In the lead up to the Sitzer/Burnett real estate commission trial, the National Association of Realtors expected to prevail.
“I am feeling cautiously optimistic and that is because I think that we will, in terms of the litigation, be able to convince a panel of jurors who are consumers that the way that the transaction has typically taken place in America, for 100 years, is the way it is because it makes the best sense for the buyers and sellers alike,” Katie Johnson, NAR’s chief legal counsel, told HousingWire in late August 2023.
She continued: “I am feeling optimistic that it will resonate that the buyers want the listing brokers to pay their buyer representative so that they can have the most money invested in their down payment, to get the best mortgage terms and rates and I feel cautiously optimistic, that sellers will realize that they do want the listing broker to pay the buyer broker’s compensation because that will result in the most amount of buyers being able to buy their house.”
There was industry-wide shock when the Missouri jury found NAR, Keller Williams and HomeServices of America liable for colluding to artificially inflate real estate agent commissions.
With NAR facing an ever growing pile of copycat commission suits, as well as mounting drama surrounding its leadership, most recently culminating in the resignation of Tracy Kasper, who served as NAR president for just over four months, not to mention having to pay potentially $5.3 billion in damages in just the Sitzer/Burnett suit, Compass agent Jason Haber doesn’t want the industry to be caught off guard again, if the unthinkable happens.
“If we were having this conversation a year ago, everyone would have said we were wasting our time, and they would probably have been right,” says Haber, who founded the NAR Accountability Project. “But at this point it really isn’t about NAR, it is about the future of the industry. Now it is a fair question to wonder if NAR is going to go insolvent or be hamstrung with these lawsuits.”
Haber founded the NAR Accountability Project in late August 2023, just days after the New York Times published an exposé revealing what it called a “culture of fear” and widespread sexual harassment at the trade group.
“My goal when we started the Accountability Project was always to help strengthen and support NAR,” Haber said. “I believe it is important for us as an industry to have a vibrant, active trade association representing our interests around the country.”
But the events in the ensuing months since the NAR Accountability Project’s founding have led Haber to start legitimately thinking about creating an alternative trade group for real estate agents.
“While the lawsuit is obviously about different issues than the sexual harassment and cultural issues, in an interesting way they are inextricably linked because they speak to the same failures within NAR — the failure to be accountable and to lead,” Haber said.
For Haber, the final straw was NAR’s lack of a backup plan in the event the industry lost the Sitzer/Burnett trial.
“The jury decided this case in less time than it take to fly from Palm Beach to Laguardia Airport,” Haber said. “And before hand, NAR wasn’t reaching out to everyone saying if we don’t win here is what is going to change or what the emergency plan is, so everyone had to scramble to adopt new policies and change systems. There was just no proper messaging.”
This lack of leadership at a time when the industry is facing an unprecedented threat, led Haber to questions if NAR is the right organization to be leading the industry at this time.
“As an industry, the question becomes, ‘how do we protect ourselves if our trade association either suffers from reputational risk right down to insolvency?’,” Haber said. “I think it is better for the industry, it is better for the American consumer to have advocated fighting for them in Washington and around the country.”
Haber said this is where the conversation around potentially creating a new NAR alternative started. And he is not alone in this train of thought. Mauricio Umansky, the founder of The Agency, has met with Haber to discuss the creation of another trade group.
“Mauricio and I have been in touch about collaborating,” Haber said. “He is an amazing guy and an incredible leader within the industry. We’ve talked a lot about the industry and where it is right now. The plane isn’t even on the runway yet, but we are talking about the steps we could possibly take.”
Although Haber said they are looking to create another real estate trade group, he said that they are not looking to recreate NAR.
“It is important for any association to demonstrate very tangibly, its value proposition,” Haber said. “I think it is important that your join an organization not just because you have to, but because you want to. So, what that means is, that the goal isn’t to run up and have a million members, but to have members who want to be in the association and who want to help make a difference.”
While Haber and Umansky have not officially announced anything they are continuing to hash out their ideas.
“I don’t know what will happen, but the prudent thing is to be prepared,” Haber said.
