Recap and Summary: Likely Impact of the Commission Lawsuits

[NOTE: This is a VIP post, for subscribers only. However, given the importance of the topic, I'm going to make it open to all for a couple of weeks. Dumbass comments will be deleted since that's one major benefit of VIP.]

As promised, I thought I would recap and summarize my thoughts on what the impact of the various lawsuits against NAR, brokerages, Zillow, and MLSs likely would be. These date back as far as March of 2019, when I wrote the first post about the first class action lawsuit, Moehrl v. NAR, which has now been certified as a class action. Over the years, I've written about Moehrl, Burnett, PLS v. NAR, Rex v. Zillow, and other lawsuits confronting the industry.

Things have evolved since then, of course, but on the whole, most of my thinking about the impact remains more or less the same. I'm going to limit my thinking to the two big commission lawsuits: Burnett and Moehrl. The others are important as well, but less impactful and dramatic than these two.

What is honestly puzzling is why the industry and its leadership has seemingly been on vacation for the last four years while all of these issues were developing. With the idea that it isn't too late, let me lay out as briefly as possible what comes next. I will structure this in terms of Most Likely to Least Likely outcomes.

Most Likely Outcomes

The most likely outcomes from these various lawsuits and related developments are as follows:

• Extended period of chaos

• Increased legal costs for everybody in real estate

• Increased (and new) regulations for real estate

• No real changes for agents on the ground

Fundamentally, I believe NAR and the Corporate Defendants will lose at trial on all of the cases known today. You can go back and re-read all of my posts on legal topics for my reasoning, but at base, I believe that the elite opinion in the U.S. and the policymakers who follow it have turned against the fundamental structure of how the real estate industry works. Most important of those is the fact that transaction costs in the U.S. are far higher than in other developed nations, which leads our Elites to want to reduce those.

But losing at trial does not mean the end. As I have written and spoken about repeatedly, whoever wins at trial, the decision will be appealed by the loser. There is simply too much money at stake and too much how-business-is-done at risk for anything other than an appeal. And whoever loses on appeal will appeal again to the highest court in the land. So this fight will not end for years. I have long estimated seven years from the start, but COVID intervened, which means we likely have some five or six years from today for resolution through the courts.

That gives us the extended period of chaos. Despite results from the trial courts, NAR and the MLSs are unlikely to immediately give in and change course. They will get a stay on enforcement against cooperation and compensation, get a stay on paying damages, and pursue appeals. Brokers and agents will be left in a bit of a limbo, doing what they've always done but with an eye towards a massive change right around the corner.