NAR Series Part VI: Exploring the Implications of the NAR Settlement Towards a More Transparent and Fair Real Estate Industry
🚨 Breaking News! 🚨 Last week, the National Association of Realtors (NAR) made headlines with a groundbreaking $418 million settlement in a class-action lawsuit alleging anti-competitive practices in the real estate industry. Real estate companies often settle out of court, but this is no ordinary case. As the largest and most prominent real estate trade group in the United States—perhaps even the world—the initial judgment of $1.78 billion sent shockwaves through the industry. 🌍💥
Was the judgment too high? I don’t think so. The lawsuit accused NAR of conspiring with major real estate brokerages to inflate commissions, limit competition, and manipulate home prices. This allowed sellers to unfairly cover the cost of buyer agent representation, ultimately harming both sellers and buyers by driving up costs. Despite denying any wrongdoing from the start, NAR maintains its stance even in this settlement.
The judgment and now settlement marks a significant moment in the ongoing debate around transparency and fairness in real estate transactions. It underscores the need to address systemic issues within the industry to promote accountability and consumer protection. Perfect timing, as this has happened during my series on the NAR lawsuit, with part VII dropping today! 📅✨
The settlement agreement includes measures to increase transparency and competition in the real estate market, such as requiring brokers to disclose more information about commissions and allowing more flexibility in the home-buying process. Many real estate firms are already implementing changes in anticipation of the court’s approval of the settlement, and we might see more action from the Department of Justice. 🏡🔍
These reforms align with the higher standards of professionalism and integrity I’ve advocated for in parts IV and V of my series on the NAR lawsuit. I’ve been discussing the implications of the lawsuit for the future of real estate and am optimistic about its potential positive impact on the industry. Now, after the settlement, I’m asking my colleagues: Does it go far enough? 🤔💬
🚨 A Deeper Dive: The Echoes of Past Financial Penalties 🚨
This entire situation strikes a resonant chord with the penalties assessed by attorney generals against financial giants like Chase, Bank of America, and Wells Fargo for redlining practices. These penalties were akin to a mere financial “speeding ticket” for these behemoths. With billions in assets, the fines had negligible financial impact and paled in comparison to the bailout funds received from the Federal government. Ideally, this could have been an opportunity for at least a clawback of those bailout funds. 🏦💸
The NAR settlement, in my eyes, mirrors the financial crisis, hinting at probable additional fines and requirements by the DOJ. While the initial judgment seemed a fair remedy for consumers, the settlement potentially undermines our trust in the judiciary to enforce justice and provide adequate compensation for the harm inflicted.
In a world where criminal actions can lead to jail time as a form of justice, a judgment of $1.78 billion should carry significant weight, akin to decades in prison in a criminal trial. However, we’re not dealing with a criminal case here, despite the widespread adoption of massive fraud, misrepresentation, manipulation, and an abuse of the public trust by agents and brokers under NAR’s watch. No one will face jail time for the billions estimated to be taken from consumers in the lawsuit. If the courts approve this new settlement, it would be, in my view, a slap in the face of Lady Justice and the American people. 🏛️👩⚖️
NAR: A Closer Look at Their Influence and Revenue
NAR stands as the largest real estate trade group in the country, wielding millions in PAC money to influence policy at the federal and state levels. If you think the settlement is merely a slap on the wrist, consider their revenue. Below is NAR’s total revenue over the last five years, according to their 2022 federal 990 return, required by all non-profit, tax-exempt corporations:
- 2022: $328,361,670
- 2021: $327,342,361
- 2020: $301,056,283
- 2019: $338,237,757
- 2018: $245,070,157
Totaling an astonishing $1,540,068,228 over five years, with an average annual revenue of approximately $308,013,646, and currently sitting on $1.01B in assets. This perspective is crucial for understanding the scale at which they operate and the impact of the settlement in comparison. 💼🔍
Wrapping Up: A Call for Reform and Accountability
Despite no admission of wrongdoing and NAR’s attempt to sway public opinion, we must critically assess whether the message of accountability and reform is truly being heard. With a settlement significantly lower than the initial judgment and liability insurance likely covering most of the costs, the real financial impact on NAR might be minimal. We must continue advocating for reforms that ensure the industry operates transparently and fairly, benefiting consumers and building trust among stakeholders. 🌈🛠️
The settlement and the reactions to it are a reminder of the need for continued vigilance in safeguarding consumer interests and promoting a fair playing field in the real estate market. Despite NAR’s policies, it’s clear the playing field has never been level. This is a pivotal moment for the real estate industry—it’s time for change. Let’s not let this moment be forgotten. Change is coming, and we must be ready to embrace it. 🏠✊
Final Thoughts:
The comparison of the financial crisis and the negligible impact of penalties on large financial institutions underlines a broader issue in our society’s approach to financial crimes and misconduct. The need for a systemic overhaul is evident, not just in the real estate industry but across all sectors where the balance of power leans heavily towards the rich and powerful.
This entire scenario, from the lawsuit to the settlement and beyond, highlights the crucial role of public awareness and engagement in driving change. While it’s disheartening that there may not be widespread public outcry or marches in the streets, the dialogue generated by such discussions can fuel the push for reform. It is a call to action for all stakeholders to demand a more equitable and transparent system that truly serves the interests of the public.
Change is indeed coming to the Real Estate Industry, and it is long overdue. As we continue to navigate through the aftermath of this settlement and look toward future actions by the DOJ and other entities, it’s essential to keep the conversation going, hold those in power accountable, and advocate for a more just and fair industry. 🏠💡🔍
In part VII of my series, I will explore deeper into why this lawsuit is so important, dissect NAR’s response made available today, and explore the necessary steps forward. This lawsuit represents more than just a legal battle; it symbolizes a fight for justice, transparency, and fairness in an industry that touches the lives of millions of Americans. Stay tuned for more insights as we continue to unravel the implications of this landmark case and what it means for the future of real estate. 📚🔎
Stay Engaged, Stay Informed, and Let’s Push for Change Together. 🌟
“Unlock your full potential in Real Estate or Business today! Connect with Eric Lawrence Frazier MBA via telephone or video for a personalized consultation. Let’s shape a strategic plan together that will empower your journey to success. Your Power Is Now – seize it!”
Eric Lawrence Frazier MBA
President | CEO | Advisor
Real Estate | Mortgage | Business | Media | Marketing
The Power Is Now Media Inc.
800-401-8994 ext. 703
Direct: 714-475-8629
CA DRE: 01143484 NMLS: 461807
Appointment Calendars:
Homebuyer consultation: https://calendly.com/ericfrazier/homebuyerconsultation
Homeseller consultation: https://calendly.com/ericfrazier/realestateconsultation
Real Estate Agent Consultation: https://calendly.com/ericfrazier/agentorientation
About The Power Is Now Media: https://www.thepowerisnow.com/about
