National Association of REALTORS Agreed to a $418 M Proposed Settlement

Anthony Lamacchia: : In a shocking surprise to many in the industry, the National Association of Realtors agreed to settle the ridiculous, wrongful lawsuit out of Western Missouri for $418 million just last Friday, and it surprised many. I plan to go over that with you, the settlement terms, the key rule changes that we are seeing from that that are listed in here that I will put in plain English for all of you, along with reviewing the headlines, which have been absolutely out of control, and they’ve been so wrong. I’m going to review all of these with you so that you can understand where I am coming from. I’m also going to state right here at the beginning that this is not good for homebuyers, despite what these terrible headlines are saying. This is not a win for homebuyers, and I’m going to break down why, and break down some of the ways that I think realtors can continue to conduct business, and I’ll actually go into that in more detail in future videos, but I’m going to graze over the top of that today.

First, I want to start with my statement that I had typed up from my phone on a flight down to Florida with my dad next to me, typed it up for the media because so many requests were coming through from media and other parties at 10:00 AM. I knew I had to put out a typed statement because I obviously couldn’t get on camera. I’m even going to show you some clips from the news segment that I did do on Monday morning where I was able to correct a lot of the record.

Everyone keeps talking as if this settlement has something to do with what realtors charge, and that’s the biggest misconception that I’m seeing. I saw another news outlet this morning that said 5% and 6% non-negotiable fees are gone. I wish fees were non-negotiable. Us realtors wish it was that easy. It is not.

I feel grateful to the Fox affiliate here in Boston for allowing me to come on and correct the record. Other media outlets nationally don’t seem to have any interest in getting the record straight. They seem to be following the line of the plaintiff’s attorney and just going along with everything they say. Let me start with the statement. We’re going to put it up on the screen.

“Truthfully, I would have preferred to see NAR take this to appeal because I and many experts feel strongly that they would have prevailed. I can understand them settling given the fact that many across our industry just don’t have the stomach to fight on and tolerate the constant media barrage that the plaintiff’s counsel has launched on our industry that is full of lies and misinformation.”

Folks, I put this statement together at about 10.30 in the morning on Friday from the plane, and boy, did I end up being right if you look at all the media that came out after that. I was right to say it then, and I was even more right after. Getting back to the statement.

“In the end, these changes that the plaintiff’s attorneys will take a victory lap on won’t bring down commissions and make things less transparent. This puts the settlement pot over $600 million, which means the plaintiff’s lawyers will get paid over $200 million in what is now the biggest legal shakedown of an industry in history. The good news is, I have no concerns about the real estate brokerage business living on and continuing to be alive and well. Buyers and sellers have wanted the assistance of realtors for over 100 years, and that won’t change a bit.”

This won’t change that a bit. Folks, I mean everything I said in there. I stand by it. I stand by saying that the verdict in the Sitzer-Burnett case– Burnett, I should say. Sitzer bailed out because he knew it was a fake case. My attitude on that has not changed. I’ve been strong in saying that, and I haven’t backed down from it, and I’m not going to now. The only folks that are making out in this is the lawyers, and that’s it, and it’s very unfortunate that the media doesn’t report on that. I put out a video last Thursday, the day before the settlement, talking about how the plaintiff’s attorneys, led by Michael Ketchmark, put in an application to get paid $69 million. If you want to see that video, log on to recases.com, and you can see the breakdown. We were going to email it out Friday morning, and then the settlement came out, and we said, well, it’s old news because now we know, within a matter of weeks or maybe a couple of months, they’re going to apply for over $200 million.

You know what I find interesting? In that video, I showed how they talked about all the hours they had spent on the case. What are they going to do now? Use the same hours when they apply for more money? Of course I’ll be breaking that down in future videos, but I just wanted to mention it because it’s an example of the scam that is going on here, in this case, in the shakedown of the real estate industry that’s going on, and I want to point it out.

Now, let’s jump into starting to review some of the headlines, starting with the New York Times. Folks, they may as well be Michael Ketchmark’s media company. I had mentioned in the debate they should name the court Ketchmark’s Court. You look at the New York Times, I actually wonder if he writes the titles. I even this morning listened to a podcast of some sort, and they were going on and on and on about how bad the realtor association is, how rigged the system is, et cetera. Insane to me.

Let’s read the headline. At 9.35 AM. Notice I’m pointing that out, both sides had agreed not to release anything to the media until 10 AM. Not only the plaintiff’s side released it early, but their media company, the New York Times, they put it out early. Let’s read it. Powerful Realtor Group Agrees to Slash Commissions to Settle Lawsuits. What? Since when does the national association or any state associations or any local associations have anything to do with what us realtors charge? They don’t tell us what to charge. They don’t allude to us or hint to us on what to charge, and it’s not mentioned anywhere on their website that I’ve ever seen. It sure is mentioned on the American Bar Association website what trial attorneys charge. It says right on it, 33% to 40%, and I mentioned that in last week’s video, and I showed it.

Let me read the rest of it. “The National Association of Realtors will pay $418 million in damages, and will amend several rules that housing experts say will drive down housing costs.”

All of you that call yourselves experts, you are not an expert. If you think that this is going to drive down the price of homes or costs, this is going to drive up the cost of buying a home for many, many buyers, especially sellers who get fooled by these ridiculous, wrongful, misinformation headlines, headlines full of misinformation, they’re going to be harmed. They’re going to spend more money because of it, and they can thank the plaintiff’s attorneys for that.

Let me read a couple of excerpts from the article. I find it interesting they had so many comments in this article. How did they gather all these comments so quickly? They were obviously tipped off days in advance. Here’s a comment. “NAR is finally out of the business of forcing home sellers to pay inflated commissions, said Michael Ketchmark, the Kansas City lawyer behind the home sellers’ legal triumph.” Never knew that NAR forced sellers on what to pay. I’ve never seen that, never heard of it.

Here goes Ketchmark again. “The reset button on the sale of homes was hit today. Anyone who owns a home or dreams of owning one will benefit tremendously from this settlement.” Another example of Ketchmark not knowing what he’s talking about. He said it in the debate. Then I said, “Michael, you don’t know our business,” and he said, “Yes, I do. Yes, I do. I know your business well. I’ve been studying your business for four years.” That’s a bunch of crap.

I said to him one time on the phone, I said, “Mike, if I worked as a trial attorney for the next four years, would I know your business as good of you as you do? Of course I would not. That’s insane to me.” That’s one article that I found. Let’s move on.

Next one. “Home prices may fall as real estate group agrees to lower commissions.” What was this? Business Insider.

There’s another one, Yahoo Finance. “Real estate agents just lost their 6% commissions, and half may lose their jobs if analyst prediction holds true.” What? We lost? Where did it go? Where did the 6% go? I lost it. Oh, my God. Folks, I wish we were able to easily charge 6%. I said that in the news the other day, and I’m being a little bit of a wise guy when I say that. What are you talking about? NAR doesn’t set our commissions, NAR doesn’t tell us what to do and what to charge.

“Buying a home. Realtor commissions could shrink after legal settlement.” USA Today.

“No more 6% commissions,” in Morningstar. “Home buyers and sellers will soon negotiate their own commissions.” As if they haven’t been negotiating all along. This is pathetic.

CBS News. “National Association of Realtors to cut commissions to settle lawsuits. Here’s the financial impact.” What?

“Money–” I can’t even read some of these headlines.

Here you go. NPR. “A major settlement could spell an end to 6% real estate commissions.”

Folks, this is a bunch of garbage. The articles are garbage. They’re not right. A lot of the reporters that are reporting on it don’t understand how the business works. They’re avoiding getting comments from people that do. Many of you know that I’m talking to you myself. I’ve reached out to many of you. I sent my statement to many of you.

You don’t report on it, but you put catch marks reports in there all day long, and any other plaintiff’s attorneys or anyone else that wants to cry that our business is too expensive. That’s not real media. That’s not balanced media. Shame on all those media companies and many more that have jumped on the bandwagon after New York Times put their article out on Friday morning, obviously before the embargo was agreed to.

Next, let’s talk about the settlement terms. Because, realtor friends, these are the proposed terms. You know it’s going to the judge in Western Missouri. Those that watched the debate, I made it clear. This judge obviously thinks our industry is wrong. He’s ruled against, he ruled against NAR and the other defendants time after time after time leading up to the trial. I’m willing to bet he’s going to approve pretty much everything that is said in here or damn close to it. Let’s talk about some of the settlement terms.

$418 million. Here you go right here. This 120-something pages of the settlement agreement that I don’t really like, to tell you all how I really feel. $418 million over a four-year period. I’m reading it.

“Within 90 days following the final approval of the settlement by the court, the National Association of Realtors will deposit $197 million into the escrow account. No later than one year after the initial payment of the initial $197 million, NAR will deposit $72 million. No later than two years after the initial payment, another $72 million. Then no later than three years after the initial $197 million payment, NAR will deposit the balance.”

They say balance because, guess what? Interest has been agreed to. They’re going to charge interest as well. When these plaintiff’s attorneys go on the news and they say they’re for the people, and they’re going after the corporate titans, and they’re going after the trade organization, where does all this money come from? This comes from realtors that are working hard on the street, serving buyers and sellers. No matter what they’ve said, everything they’ve said in the media leading up to the case, since the case, since last Friday, people still want to work with realtors. It hasn’t ended. Where’s this money coming from? The pocket of realtors. Realtors pay their dues, it goes to NAR. NAR is using the money on this.

Same with the defendants. I’ve never defended my competitors so much. They’re taking their hard-earned dollars that we all compete for. They’re having to give it to this shakedown. It’s absurd.

That’s part of the settlement terms. Something else I found interesting. It’s a seven-year agreement. The settlement says that it’s forever, it’s indefinite for these seller plaintiff lawsuits. The agreement on some of these terms that I’m going to go over soon, key rule changes, are seven years. What happens in seven years is what I want to know. It does not include the buyer cases like the Batten case. We’ve got a settlement that we’re all, everybody in this industry, is looking at, and everyone’s still got to worry about the buy-side cases? Folks that are decision-makers at the defendants at NAR, hear me loud and clear. This plaintiff’s lawyer, the leader, Michael Ketchmark, and all the other plaintiffs’ lawyers, they’re not going to just take their $418 million, plus the $206 million they got from the other defendants, and take their bat and ball and go home. They’re going to terrorize our industry until we give them the same thing that they’re giving to us. Until they’re treated with the same respect, which is none, that they’re treating us with in our industry. I hope that makes sense. We better think twice about going through with this.

Oh, one more thing. This doesn’t cover brokerages that did over $2 billion in sales volume in 2022. Apparently it covers the realtors in those companies, but it doesn’t cover the brokerages, which is 80 or 90 brokerages. I don’t think that’s right. I don’t think that should have been agreed to. It doesn’t. There’s other parts of the rule changes that I’m going to mention that I don’t think should have been agreed to.

One of the problems that I see is the plaintiff’s side does a very good job, for the most part, of colluding together, frankly, as they should in working together to attack the real estate industry. I don’t see it on the defense side. I just don’t. I don’t hear of it. They should. It doesn’t seem to be happening. Let’s move on to key rule changes so I can go through those, because I know most of you realtors that are listening, that’s what you want to hear about, how’s this going to affect my business, how’s it going to affect the day-to-day.

Page 27, Practice Changes. Section 58. I’m going to skip through. “Eliminate and prohibit any requirement by the National Association of Realtors, MLS’s board members, the listing agents, or sellers must make offers of compensation to buyers, brokers, or other buyer representatives, either directly or indirectly, and eliminate and prohibit any requirements that such offers, if made, must be blanket, unconditional, and unilateral.” A lot of legal speak there. Let’s put it in plain English.

Folks, the requirement in a lot of the MLSs that says some amount of money has to be offered to the cooperating brokerage is going to be eliminated. Any mention, that’s what I’m going to get to next, of commissions is going to be evaporated from the MLSs as I predicted over a month ago. Here’s the thing that’s being misunderstood, and I think some of the garbage media that’s over there on the floor where it belongs, they get it confused. They’re getting it confused on purpose because they’re not actually trying to get the right information. A lot of these MLSs say, like MLS PIN, for example, $1, a minimum of $1 has to be paid to the other side. Miami used to say a penny, big deal. Doesn’t say half, doesn’t say a quarter, three quarters, 60, 40. It says a tiny amount of money. That was done with the right intention. The fact that they’re saying eliminate that requirement, who cares, I don’t care. Folks, we all know that there’s been sellers that have pushed back on this before. It’s been in listing agreements, in most listing agreements, in a separate section for years, so what?

Next, “Eliminate and prohibit any requirements, conditioning, participation, or membership in a realtor MLS.” People don’t have to be realtors. They don’t have to be. In some parts of the country, to get access to the MLS, you have to be a realtor. I understand that. We’re members in some of those areas, and we’re also, where we have our biggest membership here in Massachusetts, our Realtor Association and our MLS is two totally separate things. Whatever, they put that in there, makes people feel good. If that’s great, that makes people feel good, that’s great.

“Agree not to create, facilitate, or support any non-MLS mechanism.” This part is confusing. Basically what they’re saying here is, the National Association shouldn’t be putting any other mechanism in place where compensation can be offered. Whatever, who cares? Folks, bottom line, you’re going to have to negotiate your commissions within your transaction. If you’re in a state like Massachusetts where you’re writing offers, it’s going to have to be baked into your offer. Maybe you have another compensation form and or another compensation form, maybe you don’t, but it’s going to have to be negotiated in like it has been in the commercial world. The idea of going into MLS and seeing what’s being offered in an open and transparent manner is going to be gone by the end of the summer. Gone, they say July. We’ll see if July happens. I won’t be surprised if it gets delayed a month or two, but that’ll be gone. The open, transparent system that we all can see, even the cooperating brokerage compensations that are being mentioned on Zillow, those are going to be gone.

The lawyers are running around doing their victory lap, as I said in my statement, they would take a victory lap saying, yay, we helped people, okay, great. Say that to the first time buyer that sees a house that they like and there’s a seller that believes these crap articles and the seller says, “I won’t offer any compensation, I’m not willing to share any.” Let’s see how that works out for that buyer. Those buyers should remember these lawyers and send them an email or a letter to let them know, but they won’t care. They’ll be too busy counting and swimming in their money like the uncle on DuckTales. Who remembers DuckTales when many of us were kids and the uncle would swim through money? That’s what they’re going to do, all these plaintiff’s attorneys. They’ll be busy doing that by the end of the summer.

“Listing and buyer contracts must include language.” This one drives me nuts, that commissions are not set by law and are fully negotiable. I’ve said this before, I didn’t think that MLS PIN should have agreed to it in their proposed settlement last summer. I’ll say it again now, they shouldn’t have, NAR shouldn’t. Why the hell would a trade organization agree or any organization agree that realtors are going to have to show, “Hey, this is our fee, but it’s negotiable,” or, “Hey, here’s our disclosure that our fee is negotiable. Oh, and here’s what I charge.” Do the plaintiff’s lawyers do that?

When someone wants work done in their house, when you want to buy a car, do they give you a disclosure that says it’s negotiable? No, they don’t do that at all. I don’t like that. I hope the judge shoots it down. I doubt he will, strongly doubt he will. I hope the DOJ, if they come out with a statement in reference to the settlement, I hope they say it’s wrong, but they won’t. This is wishful thinking that’s likely not going to happen.

“Prohibit realtors from representing to a client or customer that their brokered services are free or at no cost.” I agree. Realtors shouldn’t be saying that. Realtors never should have been saying that. As I’ve stated before, there’s 1.5 million realtors in the country, and then another million or so real estate licensees that aren’t part of the realtor organization. You’re bound to have some people that say things the wrong way.

“The settlement does not prevent offers of compensation to buyer brokers off MLS.” They’re making it clear, and I mentioned that from the DOJ statement a few weeks ago, they’re making it clear that it’s okay if a seller wants to offer that. They’re smart to do that, because they know that the DOJ’s wish of, oh, the seller can’t offer it, is never going to happen. Lawmakers, no Democrat, no Republican, no one’s going to agree to take away a seller’s right to offer compensation to someone. They just don’t want it done on the MLSs. Fine.

They’re also saying it does not prevent sellers from offering buyer concessions on MLS for buyer closing costs, so long as such concessions are not limited to or conditioned on the retention or the payment to cooperating broker. Here’s the point there. There’s likely going to be a field now in MLS that’s going to show what a seller is willing to offer to buyers in a closing cost credit. Great. They’re saying they don’t have a problem with that. That’s fine. Some of those rule changes I just went through, there’s obviously some other details and more to come, but I wanted to graze over the entire thing.

Here’s my final message to realtors, because I know thousands of you are watching. Folks, it’s time you get real. Many of you have been at companies that have not had real training, not show you how to navigate these things, and now there’s an opportunity for your business. You can accept the changes, learn them, learn them inside out, rise up, and dominate in this business, or you can just hope. If you’re at a company that hasn’t provided you with some amount of training on how to tackle this, you need to move on. For all the realtors out there, and honestly, it’s an honor to hear from so many of you. It is. I sincerely appreciate it. I sincerely appreciate that you think a lot of me. For all the realtors out there that have reached out to me, or reached out to our people, and said, when is Anthony going to do a training, when is it. Folks, I have news for you. If you’re not a part of my company, I am not training you on how to deal with this.

The last thing that I need is the Department of Justice, or the plaintiff’s attorneys, or anyone else saying Anthony Lamacchia is colluding with other brokerages, brokers, realtors, and training them on how to obtain commissions. Because during that training, naturally, some use of hypothetical numbers is going to be necessary. I’m not putting myself in that hot water. The training that we’ve been doing for four months and that we’re going to now triple down on, quadruple down on for the next four to make sure that our realtors are more than prepared is going to be for our realtors and our realtors only. This is not going to be for others. Our Crush It in Real Estate events and all these kinds of things, I’m not getting into details on how you can get paid.

Of course I speak about it. I speak in the media. I do training tour events. Will I talk about parts of the settlement? Of course. The idea that you’re going to get training from me on how to deal with this is not happening. That message is going out. I’m happy to say it here openly, transparently to other broker owners, other realtors, et cetera. This is a time that I need to put the majority of my focus into our realtors and making sure that they are more than prepared for it, and that’s what I will be doing. I’ll be out with another video in a week or two, breaking down additional details of the latest of what’s going on here.

Thank you all for listening. Stay tuned in to recases.com, tuned in to our Crush It in Real Estate YouTube, and tuned in to my personal Instagram where I put many smaller updates, as I did last weekend, with respect to these cases and all that’s going on.