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More straight talk from Budge Huskey

By
Real Estate Agent with Jameson Sotheby's International Realty

There's a lot of nonsense out there being published about the recent NAR settlement.  You've all seen it, it's on major outlets and it's embarrassing. Very little of it is accurate.  Wall St. Journal, NBC, ABC, CNN, and more... they're all getting it wrong, or even partially wrong... it's sad.

Here's another piece of accurate reporting from Budge Huskey who is the chief executive officer of Premier Sotheby’s International Realty. (yes, I work for Sotheby's... but that's not why I'm posting it.). Read through, see what you think.
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Last week the National Association of Realtors announced a settlement agreement in the Sitzer Burnett case that would take effect in July. For those who missed the declarations in the media that this outcome will render transacting real estate almost free, protect consumers, and make home ownership affordable once again, the settlement does none of that.

Here’s the truth.

1. The settlement forces brokers to reduce their compensation. FALSE

The settlement in no way establishes a standard or limitation on Realtors for what they may charge, nor services they elect to deliver. Those fees have always been negotiable and there has never been any collective bargaining. In every market, there is a wide variety of fees, just as there are levels of marketing, service and competence.

2. The settlement will, for the first time, allow sellers to no longer pay compensation for an agent bringing the buyer. FALSE.

There has never been an obligation for a seller to pay buyer agent compensation, yet it is a practice that’s worked well. A past rule requiring an offer of some amount of compensation was a rule of display on a Realtor-owned MLS, yet it could have been as low as $1. That limitation was removed and today the MLS accepts all listings, regardless of buyer agent consideration.

3. The settlement prohibits sellers from paying a commission to a buyer’s agent and relieves sellers of the financial burden. FALSE.

The mandate restricts properties with an offer of buyer agent compensation from displaying on association-owned MLS, yet the practice can’t be restricted in any other form of marketing. Sellers may still elect to pay buyer agent compensation to differentiate their properties. While sellers can elect not to pay buyer agent compensation, that doesn’t mean they will avoid the economics as buyers may write into any offer a contingency requiring the seller to cover the cost or request other concessions.

4. The settlement will serve to meaningfully lower prices and make homeownership affordable again. FALSE.

Values in real estate are determined by supply and demand. Fees in a real estate transaction represent additional expenses, yet these include not only commissions but many other related charges. Should real estate commissions be reduced by 1% because of compression, that $500,000 home will now cost $495,000. Not only is the potential impact marginal at best, but do you think the seller now believes the home is worth less and will happily give the difference to the buyer? The reason home ownership is increasingly less affordable is that homes in our market have significantly risen in value these last few years.

5. The settlement is a win for buyers who will now be able to negotiate the fee for representation. QUESTIONABLE.

6. The settlement will result in significant restitution to consumers who were “harmed” over recent years in their transactions by Realtors. FALSE.

The settlement is huge, yet when one divides the amount by the number of potentially qualifying consumers it works out to about $10 per person. Those benefiting are the attorneys who have submitted a request to the court for over $80 million in fees.

As a real estate professional for over 40 years, I have had the privilege of working with Realtors who represent the public in what is likely their largest investment. What I have witnessed are the countless situations where an agent has gone above and beyond to help buyers realize their dreams and sellers maximize their returns, often serving in ways far beyond their job description.

Everyone would like to see costs lowered yet I do not see the Department of Justice going after attorneys or other professions we wish would charge less. I always believed in the concept of free enterprise. If one is willing to assume the risk of running a business, one may do so at rates that allow a reasonable return for the capital investment and time. As my dad would say during his 60-year career, you wake up every day unemployed and have to find a job. Then you spend out of pocket and don’t make a cent unless you achieve someone else’s goals.

The brokerage community has always adapted to best represent buyers and sellers whenever there is a shift in the environment. And we will again. Yet when an industry I love is singled out and the justification is for false reasons, I will not be quiet.

Budge Huskey is chief executive officer of Premier Sotheby’s International Realty.

Posted by

 ALAN MAY, Realtor®   
Specializing in Evanston Real Estate and North Shore Real Estate

Jameson Sotheby's International Realty, 2934 Central Street, Evanston, IL 60201
Office: 847.869.7300      Cell: 847.924.3313      Email: Almay@aol.com

Evanston Real Estate & North Shore Real Estate
Licensed in Illinois

   

Comments(15)

Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

This is a calm and well reasoned approach.  Thanks for sharing. 

Apr 02, 2024 06:55 AM
Alan May

It's nice when logic is applied.

Apr 02, 2024 07:11 AM
Michael Elliott
Fathom Realty - Burlington Township, NJ
Burlington, New Jersey Residential Sales

I am looking forward for August when all the changes are finally in play.

Apr 02, 2024 07:00 AM
Alan May

I think things will calm down as we approach July and agencies have determined how their agents will be handling these new rules.

Apr 02, 2024 07:11 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Alan,

A well written approach to the NAR settlement. We are going to be talking about this today at our Zoom meeting..I hope you can come. I like the 6 truths yopu have outlined. When you look at the average Realtor makes between $46,000-$56,000 I find it interesting our profession is singled out.

Apr 02, 2024 07:27 AM
Alan May

It's not a matter of how much the average individual earns.  It's a billion-dollar industry.

Apr 02, 2024 08:47 AM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Prop. Mgr, Wenatchee, WA

Yep. Follow the money... right into the attorney's pockets!!!

Apr 02, 2024 08:01 AM
Alan May

You got that right.

Apr 02, 2024 08:47 AM
Charita Cadenhead
eXp Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

The sad part is that consumers will only believe the misinformation once it has been presented and there is little, we can do about it en masse. I think that one-on-one communication and explanation to our clients and potential clients will dispel the misinformation. I am not saying we should not share posts like this because we absolutely should. I am saying that it has always been a struggle to combat the misinformation about the real estate industry and this is no different. It continues to be an uphill battle to convince the public that real estate agents (those who truly are professionals) are not the villains that we've made out to be.  It's unfortunate that there are agents that have given us all a bad rap and there are unscrupulous agents in our field and no amount NAR Code of Ethics will change that. Thanks for sharing.  This is a really good piece that lays it out in plain and simple English.

Apr 02, 2024 08:56 AM
Alan May

The misinformation has bloodier headlines.

Apr 02, 2024 09:13 AM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
The Grit and Gratitude Agent

Best comment is the lawyers are the ones benefiting not the consumer or the general public.  And what seller did not know he or she or they will have to pay for selling their home or property? 

Apr 02, 2024 09:40 AM
Alan May

the lawyers have put in for $80 million dollars!!

Apr 02, 2024 10:51 AM
Nick Vandekar, 610-203-4543
Realty ONE Group Advocates 484-237-2055 - Downingtown, PA
Selling the Main Line & Chester County

Very well put, clear and concise. I could not have put it better myself, really that is true.

Apr 02, 2024 10:34 AM
Alan May

Nor, could I.

Apr 02, 2024 10:51 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

This is good to share and agents who just continue to work as the professionals they are, will see almost no negatives.

Apr 02, 2024 10:52 AM
Alan May

I believe that, too

Apr 03, 2024 05:12 AM
Patricia Kennedy
RLAH@properties - Washington, DC
Home in the Capital

OK, Alan, when I saw the title on this one, I thought that Budge Huskey was a made up name for one of your blogging personnas. When I read it, I found the clearest, best-written explanation of the settlement that I've seen. Please thank him for me!

Apr 03, 2024 05:09 AM
Alan May

Ha Ha, how well you know me, ms. Patricia.  And may I say how nice it was to be in your society yesterday?

Apr 03, 2024 05:13 AM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Moving forward is always easy, but sometimes it’s what one or two steps can get you: Momentum

Apr 03, 2024 10:22 PM
Alan May

Moving forward isn't always easy.

Apr 05, 2024 04:38 AM
Roy Kelley
Retired - Gaithersburg, MD

This is an excellent post to share.

There is much confusion.

Have a productive spring.

Apr 04, 2024 09:06 AM
Alan May

I thought so, too.

Apr 05, 2024 04:38 AM
Hannah Williams
HomeStarr Realty - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-820-3376

Alan May, I am speechless. So well written and right to the point. Eighty Million Dollars, and who is questioning them? What have they done to earn that money? Inquiring minds want to know!

It reminds me of a closing I had some years ago when an Attorney ripped apart a new agent for a fee on a sheet, and the poor fellow turned scarlet and could not speak, and the attorney made them take the $200 fee off the sheet. Later, I asked the attorney what he did for a $950 charge, and the buyer quickly answered and said, " He charged me $950 to save me $200." 

Apr 04, 2024 01:01 PM
Alan May

Yep.  Eighty Million Dollars.  And who benefits?

Apr 05, 2024 04:39 AM
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

I read this information from Budge Huskey elsewhere. I found it to be a safe port of sanity in an ocean of misinformation and false information surrounding changes in real estate practices.

Apr 04, 2024 06:23 PM
Alan May

It's nice to find a port of sanity.

Apr 05, 2024 04:39 AM
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

Really great summary of the misleading information provided by the media and other shysters. This whole thing is ridiculous sham and should be appealed and erased. In the end it will not help anyone other than the lawyers. Thank you!

Apr 06, 2024 01:18 AM
Alan May

It is a ridiculous waste of time and resources.

Apr 06, 2024 05:07 AM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

FHA and Fannie or Freddie has dictated that sellers paying buyer agents will not count against seller contribution to buyers so it looks like we already have our first work around

Apr 16, 2024 07:26 PM