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Last week, I had the opportunity to keynote a policy event in D.C., hosted by the National Association of Realtors (NAR). My comments focused on what I described as the existential threat facing first-time home buyers in America. This week, in a brief to the judge of a major antitrust lawsuit known as Nosalek, the U.S. Department of Justice called for decoupling buyer and seller agent representation. If the DOJ gets what it wants, it would mean that listing agents would no longer be permitted to share their commissions with agents representing buyers, and buyers would have to pay out of pocket to have an agent represent them. The DOJ and other proponents of the “decoupling” of broker fees believe that the net result will be lower commissions and better consumer affordability. I think that is a fantasy, but I am certain of one thing: homebuyers, especially first-time buyers, will be the biggest losers. The DOJ explicitly said they believe the current system is unfair to home sellers. Still, they neglected to note that all home sellers were home buyers who benefited from broker cooperation at some point in the past. Ending that practice will effectively pull up a ladder that has helped homebuyers for more than a hundred years at a time when Latinos will account for more than 70% of net new homebuyers over the next 20 years.
NAR has been a highly effective advocate for decades. In their unrelenting quest to protect the interests of their realtor® members, they have made a few enemies along the way, including some participants in the civil rights community. NAR has not always been a friend to the civil rights movement and has often opposed fair housing legislation. People in Washington, D.C. have long memories. Though I believe they understand that terminating broker cooperation will have a disproportionate impact on Black and Brown homebuyers, NAR’s track record in the area of fair housing has made it difficult to get some of my friends from leading civil rights organizations to join forces with me on this issue. I also believe the DOJ and the Consumer Federation of America have had a beef with NAR that goes back decades and have become somewhat blinded by their disdain for the powerful trade group. The fact is, NAR has made some mistakes in the past, especially in the area of fair housing, and perhaps the animosity toward them isn’t entirely without merit. However, the collateral damage from the war against NAR will be inculpable homebuyers who will either have to delay their dream of homeownership or, for those who can’t afford an agent, will attempt to go without representation – putting themselves and their families at enormous financial risk.
A career in real estate sales is one of the few occupations that allow opportunities for people without college degrees to earn a good living if they work hard and develop positive professional reputations. The notion that they are overpaid is plain BS. Agents provide an invaluable service to our economy, and despite imperfections in the system, the net result over the last several decades has been pretty impressive. Two-thirds of American households own their home, which, among other things, has provided them with a pathway to the middle class.
The Biden administration should look carefully at this issue and consider the broader implications of disrupting a system that has worked well for over one hundred years. I certainly wouldn’t want to be the administration that effectively crushed the American dream for millions of would-be homebuyers nationwide.
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