Go behind the scenes with Inman’s Dani Vanderboegh to get the answers to all your burning questions on the newest releases. Stay tuned to Real Tea, the intersection of real estate and reality TV.
Season 2 of Buying Beverly Hills dropped on Netflix Friday. The real estate reality TV show follows The Agency’s CEO, Mauricio Umansky, his high-performing Umansky Team and other top producers, including Ben Belack, in the Beverly Hills area.
Since the Sitzer | Burnett verdict, Umanksy has been a vocal critic of the National Association of Realtors (NAR), pointing to the lack of options agents have regarding professional associations.
That’s what spurred him to team up with Compass’ Jason Haber, another vocal critic of NAR, to create the American Real Estate Association. Umansky spoke about the organization with Brad Inman onstage at Inman Connect New York in January.
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While there’s some doubt whether the budding association has legs, Inman Intel revealed that nearly 27 percent of agents surveyed would consider joining Umansky and Haber’s endeavor.
On March 15, NAR agreed to a $418 million settlement that would effectively end all but two of the many commission cases the trade organization has been named in since the Sitzer verdict, which awarded $5.356 billion to homesellers in Missouri.
Among the terms of the settlement, NAR would not create rules allowing listing agents to set compensation for buyers brokers, offers of compensation would no longer be displayed in the MLS, and Realtors using the MLS would be required to get a buyer-broker agreement in place before showing homes.
The proposed settlement covers about 1 million agents and brokers, but not brokerages that did over $2 billion in residential real estate in 2022. The Agency, at $8.9 billion, is on that list of brokerages that aren’t covered.
Ahead of the Season 2 launch, Inman sat down with Belack to talk about the current industry landscape in light of the proposed commission settlement, the American Real Estate Association and his reaction to it all. Below is the interview, which has been edited for length and clarity.
Inman reached out to NAR for comment but did not hear back before publication.
Inman: What are your initial thoughts on the NAR news?
Belack: I understand that businesses do things for the sake of self-preservation, but NAR is a trade organization. I think we’ve got two things at hand here: We’ve got the lawsuit, and then we have the settlement.
I think, based on what I read, [NAR was] very casual about the lawsuit, and they lost, and it was a big loss, right? It was automatically trebled to [over] $5 billion.
But when they settled, they sent out an email to the entire membership, and at the very very, very, very, very bottom … Chapter 11 [was an option]. And I think they really threw us under the bus because they were like, we’re out of this. We settled out, and now every brokerage that does more than $2 billion a year they’re still susceptible … and they’re paying for it with our dues.
And my other problem with NAR is that they only really lobby at the national level. I feel like a trade organization, specifically when we’re also paying for California and our local [associations] … they should be lobbying at the local level.
For example, the ULA, the “mansion tax” — it’s kind of arbitrary in that I’m going to pay on $4,999,099 a 0.45 percent transfer tax. But for one penny more, I’m paying 4 percent. And then, arbitrarily, a $10 million [home] jumps up to 5.5 percent … Where was our organization then?
And this wildlife ordinance, which thankfully has paused, but you could have a multiacre lot in the Hollywood Hills, and you’re capped out at a 6,000-square-foot house … and I’m just wondering, where’s our association there? So personally, I just don’t see how the real estate community at large is going to stay members.
I think there’s going to be a big sea change.
What are your thoughts on the American Real Estate Association?
I think their goal is to give the power back to the real estate agents who traditionally haven’t done the best job organizing as a sector, which makes sense.
There are 1.5 million of us and a lot of licensees; at least 50 percent of them last year did a deal or less. So it’s kind of hard to organize a group, especially one that’s geographically spread out in the way we are, and that also has different rules from state to state, and, in general, the Realtor’s value is their hyperlocal nature.
So we’re not like thinking in terms of national, but as a CEO now [Mauricio Umansky] is … and I think NAR’s days are numbered. And sadly, I think that as they are on the way out, if I’m right, they kind of really left us high and dry.
[NAR doesn’t] deserve our returned advocacy. I think getting any trade organization off the ground is probably a long haul, but if it’s going to happen, I think now is a space for radical change.
What have your client conversations looked like since the settlement news?
I still think that the consumers at large look to us as an authority. Obviously, there are people who aren’t as good as others in any space, but they still turn to us to tell them what’s going on and explain where we think things are going.
The one thing I know is every real estate agent in the country is going to say the buyer’s agent is worth being incentivized for their advocacy to their database.
Many consumers right now think that the real estate agent’s job ends at home search … home search is probably one of the things that we do that’s the least amount of work. I mean, half the time, because of consumer-based sites, they send us stuff.
While we’re out in the field, they’re like “Can we go see this?” … I really do believe this affects the consumer more than it affects real estate agents.
How has the agent chatter changed? What are your discussions like?
Commissions cannot be financed, and the banks have … very difficult lending requirements. Pricing has gone up so much and it doesn’t seem like it’s going to change because we have an inventory crisis.
It’s really hard for people to qualify to buy a home because everything’s so expensive. So then, if you add on that the buyers are going to have to now pay a commission to their agent, that lowers their reserves and potentially diminishes their purchasing power in an environment where, relatively speaking, everything’s so expensive as it is.
NAR, our own trade organization, has signaled the buyer’s agent, in practice, if you kind of extrapolate what happens from the settlement, is that the buyer’s agent is not that valuable.
And the truth is, as someone who mostly reps sellers, the buyer’s agent is an integral piece to the puzzle.
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