Uber and Lyft With Lockbox Keys; Tech Platforms Benefit Hugely; Trial Lawyers = Real Cartel; RE/MAX Very Smart; Fannie will allow buyer commissions to be financed; U.S. Homebuying System’s Way Better!
Jason Hartman is an extremely successful real estate investor and YouTube commentator, and he weighed in on the NAR collusion/cartel lawsuit last week with some very interesting comments.
Here is his entire 42-minute video Devastating NAR Real Estate Class Action Lawsuit! and I recommend it in full (at 2x speed of course). But, here are a few takeaways.
NAR Real Estate Class Action Lawsuit Takeaways
- RE/MAX Was Smart to Settle: Everyone flamed RE/MAX for settling for $56 million before going to trial (because “they gave up too easily”). But, boy do they look smart now in light of the recent damage award of $1.8 billion (which is actually close to $5 billion when you account for the fact that this is a RICO case with “treble damages.”
- Money Not In Hands of Brokers/Industry Can’t Begin to Afford Damages: The plaintiffs’ attorneys are talking about a potential $100 billion in damages – which just dwarfs the value of all the real estate firms combined. So, the awards will have to come down – to avoid a sea of bankruptcies. Hartman reminds viewers too that the bulk of commissions went to the agents themselves and NOT to the brokers – so the money the lawyers are seeking is not only not in the hands of the brokers, it was never in their hands.
- Tech Platforms Benefit: In this recent blog – NAR and KW Get Crushed In Lawsuit; Who Are the Real Winners and Losers? – I suggested that some of the tech platforms (Redfin, Opendoor, Zillow, etc.) may be pushing this suit behind the scenes because they will ultimately benefit. Hartman noted that that will be the case, and some of the tech platform stocks performed well last week in response to the lawsuit (after falling at first).
- Fannie Mae May Allow Commission Financing: Hartman thinks Fannie and Freddie may change the rules to allow for the financing of buyer’s agent commissions, much like how FHA allows the financing of Up-Front Mortgage Insurance Premiums (effectively allowing higher loan-to-value ratios).
- Lawyers Are Actual Cartels/What About Tech?/No Pricing Fixing Within NAR! Hartman points out the irony of lawyers accusing NAR of price fixing/cartel pricing, when it is Bar associations that do the price fixing by pushing lawyers to always ask for 33% of litigation awards. Hartman points out too that he never heard any comments about price fixing or forcing 6% commissions during all of his years as a NAR member. Hartman then wonders why lawyers don’t go after Google, Facebook, and other tech monopolies that have way more pricing power than anyone in NAR.
- Why Commissions Are So High – U.S. MLS & House Shopping System Way Better: Hartman explains that commissions are in fact too high in the U.S. because there are too many agents and because they have to spend so much on marketing (that they have to recoup). But – Hartman also points out that our very expensive MLS system provides the best shopping experience for buyers in the world, as it is very difficult to see all of the properties available in all other countries. So, when the WSJ and the attorneys remind us that commissions are much lower in other countries, they also need to remember that the home shopping experience is also vastly inferior.
- Uber and Lyft To Take Over? Hartman suggests that vetted Uber and Lyft drivers might be given lockbox keys so they can show homes. 😊 And – that would be a true game-changer.
