Truth about the Real Estate Lawsuits 2024

Many of you have  been calling and asking me really great questions about the real estate commission lawsuits, and I want to get in front of the sensationalized headlines with some truth from the frontlines.  If you’ve known me for a while, you know I rarely if ever weigh in on news topics or controversial political issues, but you probably also know that I cannot abide false information. And there is so much false information being aired right now that is detrimental to the American consumer, that as your trusted real estate advisor, I need to get some good information in front of you.

Now that President Biden has aired his opinion on the real estate lawsuits, along with the click bait headlines from CNN, the NYT, the Denver Post, and many others, I want to give you actual facts and real information on two particular points I continue to hear about.

First, to quote President Biden as of March 19, 2024, in Nevada on the campaign trail:  “In addition, last week the National Association of Realtors agreed for the first time that Americans can negotiate lower commissions when they buy or sell their home.”

No, this is patently wrong.  Commissions and fees have always been negotiable, Mr. President. It’s up to the client and the agent to decide what will be paid; not the industry, the National Association of Realtors, or anyone else.  It’s between client and agent - period.  These processes of buying and selling homes are so difficult, that while the news wants to say that this lawsuit will change how people buy or sell, or as President Biden has stated, will lower agent commissions, in reality, the process of buying and selling real estate and the setting of commissions will continue to stay strictly between client and agent. 

We all hire professionals to lead us through complexity, and every industry has their fees for doing so - some of which are negotiable and some of which are not. In every industry, there are people operating as low-cost providers, and people operating at the highest levels. You can do your taxes online for little money. Or, you can hire an incredible accountant to guide your tax future.  You can hire a low budget lawyer to represent you in court, or hire the best, bulldog lawyer to safeguard you and your interests.  Would you hire the doctor with low ratings for your much needed surgery or treatment?  Probably not, but you always have the right to do so, and to go in whatever direction you want.  And you always have the right to negotiate fees and commissions with the service provider.  Some providers will negotiate their rates, and some will not.  And the big question - I wonder if the lawyers that are behind the scenes and driving these lawsuits forward are negotiating their rates and lowering their fees?

The second myth: Realtor commissions are inflating home prices.  False, and it’s so disappointing our commander in chief and the media, both local and national, can’t get this right. They continue to depict that commissions are what are inflating homes prices. In reality, home values can fluctuate and are determined by the laws of supply and demand. It is simple economics. That is why, during the economic and housing bust of 2008, housing prices deflated, and deflated quickly.  Demand was soft, and supply was high.  Since then, with the economic recovery, we have seen a housing shortage be created in this country that is complex and long lived, and now our high demand and low supply. The overdrive of the pandemic housing economy also contributed to higher prices. And here in Colorado, we live in one of the most desirable locations in the entire country, and buyers are willing to pay higher prices for the lifestyle they find here. 

There are many more details that are yet to be ironed out, as the courts still have not approved any of these settlements.  Yes, there will be structural changes that will more clearly help buyers understand the value of their representation and how their buyer agent is paid, and this will be the primary result of this settlement.  But rest assured, Colorado has long required buyer agency agreements be in place for buyer representation, and our Colorado contracts between buyers, sellers, and their agents have for decades been very clear on who is paying what in regards to commissions.  Colorado has led the way, and will continue to do so, on buyer agency.

As the old saying goes— while everything changes, everything stays the same. At the end of the day, humans need guidance through complexity because humans are complex. This will never change. Our emotions drive everything, and because these processes of buying and selling are so challenging both intellectually and emotionally, buyers and sellers will continue to require the highest level of expertise.  Every house is different, every client is different, and the sheer number of challenges clients face in moving through the buying or selling processes means they will continue to need experienced and wise leadership. It is always my honor to walk you through complexity to reach your real estate goals and dreams, and I welcome the opportunity to continue these real estate lawsuit conversations with you!  I’m happy to answer all of your questions, so please give me a call to continue this conversation.