👋 Happy Friday! Today is World AIDS Day, which started in 1988 as a global movement to unite people in the fight against HIV and AIDS. Approximately 39 million people are currently living with HIV. More than 35 million people have died of HIV or AIDS-related illnesses over the past 40 years, making it one of the most destructive pandemics in history. While there is medication to prevent infection, and those with HIV (with access to the appropriate medication) can expect to live as long as their non-infected peers — there is still no cure; but research of the virus has yielded dividends across the medical spectrum.
1 big thing: Verdict in NAR Lawsuit
The jury in Burnett v. NAR et. al. found that real estate brokerages colluded to force home sellers to pay inflated fees via the Multiple Listing Service (MLS), violating federal antitrust laws. It’s an industry-rocking verdict.
What happened: As a condition of gaining access to the MLS, plaintiffs alleged, NAR’s Participation Rule required sellers to pay buyers’ agent fees.
Jurors in the case agreed with plaintiffs that the Rule facilitated a “you scratch my back, I’ll scratch yours”-style arrangement between buyers’ and sellers’ agents at the sellers’ expense—and in violation of antitrust statutes.
Why it matters: If appellate courts uphold the verdict, the ruling could materially impact the distribution of fees and brokerages’ revenues. Brokerages will no longer be able to predetermine buying agents’ fee payment and value.
Furthermore: Defendants in the suit would be responsible for $1.78 billion in damages (which the court could triple) and damages awarded in any number of subsequent lawsuits. One has already been filed.
What the defendants say: None of the defendants agree with the allegation that they intentionally passed inflated commissions onto sellers.
NAR specifically denies it engaged in anti-competitive practices and vows to continue to “support market-driven pricing and promote business competition.”
“Agent compensation is set between brokers and their clients and has always been negotiable at any point in the transaction,” NAR maintains.
Appeal pending: NAR plans to appeal the jury’s verdict, hoping to reverse a ruling that could have far-reaching financial implications for brokerages, agents, buyers, and sellers.
The bottom line: Pending the outcome of NAR’s appeal, the Burnett v. NAR ruling could catalyze a material change in MLS listing rules and the agency compensation model. While several real-estate stocks took losses after the jury verdict, the erosion of fee-derived revenues could deal a far heavier blow to brokerages over the long term.
2. Commission Lawsuit: What Florida Realty Pros Need to Know
A Missouri jury said NAR’s Participation Rule broke federal antitrust laws. Still, the question remains open until the appeals process concludes, and how it affects Florida’s real estate industry is up in the air.
While we wait: The leadership team at Florida Realtors says brokers are not obligated to change their business practices while NAR appeals the Burnett verdict.
There is no change in the way we do business today [with respect to the Burnett decision]. — FAR President G. Mike McGraw.
Why it matters: Burnett v. NAR et al. is a precedent-setting case—and will likely inspire copycat lawsuits in other states, including Florida.
Citing Burnett v. NAR et al. verdict as precedent, Florida lawsuits could:
Prevent brokerages in the state from any arrangement resembling the NAR’s Participation Rule
Affect the cost and value of conducting real estate transactions in Florida for agents, brokerages, buyers, and sellers
If the appeal fails: Florida realtors and investors can expect monumental changes. Industry experts note the potential ramifications of an upheld verdict:
More variance in fees for buyer’s agents: If courts maintain that NAR’s Participation Rule violates antitrust statutes, buyer’s agents in Florida may lose their guaranteed commissions. They’ll need to brush up on their negotiating skills.
A possible race to the bottom: At a time when buyers and sellers are looking to save money, real estate brokers throughout Florida may differentiate themselves by offering lower fees than their competitors. This competition could be a downward force on commissions.
Creativity in how brokerages charge for their services: Hoping to avoid such a downward spiral, brokerages in the Sunshine State may test new fee structures, such as flat fees, for their services. Expect innovative approaches among brokerages not content to accept ever-lower percentages on transactions.
A boon or a bust for investors? How the elimination of NAR’s Participation Rule might affect investors remains to be seen.
If they can negotiate lower agent fees when buying or selling property, they’ll likely view it as a win.
The bottom line: If you’re a Florida Realtor or real estate investor, don’t dismiss the ruling. Depending on the outcome of the appeal, all players in Florida’s real-estate industry should prepare for the short- and long-term financial implications.
3. Catch up fast
Fidelity National Financial, the world’s largest title insurance company, was hit by cyber attack before Thanksgiving, causing it to shut down systems that — in turn — delayed or prevented closings nationwide. The Record
FHFA is increasing conforming loan limits for 2024, opening up more expensive home purchases to conventional mortgage loans. ALTA
Research shows that banning AirBnB’s lowers rent prices for long-term rentals. Bigger Pockets
Mortgage rates declined to 7.22%, the fifth decline in as many weeks. Bloomberg
What it would take for the Fed to start slashing rates in 2024. CNBC
4. Thought of the day
Yesterday, I attended the funeral of my second cousin, who was like a big brother to my dad and more like a fun, great uncle to my brother and myself.
The preacher, who also happens to be our hometown insurance agent and the husband of my 7th-grade English teacher, was also my cousin’s friend. So his eulogy was peppered with personal anecdotes and memories that made everyone chuckle and sigh as their own memories were triggered through his words.
In 15 minutes, he hit the highlights of my cousin’s life as a high school senior, marrying the love of his life at 17 years old; then as a Naval Korean War vet; and then as a very successful business owner.
As he moved through the vignettes of my cousin’s life, I started wondering what my 15-minute “highlight reel” will sound like. What will they say about me when I’m gone?
The bottom line: Many of us seek 15 minutes of fame, but wouldn’t it be better to focus on “writing” our 15-minute summary instead?
If we focus on making memories for others and ourselves, our highlight reel of a lifetime will indeed be rich.
We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.
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