Are Class Action Real Estate Commission Lawsuits coming to Alaska?
As you know, the long-anticipated Sitzer/Burnett class action commission lawsuit verdict is in.
In the Sitzer/Burnett buyer broker commission lawsuit a Kansas City jury has found the National Association of Realtors, HomeServices of America, and Keller Williams guilty of colluding to inflate or maintain high commission rates through NAR’s Clear Cooperation Rule. The defendants have been ordered to pay damages of $1.78 billion.
SKILL SHARPENING Discussing how selling licensees are paid is critical!
One of the major mistaken premises of the lawsuits is that sellers must pay buyer brokers and they are not able to negotiate the buyer broker fee.
The listing company pays the cooperating broker, not the seller.
To protect yourself from undue exposure, it is important to discuss the role of the co-operating broker and make it clear the listing company is outsourcing some of their marketing and buyer acquisition expense and workload and paying a substantial part of their fee to access buyers who are working with other companies. This exposes the property to more buyers to facilitate a faster sale at a higher price and it is done with the seller's best interests in mind.
The notion that the seller should negotiate compensation with an outsource independent contractor doesn't make business sense.
Compare it to a general contractor that outsources the painting on a new home to a painting contractor. The home builder comes up with a price to sell the house and goes on contract with the home buyer to buy the home. The home buyer doesn't negotiate the price to paint the house, buy the paint supplies, purchase the painting sprayers and materials, they leave it to the home builder who is more experienced in order to get the work done at the best price.
Real estate marketing and sales is basically the same. As an exclusive buyer broker on over 1,200 sales, all my effort, time, expense and energy was dedicated to developing a pool of buyers that was ready willing and able to buy a home. I worked with some of our buyers for over 4 years getting them ready to buy and move quickly. Both brokers are able to specialize in what they do best, to facilitate results for their clients as soon as possible.
The buyers who brought the money to the table to pay all the parties that participated in the sale, did not tell the sellers what to pay the listing company, nor should the seller expect to be involved in deciding what the buyer broker should charge for their fees, which are always negotiable. That is between the buyer and the buyer broker.
The seller decides what marketing fee they will pay their listing/marketing company and that is always negotiable. Once that decision is made, it is the listing company's business how they will spend the money to get the seller the result they contracted for.
MLS Meetings Scheduled
The Alaska MLS is bringing in an Attorney to discuss what AKMLS plans to do to respond to the issue. Other Realtor MLSs in Alaska have not announced their plans.
The meetings will happen next week in Wasilla, Anchorage and Kenai. Call the AKMLS for times and locations.
It is going to get worse!
Live CE classes are better than Correspondence, particularly for this Class Action issue, additionally we have added the discussion and suggested strategies to reduce your risk to our DCE courses. It was exciting to see the networking, partnerships and strategic partnerships, team building recruiting and resource sharing that happened at our last live classes. You can't get those benefits sitting at home taking a correspondence class in isolation, but we will be providing additional information on these issues in all of our relevant courses and Maui.
You should seriously consider signing up for our next live classes, Nov 11-12 or Nov 13-14, where we will give you tools to reduce your risk for the class action lawsuits that are likely heading our way. We will have workshops and role plays to refine your commission discussion to reduce your risk. You can't get that same level of protection and training in a correspondence class. But hurry to register, these classes have limited slots available and will sell out.
Jerry Royse, ITI