Go behind the scenes with Inman’s Dani Vanderboegh to get answers to all your burning questions about the latest release. Stay tuned for Real Tea, the intersection of real estate and reality TV.
Season 2 buy beverly hills It airs on Netflix on Friday. The real estate reality show follows the agency’s CEO Mauricio Umansky, his high-performing Umansky team, and others including Ben Belack Stories from top producers in the Beverly Hills area.
Since Caesar | Following the Burnett ruling, Umankes has been an outspoken critic of the National Association of REALTORS (NAR), citing the lack of choice among brokers when it comes to professional associations.
This led him to team up with Jason Haber of Compass, another outspoken critic of NAR, to create the American Real Estate Institute. In January, Umansky spoke with Brad Inman on stage at Inman Connect in New York about the organization.
While there are some questions about the nascent association’s influence, Inman Intel revealed that nearly 27% of agents surveyed would consider joining Umansky and Haber’s efforts.
On March 15, NAR agreed to a $418 million settlement that would effectively end all but two of the numerous commission cases the trade group has been involved in since the Sitzer decision, which awarded compensation to Missouri home sellers 5.356 billion US dollars.
Under the terms of the settlement, NAR will not establish rules that would allow listing agents to set compensation for buyer’s agents, compensation packages will no longer appear in the MLS, and real estate agents using the MLS will be required to place listings before showing homes.
The proposed settlement covers about 1 million agents and brokers but does not include brokerage firms with more than $2 billion in residential real estate business in 2022. The agency, with assets valued at $8.9 billion, is on the list of brokerage firms not covered.
Ahead of the second season’s launch, Inman sat down with Barack to discuss the current industry landscape, including the proposed commission settlement, the National Real Estate Association and his reaction to it all. What follows is the interview, edited for length and clarity.
Inman reached out to NAR for comment but did not receive a response before publication.
Inman: What were your initial thoughts on NAR News?
coating: I understand that companies do things to protect themselves, but NAR is a trade organization. I think we have two things on our hands: we’ve filed a lawsuit, and then we have a settlement.
I think, from what I’ve read, (NAR) was very casual about this lawsuit, and they lost, which is a big loss, right? It automatically tripled to (over) $5 billion.
But when they settled down, they sent out an email to all members, and at the very, very, very, very low level… Chapter 11 (was an option). I think they really threw us under the bus because they were like, we’re out of this. We solved it, and now every brokerage with over $2 billion in annual revenue is still vulnerable…and they’re paying for it with our dues.
Another problem I have with NAR is that they only do real lobbying at the national level. I feel like a trade organization, especially when we’re also paying for California and our local (associations)… they should be lobbying at the local level.
For example, ULA, the “mansion tax” – it’s a bit arbitrary because I’m paying 0.45% transfer tax on $4,999,099. But for every penny more, I have to pay four percent. Then, arbitrarily, the price jumps to 5.5% on $10 million (of a home)…where is our organization then?
and this wildlife regulationsLuckily this has been put on hold, but you can own acres of land in the Hollywood Hills and your cap is 6,000 sq. ft. house …I just want to know, where is our association? So, personally, I don’t see how the real estate community as a whole is going to retain members.
I think there will be huge changes.
What are your thoughts on the American Real Estate Association?
I think their goal is to give power back to real estate agents, which makes sense since they have traditionally not done a good job organizing the industry.
We have 1.5 million people and a lot of licensees; at least 50% of them did one deal or fewer last year. So it’s a little difficult to organize a group, especially one as geographically dispersed as ours, and there are different rules from state to state, and generally speaking, the value of real estate agents is their hyper-local nature.
So we don’t like to think in national terms, but as the current CEO (Mauricio Umansky)… I think NAR’s days are numbered. Sadly, I think when they were about to exit, if I’m right, they really left us in a bind.
(NAR does) not deserve our support in return. I think getting any trade organization off the ground is probably going to be a long process, but if it’s going to happen, I think now is a space for radical change.
What have your conversations been like with your clients since news of the settlement broke?
I still think consumers at large look to us as the authority. Obviously, some people are not as good as others in any area, but they still come to us to tell them what’s going on and explain how we think things are going.
One thing I know is that every real estate agent in the country will say that buyer’s agents deserve to be incentivized for their promotion of the database.
Many consumers these days think a real estate agent’s job ends with the home search… Home hunting is probably one of the least demanding things we do. I mean, half the time, because of the consumer-based website, they send us stuff.
When we’re on site, they’re like, “Can we come see this?” … I do believe it affects consumers more than it affects real estate agents.
How has agent chatter changed? What were your discussions like?
Commissions cannot be financed, and the bank’s loan requirements are… very difficult. Prices have gone up a lot and don’t seem to be changing as we have an inventory crisis.
It’s really hard for people to qualify for a home because everything is so expensive. Well, if you add in the fact that buyers now have to pay commissions to their agents, it lowers their reserves and potentially erodes their purchasing power because everything is so expensive, relatively speaking.
Our own trade organization, NAR, has signaled to buyer’s agents that, in fact, if you extrapolate from settlements, you’ll find that buyer’s agents are not that valuable.
The truth is, as the person who primarily represents the seller, the buyer’s agent is an integral piece of the puzzle.
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