The impending class-action settlement from the National Association of Realtors is likely to cost more than just millions of dollars…it’s also likely to cost hundred of thousands their jobs.
The Consumer Federation of America has predicted commission rates could fall 3-4 percent, saving homeowners $20-$30 billion in commission payments each year. But, with the proposed industry changes in mind, if fewer buyers use their own agents (as some industry experts are already predicting), that means agents will in theory have less work. Couple that with less take-home from lower commissions and the industry is likely to face an employment exodus.
Ryan Tomasello, a real-estate industry analyst with Keefe, Bruyette & Woods, has predicted that the lawsuits could eventually lead to a reduced realtor head count by more than half. (NAR currently represents around 1.5 million agents nationally, while some estimates have total licensed agent count in the U.S. at around 2 million.)
Mauricio Umansky, co-founder of The Agency and the recently launched American Real Estate Association, told the Hollywood Reporter over the weekend that AREA is well-positioned to be a new alternative trade association to NAR, especially in light of the proposed settlement:
“The American Real Estate Association believes NAR’s decision to settle this lawsuit unequivocally demonstrates a lack of interest in serving their members or safeguarding consumer interests,” Umansky said in a statement to THR. “American Real Estate Association is actively collaborating with Fannie Mae and HUD to bolster the buyer’s incentive program to include commissions. NAR’s self-serving involvement in this settlement is primarily aimed at ensuring the organization’s financial stability over the next several years. As industry leaders, it’s imperative that we remain vigilant in safeguarding the interests of buyers while also fostering a transparent and equitable real estate market for all stakeholders.”