Century21, Sotheby’s International Realty and Corcoran”. This lawsuit alleges that these brokerages conspired to have home sellers pay the broker representing the buyer of their homes, and to pay at an inflated amount, in violation of federal antitrust law.

First, let’s dissect the core of this allegation. It claims that the seller is directly responsible for paying the selling agent's commission. However, this is not entirely accurate. The seller compensates the listing brokerage with a commission, and the listing brokerage, in turn, compensates the selling brokerage. Each prospective brokerage pays their contracted agent. This is the conventional procedure for real estate transactions.

The “above the cloud” franchise has proposed a $55,000,000 settlement to the class action lawsuit and the “Discover Where You Belong” companies has proposed an $83,000,000 settlement. Ask yourself this question “who are these brokerages representing?”  This raises the essential question: "Whom do these brokerages really represent?" Are they protecting the interests of the seller, buyer, listing agent, selling agent, or their corporate investors? To be clear, the above mentioned companies may not be serving the best interests of the real estate industry. Instead, their actions may have a long-lasting negative effect that echoes through multiple sectors. This includes title companies, lending institutions, third-party resellers like Realtor.com and Zillow, local boards of Realtors, Realtors themselves, buyers, and, most importantly, the party bringing the action, the home sellers.

If the plaintiff prevails in the class action lawsuit, who stands to benefit? Is it the homeowners striving to sell their properties at a fair market price? What about the average Americans looking to become homeowners, or the Realtors licensed to represent their prospective customers? Let's draw back the curtain to reveal the primary beneficiaries in this narrative: the attorneys involved in the lawsuit. Given the lawsuit's size, each participating plaintiff is projected to gain a modest sum of less than $1,000. These are the real winners and cost to ruin an entire industry.

I would like to provide you with this illustrative example. A listing Brokerage enters a seller’s property on the MLS with $1.00 compensation to the cooperating Brokerage. This is because most MLS require the listing Brokerage to offer a fee to the cooperating Brokerage. The buyer may elect to pay the selling agent’s commission, if they could afford to or finance their agent’s commission. In order for this to happen there would need to have changes done to the lenders financial platform to allow this in the buyer’s mortgage. The property needs to appraise over the contracted purchase price for the buyer being able to pay to have agent representation. The selling agent (representing the buyer) is less likely to show this listing because the agent knows their customer’s financial situation by not being able to afford the agents commission. With less exposure to potential buyers, this can lead to fewer offers, potentially resulting in the property selling for a lower price.

This has a cascading effect. The MLS service will experience a reduction in inventory and members because of fewer inquiries from selling agents. Properties will remain on the market for longer durations, and the ratio between real estate investors and primary homeowners will decrease with the advantage going to the investors. Lenders will lose because of the lack of customers that the selling agent brings. This holds true for the appraisers also, having less customers from the lenders.

At the time of writing this blog, the National Association of Realtors demonstrates unwavering determination in defending its position, acting as an excellent ambassador to all Realtors.

To the contrary, large franchise brokerages like "Re/Max and Anywhere" acted swiftly to shield their large corporate investors without adequately safeguarding their primary resource: the everyday Realtor. Sometimes, it's essential to question whether your affiliation with a large franchise company authentically benefits you, your brand, and the industry that supports your livelihood.