The National Association of Realtors Settles

A major class action lawsuit could mean lower housing prices for consumers.

By , and
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Happy Tuesday! Despite our eagle eyes and best efforts, sometimes your intrepid TMD reporters need to crowdsource some sleuthing. After a video showing Kate Middleton shopping at a farm market in Windsor popped up online—her first public sighting since January amid wild speculation over her situation—some on Twitter argued that the woman in question was in fact not the reemerged royal. So we’re asking you, loyal readers: Was that really the Princess of Wales out for a stroll?

Quick Hits: Today’s Top Stories

  • The Israel Defense Forces (IDF) raided Shifa Hospital in Gaza City early on Monday, following intelligence reporting that senior Hamas officials were once again utilizing the building. “Hamas tried to reestablish its base in the hospital and use it as a shelter for terrorists on the run,” IDF spokesman Daniel Hagari said yesterday. “We will not allow this and will attack and continue to attack any place Hamas tries to reestablish its grip.” More than 200 terrorist suspects were arrested for questioning and more than 20 Hamas gunmen were killed during the fighting, according to Israeli officials. One IDF soldier was killed in the mission. Also on Monday, President Joe Biden and Israeli Prime Minister Benjamin Netanyahu spoke by phone for the first time in a month—and Biden reportedly warned Netanyahu against a military incursion into Rafah, Gaza’s southernmost city. National Security Adviser Jake Sullivan told reporters after the call that Israel agreed to send a team to Washington, D.C., to discuss plans and concerns for a Rafah mission in the coming days.
  • North Korea fired three short-range ballistic missiles on Monday in a test launch that coincided with Secretary of State Antony Blinken’s visit to Seoul, South Korea, for a summit on advancing democracy. The barrage—which saw the missiles land in the sea off of North Korea’s east coast, just outside of Japan’s exclusive economic zone—was the first in nearly two months, and was swiftly condemned by U.S., South Korean, and Japanese officials.
  • Pakistan launched airstrikes against Taliban targets in Afghanistan Monday, in retaliation for an attack Saturday in which an explosive-laden truck and suicide bombers killed at least seven Pakistani soldiers. The Taliban said that Monday’s attack killed five women and three children, and their forces fired at Pakistani forces along the northern border in retaliation.
  • Former President Donald Trump’s lawyers said Monday that their client could not obtain a $454 million bond to guarantee payment of the New York civil fraud judgment against him. In their filing Monday, the former president’s lawyers said it’d be “impossible” to secure such a bond after 30 surety companies rejected his request for the amount. The legal team asked instead that Trump be allowed to post a $100 million bond as he appeals the case.
  • Supreme Court Chief Justice John Roberts, acting in his capacity as circuit justice for the D.C. Circuit, on Monday turned down former Trump aide Peter Navarro’s request to delay a jail sentence set to begin this afternoon. Navarro, who sought to remain out of prison while appealing his case, was sentenced to four months in prison after he was convicted last year of criminal contempt of Congress when he refused a subpoena by the House Select Committee on the January 6 Attack. 

Settling the Sellers’ Market

(Picture via Getty Images)
(Picture via Getty Images)

The National Association of Realtors (NAR) announced a landmark settlement Friday that would resolve more than a dozen lawsuits brought by home sellers contesting the trade group’s real estate commission practices. The settlement involves not only compensation to sellers—to the tune of $418 million—but also policy changes that could lower agent commissions, open up competition, and decrease housing costs. 

For your millennial and Gen Z Morning Dispatchers who have all but given up on the prospect of home ownership in the near future, the settlement came as welcome news. But the effects on housing costs will likely be modest against the high interest rates and supply crunch pushing home prices up.

NAR has long dominated the housing market. The group is the country’s largest trade association and boasts nearly 1.5 million members. The association’s practices effectively set rules for the rest of the industry, including the 5 to 6 percent commission paid by home sellers and split between their own agents and their buyers’ agents. NAR rules require sellers to include a commission offer in their listings that is visible to buyers’ agents but hidden from the buyers themselves. Agents must abide by NAR rules in order to list homes on multiple listing services (MLS), private property databases controlled by NAR and its affiliates that are used by agents to circulate listings. 

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  1. Avatar photo
    Ben Connelly

    Abolish zoning laws. Housing is one of the top-five least free markets in the country. An actual free market wouldn’t have this problem.

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  2. Chris D

    "What other public policy fixes do you think could be made to make buying a home easier?"

    Remove barriers to building more of them?

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    1. Avatar photo
      Ben Connelly

      Exactly

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  3. Laurie

    I should, but I don't! I'm already here in HSV, and I'm hoping to buy them locally. It's a big deal in downtown Hot Springs. My 79 year old uncle will be coming too to photograph it.

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  4. Wlbrockman

    If the president can just wave a wand and forgive student debt, why not wave the same wand & forgive mortgage debt? It's in the national interest, right?

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  5. Bigdonmck

    LUK: Forget percentage commissions. Let the buyers and sellers negotiate flat rates.

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  6. Avatar photo
    Ralph S

    This is exactly how the rule of law is supposed to work. Glad to see it work with no comment on my opinion as to whether or not the adjudicated judgment is "fair". What is fair legally in this instance is what the court says is fair. That's life. Life does not guarantee fair. You win some. You lose some. Not accepting outcomes after all the arguing is said and done is insurrective (coined word of my own). At this point we can call God unfair. And indeed, it does seem that way in life often. But it does not change that this is the way it is. We can be ready to take up arms to fight for what we think is fair. But be ready to be crushed and/or die. It may not be worth the cost. If victorious, you may still have the blood of innocents on your conscience. "But hey, we won." you say.
    Still, I find war a much more costly way to settle disputes than the adjudication process which also delivers winners and losers. I'm glad to see the process work.

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  7. Avatar photo
    Floyd Katz

    For sale by owner, seller covers buyer’s agreed attorney fee

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  8. Morah Nechamah

    LUK: After WWII, people like my parents and most if not all of our neighbors in the little Levitt houses on Long Island would never have been able to buy houses if not for the GI bill. They were thrilled to have a little house with an indoor bathroom, with a kitchen with appliances, and unfinished attics that could be made into more bedrooms as the families invariably grew, with a little yard in a great neighborhood.

    If public policy would allow for something like the GI bill for civil servants, for people who contribute to the country as teachers, police officers, firefighters, etc., and if builders could be motivated via tax relief/incentives, etc. to build simple little houses with little yards, it would make home-buying much easier for those who serve this country either in military, or in other positions as I've mentioned.

    Encouraging remote work would enable people to afford homes in areas away from cities and other expensive places.

    One hurdle public policy cannot fix, though, is helping people mature enough to know the difference between want and need, and to accept that a little house and a little yard, although not 'trendy', can be made into a loving and lovely home.

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    1. Avatar photo
      EmmyCab

      Contemplating this today, I think your statement about "simple little houses with little yards" hits on something. When a developer parcels up land into lots, the developer can build "simple little houses" on those lots or... much more expensive houses (which turn a much greater profit). I wonder if that's part of what's driving at least part of the supply shortage - a lack of starter homes.

      Where I live (Lubbock, TX - a "normal" market if there ever was one: not upscale, not ghetto), there is a real shortage of starter homes. All of the new home construction is "nicer." But with a growing population there is a continually growing population of people needing starter homes, but they all wind up competing for the same inventory of starter homes built decades ago because there are no new "simple little houses" being added to the market.

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      1. Avatar photo
        Kurt

        Exactly right. Same as the car market. Margins on homes with all the doodads are much better. Starter homes…no gravy.

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      2. Avatar photo
        Mudskipper

        We discussed something similar a month or two ago in the comments here at The Dispatch. It's not just starter homes that aren't being built, it is simple apartments as well. As near as I can tell, we stopped building your standard, small apartment blocks decades ago. All the apartments being built where I live are large luxury apartment complexes.

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  9. Avatar photo
    PC Albright

    The key (key!) thing here is that sellers will be able to advertise to buyer agents their fee sharing. Keep in mind that there is an asymmetry between buyer and seller. The seller is going to walk away from the transaction (most times) with cash. The buyer is typically struggling to make the down payment and other closing costs, which are substantial even without high interest rates (which, to get a better rate, will require up front points). Adding on top of all that a substantial fee for the buyer agent will be a nonstarter for buyers except those with excess cash. Basically, you have to ask what the incentive is for a real estate agent to represent a buyer and take them around to show homes. Up to now it was the promise of a split commission. My guess is that brokers will be scrambling to offer buyer agents a set deal outside the listing. Will be interesting to watch.

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  10. KVBrink

    "For your millennial and Gen Z Morning Dispatchers who have all but given up on the prospect of home ownership in the near future, the settlement came as welcome news."

    I'm genuinely confused by statements like this. House prices are determined by the market. There is limited supply, and sellers will understandably get the most they can. I can't imagine a seller saying "I don't need to pay the buyer's agent, so I'll reduce the sale price..." I don't expect prices to go down because of this. What I do expect is that buyers will pay more as they may need to come up with the funds to hire their own agent. This will create an even higher hurdle for first time and low income homebuyers. And if they try to go it alone, they will be novices competing against multiple offers submitted by experienced professionals who negotiate many deals a month.

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    1. Avatar photo
      EmmyCab

      Spot on.

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