Legal challenges on broker commissions models could spell chaos for the real estate industry, Jason Oppenheim.
The founder of the eponymous brokerage based in Los Angeles and star of Netflix’s “Selling Sunset” described a dire forecast to Yahoo Finance of what changes could come for agents.
“We’ve got federal regulators and a couple of lawsuits coming down the pipeline that at worst case could be an armageddon for real estate agents,” Oppenheim said on the potential uncoupling of the commission structure.
Oppenheim’s comments appear to reference Sitzer et al v. the National Association of Realtors. Two homeseller plaintiffs took issue with sharing commissions between the listing and buyer brokers, claiming the practice violates the Sherman Antitrust Act.
The lawsuit against the NAR, Anywhere Real Estate and others, was filed in 2019.
The plaintiffs asked for homebuyers to pay brokers directly, instead of having listing brokers collect payment from sellers to pay buyer brokers. Oppenheim said an unfavorable ruling for NAR could lead to an exodus of hundreds of thousands of agents and the collapse of major brokerages.
The case’s potential fallout widened in April, when a federal judge granted class-action certification, meaning hundreds of thousands of homesellers can seek reimbursement on commissions paid to buyer agents across four Missouri MLSs, dating back nine years.
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Along with a potential exodus of brokers from the industry, Oppenheim said taking a buyer’s agent out of the equation could give way to dual agency.
“I think there are too many real estate agents anyway, so I don’t think that’s part of the problem,” he said. “I think the problem is that if we remove the buyer’s agent’s commission, you’ll see the listing agent representing the buyer in 90% of transactions.”
A judge last month denied motions filed by the brokerages and trade group for a summary judgment. A three-week jury trial is scheduled to start on Oct. 16. NAR has expressed confidence the defendants would prevail over the lawsuit.
The industry should start preparing for ramifications of the case even as the lawsuit’s fate remains uncertain.
“It’s something that’s not talked about that much, and it could be difficult, probably more in 2024, but it’s coming,” Oppenheim said.
— Holden Walter-Warner