Settlement is Still Not Approved, NAR Going To Supreme Court and Clear Cooperation

Anthony Lamaccchia: The NAR settlement still hasn’t actually been approved by the court. By this time next week, the Department of Justice could file a statement of interest and interrupt this settlement. We shall see if they do. In addition to that, legal fee requests from the attorneys are now over $200 million. NAR has filed a petition with the Supreme Court to argue that the Department of Justice should not have been able to undo their settlement agreement. They’re talking about a certain letter that they obtained, and I’m going to go over that with you. I’m also going to be discussing clear cooperation policy and my stance on why it should be something that is continued.

Back to the beginning. The settlement still hasn’t received absolute approval from the court in western Missouri from the famous Judge Bough. That is scheduled for November 26th. One week from today is the last day that the Department of Justice could step in and file a statement of interest. Now, some people think they will. Some people think they won’t. I’m torn on it, to tell you the truth. As I’ve mentioned, they filed the statement of interest in the MLS PIN Nosalek case where they made it clear that they don’t want sellers to be able to put out proactive offers of compensation.

I think that’s completely wrong. I can’t imagine that any court or the Department of Justice would be able to get such a thing approved, but they may try to mention it once again just to highlight what they see as an issue. I don’t see it as an issue whatsoever. Home sellers or sellers of any product in the world have a right to offer out compensation proactively to whoever brings them a buyer. I’m going to bet you all, if they file a statement of interest in the next seven days, that is what they are going to highlight once again, but I’m not sure that they will. They may just allow the settlement to go ahead.

Keep in mind, even if the Department of Justice does file a statement of interest, of course, the judge will read it and consider it, but Judge Bough doesn’t have to listen to it at all. He can move on and he could approve things on November the 26th. When he probably does, that’s when money starts flying, lawyers start swimming in all kinds of money and we continue on doing business as we have been since this summer when things took effect. It will be interesting to see if that happens. In addition to that, every few weeks the lawyers have been filing for more and more legal fees.

Once upon a time when I debated Mr. Ketchmark, the famous plaintiff attorney, I had told them that they would probably make between $300 million and $400 million. I have to tell you all, the cash register is now over $200 million. We didn’t bother to add it up and go crazy, but I know that it is now over $200 million. That doesn’t even include when the Gibson case, the national case gets approved and the home services settlement. That’s going to get them well over $300 million. When that happens, I’ll be sure to have a video for you all to show you that.

Incidentally, I should mention here quickly, the Gibson case hearing is on the 31st next week. That will likely get approved funny enough before the Burnett case, even though that came after. The Burnett case is obviously more convoluted. Don’t want to get too deep in these different cases, but I want our realtor friends and realtor audience to understand what is going on. Also want to throw a shot at the Department of Justice. I want to give credit to the Wall Street Journal editorial board. Everyone is under investigation. Firms with 40% of the S&P market cap are under Justice Department scrutiny. This was last week in the Wall Street Journal.

I read the entire article and it talked about how literally tons of companies are under investigation by this Department of Justice. They are just it’s like they’ve gone rogue. They hate business. They hate free enterprise. They’re completely wrong. It’ll be interesting to see what happens in the election. If there’s a change in administration, I strongly suspect that their wings will get clipped and things will change. I bet a lot of the people there are wondering the same thing and curious what will happen. It will be interesting to see. Now, for some good news, and then I’m going to go into what NAR is doing, filing a petition with the Supreme Court.

First, I want to talk about some good news. The good news is since the summer when the practice changes took place in New Hampshire, it was July 15th. The rest of the country majority was August 17th. Transactions are still happening. Homes are still selling. Buyers are still calling realtors, working with realtors. Sellers are still selling. September was an extremely busy month. Interest rates came down right after Labor Day. They were coming down late August. Then after Labor Day, they went down a good amount into the mid-sixes, even in some cases low sixes. There were some folks getting mortgages locked in the high fives.

There was a really busy four weeks there. Transactions were happening. Now this month is going to be a huge closing month. I’m certain that home sales will be up nationally. This will be bad news to the industry disruptors. They’re going to despise the fact that business is still happening. They’re going to despise the fact that people are still working with realtors. They’re going to despise the fact that commissions don’t seem to be going down, at least as far as what I can see. Remember, I see two sides of a transaction here at our own company. I can’t speak for other companies. I don’t know what they’re doing.

I know in our company, I’m seeing buyer transactions. I’m seeing seller transactions with offers coming in, purchase agreements coming in. Guess what? Commissions, the averages that I’m seeing when we actually run the average for our own transaction, not too much seems to be affected at all. What I’m finding is on our transactions, over 90%– whether we’re representing buyer or seller, over 90%, buyer’s agents are writing a request for compensation into the purchase agreement and many sellers seem to be agreeing to these things.

Obviously, there’s a negotiation, as there always was. There’s some pushback on all sides, as there always was. Transactions are happening, brokerages are getting paid. It’s going to be interesting to see two years from now when the statistics come out, people that want to disrupt the MLSs, people that want to serve their own interest. I’ll be sure to call you all out and show all the statistics on how things didn’t change very much. I promise you, you can be sure that I will do that, because you all deserve it. Now, NAR files a petition with the Supreme Court to call in the Department of Justice.

Now, there’s many agents, many folks in the business that are confused why all this is happening. I’m fortunate to be here with a bunch of real smart people like our general counsel who walked me through a refresher on this on Friday and I want to walk through it with you. NAR filed a petition with the Supreme Court to argue that the letter that was given to NAR on November 19, 2020, should have prevented the Department of Justice from reopening the investigation in 2021. Okay, the letter. President Kevin Sears talks about that as well. He did a great update on October 9th on an internal forum with NAR. He said they filed the petition. He talked about clear cooperation, et cetera. One step at a time.

Let me first show you the four original issues that the Department of Justice had when they originally opened their investigation in 2019, which they were allowed to do at that time. Those four issues, and the prohibition on public disclosure of buyer agents commission. That ended. Prohibit buyer agents from advertising services as free. Some did that. I agree. That wasn’t smart. That’s long gone. I haven’t heard anybody saying that in some time. Prohibit filtering of listings based on buyer commission amount. That’s long gone. Prohibit rules that restrict access to lockbox. That’s long gone. Those four items were included with the settlement in the DOJ, but CCP was not included. Clear cooperation policy was not included. I’m going to get to that in a minute.

What I want to do is I want to show you this letter right here. This was written on November the 19th. Go ahead and show it on the screen. It was addressed to William Burck, who is, I believe at that time, outside counsel for NAR. “Dear Mr. Burck, this letter is to inform you that the Antitrust Division has closed its investigation into the National Association of REALTORS’ Clear Cooperation Policy and Participation Rule. Accordingly, NAR will have no obligation to respond to CID numbers, blah, blah, blah, blah, blah, on April 12th, 2019 and June 29th, 2020.

What happened was there was a settlement. They came to an agreement on the settlement, but then NAR pushed back and said, “Hey, we’ve covered these four issues, but we want further clarification that we don’t have to get back to you on clear cooperation in the participation rule.” They sent a letter. What else do they need? How is any enterprise, be it an association, a major company, whatever, supposed to trust the government? If they put something in writing on November the 19th, 2020, in less than six months later, they go completely against the letter that they wrote. How is anybody supposed to trust the government? That is the exact argument that the National Association of REALTORS is making.

Now, keep in mind, there are thousands of petitions filed with the Supreme Court per year. Thousands of them. Thousands of requests for the Supreme Court to hear arguments. They take on 50 to 100, maybe a couple hundred a year. NAR is obviously hopeful, and everyone in the real estate space should be hopeful that the Supreme Court will hear this. I, for one, and my legal advisors are pretty confident that if the Supreme Court hears this, they will come down in favor of the National Association of REALTORS. I also want to point out, I would understand if this letter was written and 5 years later the Department of Justice opened the investigation, 10 years later, 8 years later, 3 years later, but less than 6 months, what good is this letter?

Does every private enterprise, every association have to be worried when there’s a change in administrations? This letter was written November the 19th, 2020. Change in administration, obviously, January 25th, 2021, I can’t remember if it was March or June, but it was a few months later, they undo it and they go completely against it. That isn’t fair. The Supreme Court will likely come down in favor of the National Association. When they do, that will be a wonderful day for all capitalism and all private enterprise because it’ll give people more security and it will keep the Department of Justice in check. As it says in this letter, they’re clearly not in check. They’re investigating everyone.

I’m going to read a couple of things here from this RAS Media article, and then I’m going to get into clear cooperation. “In a 25-page brief, NAR called a DC Circuit Court decision handed down in April that allowed law enforcement to reopen the investigation in overreach.” Now, remember, this went to the DC Circuit Court of Appeals and they didn’t come down in our favor. It was two to one, and that’s why NAR– when I say the industry, that’s why NAR is filing with the Supreme Court, asking the Supreme Court to intervene based on issues of critical legal and economic significance.

Right here, another statement from the brief. “A rule that the government receives special treatment permitting it to easily escape its contractual commitments would create profound instability along with basic unfairness.” I like that term, “Profound instability,” and I applaud the NAR lawyers or the outside counsel, whoever wrote this. That’s good words. You can’t have instability when you have a government and you have private enterprise scared of them for undoing deals. Why is any institution going to want to make a deal with the Department of Justice ever again?

Down the bottom, I like this statement. “Without intervention from this court, the position adopted by the panel majority will expose businesses and private citizens to perpetual uncertainty regarding the government’s commitments or representations when settling investigations, particularly in the wake of changes in control of the executive branch.” I just got through saying that, just because we change presidents doesn’t mean that that sort of thing could happen. Now, the last thing that was mentioned in the letter was the participation rule. When they say that, what they mean is the posting of compensation in the MLSs.

We all know that that’s gone in the vast majority of the MLSs, and it soon will be an MLS PIN once the judge probably approves this settlement, and then in the MLS PIN case, Judge Patty B. Sarris, I’m sure, is going to force the hand to make that settlement the same, and by the time you get to the end of the year or early next year, there’s no compensation mentioned in any MLSs, including MLS PIN. Basically, five out of six items got solved. The one outstanding is CCP, clear cooperation policy.

Now, I’ve done a couple of videos on this. I haven’t been as loud as I’ve been with the cases. I don’t feel as passionate about it or as frustrated about it as I do with these cases. These cases certainly fire me up with these academic lawyers and these industry disruptors who are really just out to fleece their own pockets instead of doing what’s best. On clear cooperation, I want to state again, I am for keeping it, and this is something that I have considered and reconsidered for some time, but every time I spend time thinking about it, I come down on the side of it needs to stay. It’s better for sellers, better for buyers. Consumers are what is most important.

If the Department of Justice, if any of these governmental bodies come out and force the hand of the National Association of REALTORS to undo the clear cooperation policy, mark my words, and we will save this part of the video, ready? Within 10 years, the Department of Justice will launch an investigation into the National Association of REALTORS saying that they’re allowing brokerages to hoard listings and not post them publicly is having a bad impact on people who don’t have access to all properties for sale. That’s what they will be doing.

Just like how our general counsel, Michael McDonough, pointed out how in ’07, the Department of Justice put a statement out saying that our system was fair and the way we did it with MLS was fair, and then Michael pointed that out in his write-up that he did a few months ago, same thing’s going to happen. If Department of Justice or someone comes out against CCP and says it should be undone within 10 years, they’re going to go back on their word again because that’s what they seem to be doing. They seem to have an obsession with our business, although many would argue they have an obsession with many businesses. Clear cooperation should stay.

If you read the clear cooperation rule, as I stated in my more lengthy video about it specifically, it says that the properties need to be listed in the MLS within one business day of being marketed publicly. That’s all. The brokerages out there that are concerned, there’s some large competitors of mine that are very concerned, and they say, “Well, it’s not clear cooperation, it’s forced cooperation.” A brokerage should have the ability to market within. Okay, you still have the ability to do that with clear cooperation. It says once it’s posted publicly, it should be posted in the MLS. That’s something that we’ve been doing with our company, following all the MLS rules and all the MLSs that we participate in.

I am here to say we should keep it. We don’t want to end up like Europe and the rest of the world where we have a completely disjointed system and brokerages or realtors can hoard listings, stop others from being able to see them. Sellers who don’t realize that they’re getting hurt could be in a position where they list with someone that they know and trust, and that person’s hoarding the listing. It’s not being exposed to everyone. Everyone’s not getting a fair shot at it. That hurts buyers, that hurts sellers. Again, let’s keep clear cooperation. I hope that helps everyone with an update on what’s going on.

I imagine I’ll be back to you pretty soon. Most of my videos in the last few months have been a month apart. When the rulings come out over the next few weeks, I’m sure I’ll be back with another update. Stay tuned into recases.com and my personal Instagram, AJLamacchia, to see some updates along the way. Thank you.

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