 What's up guys coming to you today with a big update on the real estate commission lawsuit nothing We didn't see coming, but it is becoming more and more official the DOJ actually Basically said the settlement that remax anywhere and kello williams put forth is basically Inamissible like we don't like it Not the money part the money part. I'm sure it's fine The the terms of the settlement right they they do not want Real estate commit commission is to be coupled the way that they are now. Why is that we're going to dig into this? I'm going to share with you, you know everything about what's happening right now where we're going and the possible Outcomes so every single week. I bring you whatever the biggest story is in real estate I also do a video every week And concerning real estate coaching if you're a real estate agent happen to get more listings close more deals And I'm actually doing live cold calls tomorrow 3 p.m. Eastern so I'm going to put a link in the description It's going to be a webinar style so you have to register to get the zoom link But I'll put that link in the description and I'll see you tomorrow at 3 p.m. Eastern You can watch me get a listing appointment. I've made Probably getting close to 100 live call sessions. I don't know where I'm at Maybe 50 to 100 live call sessions right here on my youtube channel. You can go back and watch But they're always a lot of fun entertaining and I always get business so anyway be there for that Let me know if you have any questions concerning that let's dive in here, right? So the doj basically turned down this settlement and the reason being is as they said This doesn't fix anything. This doesn't fix the problem This doesn't fix the reason why we're in this to begin with and we don't want to walk away with Uh, we don't want to walk away from this basically with the same scenario moving forward, you know Basically keller-williams and remax came in and said and anywhere and said listen. We're going to disclose better We're not going to make it uh mandatory that our agents join the national association of realtors We're going to disclose better We're going to train our agents better on agency and buy your agency and and all that good stuff But they didn't say anything about changing the way that real estate agents operate in terms of How the buyer agents are paid and how that commission how the buyer agent commission how that number Uh comes to be and that's what the doj has a problem with They want the buyer to be able to negotiate their commission And right now the way it stands They don't do that Okay, the buyer. Okay. This is how it works right now a buyer You know either went through zillo or was a referral or you know You got a hold of this buyer somehow as a real estate agent, right the buyer comes through You basically just go to work for them And the way real estate agents do it now they don't explain anything to the buyer Okay, this is this is kind of where the problem is Um, you know agents haven't done a good job I'll be the first to admit that we haven't done a good job I say we because i'm a real estate agent. We haven't done a good job of explaining What we do how we do it what our value is how we get paid Just don't explain it. Why well because this has been going on for the last 30 40 50 years and we have it We haven't had to explain Um, you know, we just take the we take the shortcut We just go find them a property help them negotiate the deal Get the deal done help them through the process get paid. Why because Our commission as a buyer agent is already figured into the price The way that the current system works A listing agent takes a listing and they carve out a percentage of the Uh of the listing of the commission that's agreeing on with the seller to give to the buyer's agent. Okay And honestly, I don't I know this sounds crazy, but I don't see I don't see it changing much. I'm going to go through some different scenarios with you Okay, so that you can kind of visualize this and then you make your own judgment of how you think this is going to play out Worst case scenario, we're going to be just fine. I can tell you that right now Closings are going to happen every day and our job is to connect buyers and sellers and we will continue to get paid I'm going to show you some things in in a couple different articles here and kind of go through some different scenarios with you but basically the doj they Just don't like the way that it is. They're not going to take these settlements and this this the you know What they're talking about here with the with this settlement. They're strictly talking about the nacella case All right, the sister burnet Settlements that's still, you know happening in the works and processes. We're talking about the nacella case, right and They denied the proposed settlement between the plaintiffs And what it is Is that they say that the allegedly uh anti competitive rule at heart of the lawsuit it They want it to change All right, they want it to change right and the doj says that's not accurate. It's not changing the heart of the lawsuit All right, it's far from curing the rules defects The proposed settlement premature is the very same competitive concerns that trouble the current role basically what they're saying is is You're still going to be figuring the buyer agent commission into the deal And you're still going to be operating the way that like you're operating Which does it which does nothing, you know different to solve, you know what You know these defendants the the defendants actually were found guilty of when it comes to collusion Um, you know under the proposed settlement they say this would not create a competitive or reduced commissions Um and that it would provide no meaningful benefit to buyers or sellers and They're right that what they're saying is it wouldn't do much right? I mean the way that the settlement's drawn up. We would just continue to operate the way that we're operating Um, you know, which you know the brokerages Obviously don't feel like the way they're operating is wrong at all Further the proposed changes could themselves violate federal law Right, and they're talking about the antitrust You know laws allowing sellers and listing brokers to set the commission that buyer brokers would receive would still Leave buyers agents to steer clients away from listings with low commissions Now let's talk about steering for just a second right let's talk about steering for just a second because You know the doj actually said I'll show you here. They actually say in this article that You know with you know, you can as a buyer broker you can ask the seller in the offer To pay for the buyer commission or maybe the seller offers concessions So the way that this is going and the way that you know People feel like this is 99 percent going to happen is that the buyer agent commission field will be eliminated from mls all together Won't be there But there's going to be a concessions field Okay, and so basically, you know that the seller decides they want to give concessions towards buyer agent commissions closing costs prepays whatever They could put it in the concessions field All right, um to go towards any of those closing costs Um, which could include buyer agent commissions And so for me it's like Well, if you take the commissions out take the buyer agent commission out of the listing And just move it over to classified as as concessions You can't get away from the fact that okay buyers Who want their agent to be compensated? Going in looking i'm not saying the agents are steering i'm saying buyers buyers Buyers looking at homes and saying i'm not going to look at that when they're not going to pay my agent anything I'm not going to look at this one. Oh, i'm going to go look at this one. They're going to pay the buyer agent commission So it's not steering from the agent standpoint Okay, it's buyers choosing. That's just the same thing as as closing costs now Right, like i'm a buyer. I can only scrape up the down payment. I need my closing costs taken care of So what am I going to do? I'm going to go out and I'm going to look for a property They're advertising. They're going to pay for the buyers closing calls. I'm not going to look at any other houses This is me the buyer talking So I think what they're trying to get away from they're never going to get away from Completely when it comes to people only looking at certain houses that offer certain things I think that's something that's just going to live forever Um, they said instead buyers should negotiate directly with their buyer broker Which could include them paying out of pocket or negotiating with the seller Right. So let's so listen to what the doj say While some buyers might choose to pay their buyer broker out of pocket Other buyers may request an offer that the seller pay a specified amount to the buyer broker from the proceeds of the sell Okay You're asking the seller to pay it Thus the current practice could continue Where the seller factors the commissions into the offer the seller is willing to accept Basically the seller's net and that's what it's all going to come down to guys Is what is the seller netting To address the anti competitive landscape that would still exist that the proposed settlement was approved They suggested that uh prohibits offers of compensation to buyer brokers by listing brokers Right if the mls pin that's part of the nacella lawsuit If their roles prohibited sellers and listing brokers from deciding what buyer brokers would be paid So those would be responsible for determining only the compensation of their own broker in the listing contract while buyers would be responsible For determining the compensation of their own broker in a buyer broker representation contract and the thing for me there is is Okay But you just said That they could offer In the offer they could say they could ask the seller to pay the buyer broker commissions So now we're right back To the seller actually deciding What the buyer broker is going to make We're right back to that spot. We're right back there Now i know that there is some stuff happening behind the scenes that FHA uh va usda, you know, there's there's a push To get the financing get buyer brokerage fees taken care of in the financing and You know, I mean as far as that goes Like it still has to appraise So now the seller is still going to pay You know, I mean that's what the property's worth out of what the property's worth They're going to pay a certain amount towards buyer broker fees. It just seems like we're shuffling paperwork around here That's all this seems like seems like you're just shuffling paperwork around here Now You know the scenario for me Where i'm like, okay, what's going to happen here? Is if we come out This new rule comes into place they erase buyer broker commission from mls And then you have sellers who say well, I ain't got to pay and I ain't gonna pay it Because you're gonna have that you're gonna have a mixed bag You're gonna have some with concessions towards buyer brokers You have some you offer to pay for the seller to pay for the buyer brokers and they accept You're gonna have some that won't And you're gonna have some that don't offer it and end up selling the property And so then you've got you've got listings that are selling with no broker buyer broker You know commission included And then other sellers see that happen You're like, well if they do it I can do it then they try to do it I think the problem is going to be is that you've got these buyers out there who want representation And if you're a buyer who doesn't care about representation, I mean I talked to a guy in la Last week I was on this podcast and he was like I go right to the listing agent like I don't know what Why I need a buyer agent. I don't know why I need someone to represent me blah, blah, blah This guy's a sophisticated guy. He's doing, you know, 10 million dollar deals You know buying houses for like 8 10 million. I'm like, yeah you You know, you you do real estate, you know, what's going on not everybody does Not everybody does if I went to Atlanta to Dallas to Miami, I would get my own real estate agent I would want somebody to help me because I know I know how treacherous it is and I'm an expert in my market But if I went out of state somewhere You bet you bet your ass I would have my own agent kind of helping me representing me through the deal I had a for sell I had a for sell by owner call me today The for sell by owner was a client of mine. I sold him the unit Kondo on the beach. He's calling me saying hey, I'm buying this other unit for sell by owner We're selling ours by owner. I'm calling to ask you I got this offer and I'm calling to ask you Some for some advice on it and I was like This is why you need an agent Like now I'm consulting you on a deal That I'm not even representing you on I'm giving you advice On a deal that I'm not even representing you on you know, I mean People think they can do stuff on their own and some people can like my guy in LA Yes, you can do stuff on your own But not everybody can and even if you think you can you run into a weird situation on an offer You don't know quite how to handle it. You need some advice So you call real estate agent you're for sell by owner, right? This is just the kind of stuff and just bringing this up because The advancement in in in the amount of information that the general public has about property real estate Etc. Is that an all-time high people know more about properties the market the comps Everything about the properties. It's at an all-time high But yet the usage of real estate agents is also At an all-time high now. Why is that they know more What more information calls them to not need an agent? It's quite the opposite ladies and gentlemen It becomes like Chinese to them the more information they have the more overload it is And the more confusing it gets And again, I'll repeat we're at an all-time high when it comes to the amount of people that use Real estate agents. It's an all-time high And that's what's very interesting Here and the people that think they can go sell property on give it a shot Go give it a shot and if you do great great do it again and again and again man save that money But for me, it's kind of like I wouldn't have an agent I mean, I wouldn't not have an agent if I went to Atlanta Dallas, New York There's no way I wouldn't go into court without a lawyer It's the same thing to me. That's my opinion. I want peace of mind that I'm not making any mistakes and it's worth whatever money I got to pay You know, whatever somebody is worth to do that Uh, let's see. This is the background on the case. You guys know the background. I have to go into all of that stuff um, there was a You know a case, you know, they basically took them to court, you know, there's a couple cases, you know The sister brunette trial in in Missouri. They won kansas city. They won It's like a five billion dollar settlement anywhere remax and and kelly williams settled out and it included the nacella case Which is a believe in chicago And then uh, there's been dozens and dozens and dozens of copycat lawsuits that have popped out from lawyers Trying to get that money. They trying to get that money And and do you blame them? If you see an opportunity on a development as a real estate agent, you know, it's a it's a development Aren't you going to go try to get that listing and develop and and and represent that developer on all those units? Yes, you are same thing here. They seen a development Which is uh, a spawn of class action lawsuits that they that these lawyers could get in on And make some money Can't blame them for that. That's what they do. That's their job Uh, let's see Let's see if we get into some more stuff here Okay, this is still getting into the um We're still getting into the You know the history, but this is right here. This is where we kind of get Uh, let's see the critical issue is not how much a seller should offer buyer broker But whether the seller should set the buyer broker commission at all. Well, that's what they're doing and the doj is literally saying Offer it, you know, put in the offer for the seller to pay. Well, then the seller has to agree to what that amount is So we're right back where we are. I think it's just a paper shuffle um She said federal law already allows buyers to make conditional offers around compensation As an example, she said a buyer could offer to pay 700 000 for a home on a condition That the seller paid 14 000 to the buyer broker, which would result in a net of uh 686 000 And another buyer could offer the same home could offer 680 000 and not ask the seller to pay a buyer broker Uh buyer broker such a scenario would allow the seller who's considering multiple offers to compare The net price after factoring in any possible request to pay buyer broker. Of course, that's what they do now Look at all the terms see what the net is And uh figure out what's best for the seller Those programs do not require buyers to come up with additional funds at closing in order to compensate their brokers In these types of conditional offers Buyer therefore would not need to come up with additional funds at closing in order to compensate their brokers instead They they and other buyers would benefit from increased competition between buyer brokers So what what they're saying is they're trying to create this competition between the agents To go lower on commissions for buyers Is what is what that sounds like to me Um and it is crazy because You know in this other article i'll show you it's like you know, they're They're like well the commissioners haven't you know, we don't see it really, you know coming down much. It's like I mean, why aren't you going out there and saying roofers? Have to come down on their prices, right and other contractors and other people that have to do service It's like there's no regulations on price increases uh inflated prices on milk and Coca-Cola and cars. Oh my god man, they they tacked on a $20,000 fee for fun when I bought my wife at escalate two years ago for fun I forgot what they called it But me literally told me like we just can I mean the guy was like, you know I was like what's that for it was like because we can and he was right There was we could not find another one. That was it. We either wanted or we didn't and somebody else was in line to buy it So what are we gonna do? You got to pay it Let's see Okay, here we go. This is interesting the doj also suggests that some buyer brokers might begin offering hourly rates Or flat fee structure Scenario tailor into their services to meet a given buyer's wants and needs and this whole hourly rate From my understanding you've got to be a w2 You've got to be a w2 employee to get hourly rates So we're 10 99s doj unless i'm miss miss reading the situation. I don't understand, you know the law The way I see it. We can't work by the hour. We are we are 10 99 independent contractors I don't know if this is like how we start sliding backwards into a possible hourly rate that turns real estate agents into w2 Is that what they're actually going in? anyway I didn't think that was possible to charge hourly rates. Maybe i'm wrong um Let's also look at the issue that the fact that there's no guarantee that class members would get paid from the three million proposed settlement amount Um, then we get paid three to five dollars each Three to five dollars apiece is what the plaintiffs are looking at on this nacella case it's insane Uh early this month the president of nar kevin sears He told hundreds of agents that at a real estate conference that nar is appealing the multi-billion dollar verdict in the citzer brunette But the bigger problem for the industry is the doj We've been in their crosshairs for as long as i've been involved with the national association realtors We had a settlement with them in 2020 2021. They renegade Renigged on the deal. We sued them when we won in court. So they're pissed off at us I mean just candidly And all that's true they they worked a settlement and then doj reneged and They've come they're coming back and they they lost in court All right, let me let me dive over here. I want to show you this Doj rejects court settlement and affirms importance of decoupling agent commissions A lot of this we kind of already covered the doj's opinion virtually guarantees that buyers will eventually be able to negotiate Bioregic commissions that are currently fixed through industry collusion Is also likely there'll be a greater variation of agent compensation depending on factors such as agent experience And time spent on the sale Okay, here's kind of the timeline of events doj litigation begun in the 1940s against the industry adoption of standard rates of commissions the 1940s um a massive 1983 report by the federal trade commission that explained the documented How the industry uses informal collusion? Informal collusion into couples and coupled rates to set to set these rates 2006 there was a here with a doj redfin Cfa criticized industry price fixing and it all leads back to you know, the sister brunette more case You know being found guilty and all the different copycats Now get this We blow this up the doj does not envision compensation system in which buyers must come up with additional cash Now read that again The doj does not envision a compensation system in which buyers must come up with additional cash to pay their agents The agency the doj agrees that sellers could provide dollar Concessions to be used for this compensation and other buyer expenses However, doj stressed that buyers must have the ability to negotiate these commissions Then decide what if any concessions to seek from sellers Similarly sellers would have the ability to decide whether to offer any concessions and if so their amount Some of the details of this decoupled system need to be worked out It's it is critically important that buyers negotiate Other commissions before an agent searches for properties Otherwise buyers agents could steer buyers to properties with the highest dollar concessions and potential agent compensation If that's happening now, it's going to continue to happen. I'm not saying it's happening There's data out there that says it happens Honestly, I haven't seen it happening. Um, I've never done it However, whatever research somebody did Showed that it was happening if it's happening It's going to continue to happen because even if the buyer agent signs signs a broker agent agreement saying i'm going to pay this much still gonna Show properties if it's happening now It's going to continue to happen because some sellers are going to get more commission than others or no commission over others Etc It's also going to happen on the buyer side, right because now they may be paying out of pocket So they're going to go they're only going to look this is going to worsen the situation because I think the buyers Are going to be more steering than anybody Right now they're going to be steering the most, but I guess that's okay You know, I guess that's okay with the doj and you know, everybody else as long as it's the buyer that's steering And deciding that they don't want to see properties for reasons of compensation Then maybe that's okay Um, let's see it appears that that the doj's opinion was influenced by separate proposals made by Cfa and a group of attorneys representing multiple listing services both of which cited in the footnotes Cfa supports the mls proposal only as a package deal by eliminating one or two key requirements The proposal would allow the existing collusive system to continue the buyer agent be Prohibited for being compensated by both buyer and seller practice that gnar code of ethics disapproves of Okay Let's see The the the cfa emphasizes that it's not easy to completely eliminate price fixing So there so listen to that they're saying that It's not easy to completely eliminate price fixing significant Um as symmetries between consumers and agents provide Uh opportunities for continued price fixing within a decoupled system Agents could tell a buyer and seller clients that two and a half to three percent rates You know five to six total were normal and agents could refuse to negotiate these rates as many listing agents currently do Um that there's some research that have found that many agents don't go below five or six percent. I mean, it's like Okay, um You know what don't let disney charge so damn much For a coca-cola I mean, it's ridiculous The prices you pay for a little stuffed animal down there Um, you know contractors roofers, you know flooring guys plumbers You're just going to like go and tell them you they got to basically go down. You got to you got to work for less now It's crazy. It's insane To ensure significant price fixing Uh To to secure significant price competition both buyers and sellers Would need to discuss and try to negotiate compensation with their agents Even then rates would unlikely would be unlikely to fall immediately Okay, so it's like this is their thing. They want they want commission rates to fall I've I've seen this in this article a couple times. I've seen in the in the emin article a couple times like Why are you guys trying to make it fall? Why don't you let the market? Speak, okay Put all these rules in place And then let the market speak if they fall they fall if that's what happens through competition that you want That you're creating Let it fall. Why are we trying to force? Force it to fall even then rates would unlikely to will be unlikely to fall immediately Yet over time could decline to an average of three to four percent level Saving consumers an estimated 20 to 30 billion annually with a much greater variation in types of compensation and rates charged by different agents No longer would inexperienced agents be able to charge the same rates as a highly competent agent with years of experience So that's kind of where where they're going with this whole thing You know, it sounds like they want Rates to go down to three four percent. They want new agents to basically work for nothing And then they'll be happy. It's like do what what are you talking about? It's like Everything inflates, but I've been getting five or six percent since 2002 when I got in real estate It's never went up. It didn't go up to six and a half. It didn't go up to seven but everything else increased Now, yes the price of homes increased so that makes the commission increase So, you know, at least we got that going for us. But the fact is the percentage rate has not it's actually come down Um slightly because you look at the national you look at the average of commission rates like five point Something like normally it's like five point five. That's kind of the normal, you know, I think right now It's like five point one five point two. It's a little bit down Anyway, nevertheless, this is kind of where we are. This is an interesting article buyer agents are already cutting commissions the download and basically this article It was crazy because they suck you in with the with the title, you know of the article And then once you get in here, you realize they're just talking about one little Uh discount broker Right. It's the broker of uh the leon realty and palo alto california Um, you know, they're doing three and a half percent with two and a half going to the uh listing agent One percent going to the buyer agent. It's and then what they do is they go they go they receive one percent or ten thousand dollars So I guess there's a limit of a floor of ten thousand dollars. They give the buyer agent and one percent You know total if it's more than ten thousand two and a half goes but this is just this is just one brokerage Uh in california. That's just a discount brokerage um And I thought this was funny while in the industry Uh have long complained many in the industry have long complained about so-called discount brokerages How can it be a discount if there's no standard commission rate? One might wonder Brokers who are flexible on commission see us as a customer friendly service first choice The thing about that is is there's no set prices for You know getting a house built Right, but there are discount home builders and like there's no standard because when you look at mls Dude, everybody charges something different 5.4 5.5 5.6 four and a half 3.4 3.9. They're all different You know, you they're all negotiated I understand what they're saying the buyer doesn't get a chance to negotiate their side because it's all figured in But that I mean that solves a lot of the problems now With with representation. I believe with representation Now we're going to move into this other world. This is where we're headed And so then you have to think okay, I have one friend that thinks that 40 percent of agents are going to leave the industry leave the industry be gone out of the industry Um because of this right it's just going to crush them. It's just across the buyers agents You know commissioners are going to go down Etc etc etc etc, right? And then I have another friend who makes a lot of sense and he said No, that's not going to happen. He's like think about it. Number one of the demographic The by the way his name's tim harris if you're watching Smart guy, um, he said If You know the demographics and like the the like generation coming up like and he didn't say this number I'm throwing this out there I think we'll hit a year where we get back to a seven million transaction year in the in the next five to ten years I think that because that could very well be a reality um But the real estate agent as a real estate agent. It's a sexy occupation like it like it's glamorous People are always going to have this allure to it's always going to have this allure that draws people in Now the agents that are there that aren't selling anything 50% of the agents out there sold one property or less in the last 12 months Those agents like why would they leave because if you make it to where it's not mandatory to leave nar Or to be a part of nar that saves them money right there if they do this decoupling thing It's not going to be mandatory that you're part of mls Okay, if you're not if it's not mandatory that you're part of mls You're part of nar that that reduces their fee Significant that's most of their fees to be in business not selling anything So if it's going to be if it's going to be cheaper to stay in the business than it was And they're selling one property a year two properties a year whatever Why would they get out? It's going to be cheaper to stay in than it would be you know Then it was before You know and they still kind of like are hanging on to this dream and he's right So I got one friend james. I got another friend tim I'd love to get you guys you both of you guys on a podcast And like I would love to get both of you guys on a podcast to kind of debate this issue With agents leaving the business Um because I I'm kind of like what's going to happen I don't know what's going to happen, but I'm excited to see whatever it is I can tell you that and I know there's going to be massive opportunity. So With that, I'll leave you guys with it. I'll be making live calls tomorrow I'll put a link in the description right now for you to go and sign up for that webinar It's our webinar style and I'll be on there and I'm gonna I'm gonna show you I'm right down you know going in there and finding the best highest quality leads I'm gonna call them right there in front of you. So you can see the whole thing go down I'm gonna set some list of appointments. It's gonna be a lot of fun. All right I'll see you guys on the next video. And if you found any value in this at all hit subscribe And I'll make another one in a couple days teaching you guys something else. We'll see you soon