She’s Warming Up!

Caution: Some content may not be suitable for many franchise affiliates.

Everybody knew the real estate industry had a “third rail”.  Nobody wanted to talk about it.  Much easier to ignore the problem.  In November of 2018, we wrote a blog: R.I.P. Normal in which we asked: what if the Seller said NO? 

In the spring of 2019, the first of the lawsuits were launched.  The National Association of Realtors (NAR), Realogy, HomeServices of America, RE/MAX, and Keller Williams were all sued for unfair labor practices by conspiring to inflate commission rates.   Duh, agents barely yawned.  When small regional Brokers are writing about the 3rd rail well before any lawsuits, you know the topic is commonplace within the agent community.  This was NOT news.

In March of 2023, after four years of contemplating the obvious, a federal judge in Chicago ruled: YES, the Brokerages in question did indeed conspire to inflate commission rates.   This decision grants “class action” status to past sellers.  So?

This means millions of homesellers can now ask to be reimbursed for billions in commissions they paid to buyer agents between the years of 2015 and 2020 in the States of TX, FL, NJ, OH, PA, VA, NC, and CO.  WOW!  Estimated class damages range from $13.7 billion to $41.1 billion dollars.  Nice! 

Over the next year there will be thousands of articles written about the merits of this decision.   You can read all about it elsewhere.  But one thing is certain, NAR and its cabal of franchises have gone toxic.  No longer just the fodder of Broker blogs, this “problem” or third rail will now go mainstream.  And everyone will side with the Sellers.  The franchise business model is exposed for what it is, and today’s consumer won’t be buying it much longer.

If you are interested in the real estate industry and are under 55, you really need to stay away from dated toxic franchise brands that will only bring you down.  There used to be pride in saying, “I am with Re/MAX or Keller Williams”.  But that was during the Reagan Administration when Bill Cosby was America’s Dad.  Saying such a thing now implies you and the brands are one in the same; old and tired.  Save yourself.

Atlanta is home to over 1,900 real estate Brokers.  That means we have lots of independent Brokers that have long ago given up on the franchise format.   Sales agents, did you ever want to open your own Brokerage?  Now would be a perfect time because over the next 18 months tens of thousands of franchise agents will be looking for new affiliation. 

NAR and the franchises are “shocked” by the Court’s recent decision.  After four years of battling the Court at every turn, NAR doesn’t understand why the discussion can’t go on forever.  They have enough money to pay lawyers till the end of time.  But amazingly, a decision was made. 

Most of the defendants in this case have offered “no comment” to the Judge’s ruling except for KW’s  Darryl Frost, who said this: “The case is far from over and we will continue to vigorously defend ourselves in court”.  Eeww, smells Trumpian doesn’t it?  Holding a losing hand with nowhere to go but down.    

Our industry is changing.  But what’s not changing: people buying and selling homes.  All this legal drama is for our enjoyment and fodder.   All the consumer knows or cares about is that going forward, the buying and selling of homes will be a little less expensive than it used to be.   

This legal decision doesn’t really “hurt” the agent community.  It destroys the traditional franchise format.  The music has stopped and there aren’t any more seats for the franchises.  Economics, common sense, technology all nudged them out.  As your grandparents would say; “it was their time”. 

So be sure to check out our terrific independent Broker community in Atlanta.  There are several wonderful options to choose from, ALL cheaper than the franchise format.  And while you are there, be sure to tell them stories of when you had to “split” a commission.  They’ll think it’s hysterical. 


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