The REAL reason NAR settled

Came a question last week from one of our community members Donna Carter:

Okay, chill.

NAR settled to consolidate nationwide copycat lawsuits by 1) expanding the class status and 2) making DOJ happy enough that they a) don't object to the settlement like they did in Nosalek and b) leave NAR alone and don't continue investigations and cases (this has already failed).

DOJ has a hard-on to try to bring down NAR and put the MLSs out of business, with pressure to do so coming from the White House.

They want to ban sellers from paying buyer agent commissions (BAC) and are going after the NAR rules requiring Realtors to list all homes they market in MLS.

As soon as that happens, this will allow other players to get agents and sellers to directly list homes with them instead of MLS, and syndicate them together with their IDX feed from MLS.

The NAR settlement removing commission sharing from MLS will phase out the MLSs. If the DOJ bans sellers from paying BAC, this will happen faster.

In 7-9 years, we'll end up with an oligopoly of Zillow, CoStar (via Homes.com), and Redfin (if they can get their sh*t together), replacing regionally distributed MLSs with a single centralized database of homes for sale.

They'll syndicate listings among the three, and whatever is left of the MLS will then need an IDX feed from them.

Agents will then list with them instead of MLS and increasingly have sellers list directly with them, ultimately working towards making an eBay-like marketplace of homes within 13-15 years.

They will try to eliminate the need for agents again on both sides, with condition grading, prescribed valuations, and an insurance-like buyer protection/warranty program that addresses condition and risk for the unrepresented buyer.

CoStar has already invested the first BILLION towards making this a reality.

Did you see those Super Bowl ads? It's part of their announced BILLION-dollar campaign to compete with Zillow and Redfin.

It's not to get a bigger piece of the pie of referral commissions in a time of potentially declining buyer agent commissions or at least uncertainty.

When the new upcoming FCC rules, it will significantly hamper the referral business - which is why Zillow is getting rid of Premier Agent leads and transitioning everything to Zillow Flex teams only.

For those who think this is such a consumer-friendly thing, Zillow and CoStar will ultimately be able to charge whatever they want, probably with an enormous profit margin.

There will then be an impossible barrier to entry for any new player not already under their syndication agreement - so you'll have traded one "cartel" for another. A much stronger, even more profitable cartel.

This will all lead to a couple of Zillow and CoStar executives sitting in a bar in 2040 saying:

Zillow executive 1:

"Hey, remember when we were broke and our entire revenue was only from those stupid referral commissions?"

Zillow executive 2:

"Yeah, and LOL how all those - what did they call them - real estate agents? - even funded us to put them all out of business?"

CoStar exec:

"Yeah and remember how we almost put you out of business by getting the DOJ and FCC to screw over your referral commissions while putting those - what did you call them - MLS? - out of business, while we had our fat commercial real estate revenue to fund everything?

You guys used to be the #1 place people went to find homes. LOL"

Anyway.

Whatever happens - Realtors are here to stay. They've tried to replace us, but they’ve failed - and will fail again. With adaptability, innovation, and dedication to our clients, we will continue to thrive and remain an essential part of the real estate industry, now and in the future.

Best,

Alexa

P.S. Our friends at Agently are on a quest to build the first sales assistant for the post-NAR settlement era. Apply here or share this post with your broker to equip yourself and your team and double your ATPA (average transaction per agent.)

Thank you for reading Realtors @ Substack. This post is public so feel free to share it.