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With all the media coverage of today’s real estate industry, if you’re a concerned real estate licensee you’re not alone.
With confusion over “inflated commissions,” “conspiracy,” and “consumer’s rights,” allow me to shine a light on the matter. It is not just about the money — it’s the perception of behaviors within the Realtor trade organization’s systems and policies and the control it imposes.
In my opinion, at the core is the limiting of capitalism, free enterprise and the stifling of competition. At the heart of it all is antitrust. There is a ray of hope, because, in simplest words, you do have a choice.
Key Realty Group (KRG) is the only real estate brokerage independent of the National Association of Realtors (NAR) that is native to the Berkshires in Massachusetts, and with careful research, you can find other brokerages across the nation that have made the same choice as we did to become independent.
Why did we make the choice to leave NAR?
KRG was licensed in 2022 so that it could broker real estate transactions free from the control of NAR. As an independent, KRG had no affiliation and, therefore, no influence from NAR over policies.
KRG’s new economic paradigm was motivated by a desire to give consumers a choice and to provide transparency within the real estate transaction, all while giving real estate licensees more control over their own business plans, advertising and transactions.
What’s the difference between a licensed broker vs. a licensed Realtor?
So, let’s first understand the distinction between a licensed real estate broker versus a licensed real estate broker who is also a Realtor. The term Realtor is often used interchangeably with agent.
All licensees must complete the same educational hours and the same training and pass the same test to obtain the license, and the salesperson licensee must be affiliated with a supervisory broker before they can act as a fiduciary to a consumer.
While all licensees are educated, trained and licensed to do the very same job, and all are held to the state’s ethical and professional standards of that profession, the autonomy of a non-Realtor real estate broker versus a Realtor real estate broker is not the same. The choice to pay and join a trade organization is the sole act that makes that licensed real estate broker a Realtor.
A Realtor, as a trade organization member, must abide by the policies and rules dictated by the organization, whether they believe in them or not. A few policies within the NAR trade organization were the focus of the Sitzer | Burnett suit and the basis for the federal verdict that found Realtors guilty and awarded damages of $1.78 billion.
Rejecting the complacency requirement of a Realtor membership is how KRG first began.
The commission lawsuits emerge
In 2020, I learned of the first suit — U.S. Department of Justice v. National Association of Realtors (NAR). It was a case alleging antitrust violations. With looming questions in my mind, I began to research to find a better, independent way.
In 2021, I implemented change. In 2022, our team successfully licensed the KRG-Key Realty Group (KRG) brokerage, and in January 2023, KRG began servicing clients.
While KRG was plowing the path for the new brokerage with new ideals, NAR would find itself in another antitrust lawsuit (the aforementioned Sitzer | Burnett), which would be in the headlines throughout 2023.
In a Federal courtroom in October 2023, in less than two hours, a jury of average consumers would render a guilty verdict for antitrust behaviors and policies against NAR and award a historic sum of damages in the amount of $1.78 billion.
Fast forward to today. While the Realtor community was scrambling to meet the Aug. 17, 2024, deadline imposed upon them within the NAR’s settlement agreement, some may have missed the point. The atmosphere is hyper-focused on how to reallocate and redefine the compensations that came under scrutiny in this antitrust case.
Perhaps taking a good look at how attorney Michael Ketchmark was able to win against NAR — the largest, most powerful trade organization in real estate — will shed some light. The win was based on the perception that they had no choice. Consumers, unaware of the differentiation of real estate brokers and Realtor real estate brokers, felt they had no choice. The fee the Realtor broker was charging — the consumer felt they had no choice. The Realtor broker or agent may have also felt they had no choice since their trade organization controlled them and restricted creativity or business diversity.
Now, in the aftermath of that verdict, some licensee professional brokers are lashing back. They are bitter about more limitations and more control placed upon them by NAR’s universal settlement agreement. It’s an agreement that affects every NAR member (every Realtor broker, not every non-Realtor broker). It’s another agreement that they had no voice in crafting. Disappointed with a system that has held them hostage for decades, some have filed their own suit against NAR.
Maybe it’s about time they fight back. The undue influence would begin as early as the inception of the Realtor-owned MLSs. Looking at the history “once an MLS reached critical mass in a particular marketplace, brokers might find their business drying up if they didn’t join.”
It seems even back then, they had no choice.
In light of this past year, Realtor brokers and non-Realtor brokers alike are determined to change the system for the good of consumers. Many didn’t like NAR’s influence or control in the first place, nor did they feel an overpowering need to be involved as a political lobbyist just to run a small successful local real estate business.
Now, the real estate industry is changing, and that is a good thing. Hold on tight. When you let loose the number of brilliant, resourceful and moral entrepreneurs these brokers are, things are gonna change. I see opportunities everywhere I look. Opportunities for different business models, more services or fewer services, and more creativity.
Brokers have a choice
All brokers have choices, too. Brokers can be Realtor brokers or non-Realtor “independent” brokers. A broker can be proactive or reactive. With the power of a broker’s license, the professional can affiliate within multiple brokerages all at one time or just one brokerage.
The broker can open their own brokerage and affiliate hundreds of agents with them, or they can be a lone-ranger broker. A broker has a vast array of business model choices, some of which may not have even been invented yet.
The brokerage can utilize hundreds of advertising menus and social media platforms; subscribe to websites; and participate in one multiple listing service (MLS), several MLSs, or no MLS at all.
A broker can be a managing broker overseeing agents or an active, boots-on-the-ground broker helping consumers buy and sell or both. A broker can specialize in services to a seller, services to a buyer, or services to both buyers and sellers. There are many types of business models.
Brokers have choices. It’s all about choices. I can see opportunities for entrepreneurs within the real estate sales industry and for those all around it. Opportunities for advocates, negotiators, mediators, facilitators, estimators, contractors and, of course, more opportunities for fiduciaries than ever before. Buyers, sellers, agents and brokers have choices. Everyone has choices.
Nadine Hiser, broker associate, Key Realty and Broker of Record, KRG – Key Realty Group. Connect with her on Twitter, Linkedin and Instagram.
