Today's Ridiculous Real Estate Verdict

Today an eight-member jury ruled in favor of the plaintiff in Burnett vs. NAR (National Association of Realtors) et al.?The jury awarded for NAR and its codefendants to pay "$1,785,310,872 in damages, which, under the law, will be automatically trebled to $5.356 billion.?The eight-person jury deliberated for about 2.5 hours Tuesday morning before issuing its unanimous verdict.”?(see Inman.com for the news release).

Yes, you read correctly:?eight Dollar Store shoppers awarded billions to “Burnett" after taking only 2.5 hours to proclaim themselves subject matter experts in antitrust law.

The plaintiff's complaint was rooted in a price-fixing accusation against NAR in the form of ’setting’ commission rates which, if true, would be a violation of the Sherman Antitrust Act.?If memory serves me correct, Sherman is the same act that was referenced to break up the monopolies of various internet browsers (Netscape, Internet Explorer) and to delay or prevent various airline mergers.

Before I say anything further, let me be clear that I am not an attorney.?I am a bottom-feeding (we prefer cereal first), commission-sucking, monopolistic Realtor.?So my comments that follow should in no way be construed as legal commentary.

After graduating from UT-Austin in 1993 with a Mechanical Engineering degree, I pursued a career in business/IT consulting that lasted eight years.?Long story short, in the span of two years from 1998-2000 I would marry my wife, lose an otherwise perfectly healthy father to Leukemia (he was 52 when he passed), and welcome our first child to the MINMAN experience.?The density of these life events, combined with the uncertainty created by the terrorist attacks of 9/11/2001, had me completely rethinking my future.?So in the Fall of 2001 I stepped off the corporate bus.?I resigned from my employer without much of an action plan for what I’d pursue next.?Note to self:?coming home and announcing to your spouse you quit your job does not lead to a romantic evening.

Another long story made short, I decided to join 16,000+ licensed real estate professionals (at the time) in the Greater Houston area when I obtained my salesperson license in 2002.?I was not interested in selling commercial real estate nor dreaming of one day becoming a broker/sponsor of 300+ agents.?I had stepped away from ‘corporate’ models intentionally.?My desire was to leverage the problem-solving discipline I honed through university and my eight years’ consulting experience with Accenture/iPath to bring a unique service model to my residential real estate clients.

Since the very first day I took a real estate pre-licensing class at Champions School of Real Estate (where I now teach part-time) to the day I began training under my initial sponsoring broker to the class I will teach tomorrow and Thursday at Champions, one thing has been consistently preached to me and I will continue to repeat as real estate gospel:?the compensation of real estate services is NEGOTIABLE.?I get asked all the time by clients and family and bartenders and coed soccer league referees:?What is the standard commission for Realtors??And my reply is always the same:?NEGOTIABLE.?Now, ask me what ‘I’ charge for my services to list a home, and I tell everyone 6%, 3% of which I propose (but do not demand) goes to compensate the buyer’s agent for not only bringing forth a buyer candidate, but also their professionally managing that buyer through the negotiation, inspections, loan approval, and pre/post closing activities.

What??You don’t like my proposal for seller to pay the buyer’s agent for bringing the buyer??Fantastic.?It’s a free country.?The seller compensating the buyer’s agent always was and will forever be (from me) nothing more than a proposition. No arms were twisted, and no threats to put a hex on Aggie football were made (someone else beat me to that).

Where did I get my 6% pricing model for listing homes??Simple.?I asked around at my sponsoring broker’s office as a new sales agent in 2002.?6% commission was what a few successful agents told me they charged.?Where did they come up with 6%??I had no idea and I didn’t care.?And I still don’t care.?I was simply pursuing the practices of successful agents in my office.?I ask my neighbors with cars that seem reliably drivable where they get their cars serviced.?They say ABC Automotive (I made this up guys).?So I take my fleet of teenage-driven cars to ABC.?Where did my neighbors get the name of ABC??I have no idea and I don’t care.

One of my very first listings in 2002/2003 was the sale of a $23,000 mobile home.?I charged 6% and my seller agreed to my proposal?of paying half of that compensation to the agent that would bring his/her buyer client to the sale.?I believe we sold for $23,000.?Do the math…I made $690.

In 2022 I had a 'million-dollar listing.'?I charged 6% and my seller agreed to my paying half of that compensation to the agent that would bring his/her buyer client to the sale.?We sold for $1,000,000.?Do the math…I made $30,000.

In the 21 years I have been practicing residential real estate full-time, 18 of those years as an independent real estate broker, I have never claimed there is a standard commission to list a property.?What do I charge??6%.?Is $690 a bargain for my service??Absolutely.?Is $30,000 a lot of money to make on a real estate transaction.?Absolutely.?Did I earn those respective compensations??Absolutely.?To the latter, my million-dollar listing clients were open to listing for $900,000.?Interest rates were well into their Federally-driven climb in the summer of 2022, scaring many listing agents into prematurely devaluing their listings.?But I had data and 20 years of client experiences to suggest that, given some uniquely compelling features of the property, we could still shoot for a bigger number.?My advise and counsel netted my clients a $70,000 improvement on their acceptable net proceed AFTER Realtor compensation.?Simply put, my clients put their trust in a consultative real estate professional, and that trust was rewarded.?We call that cliche ‘win-win.'

Do certain licensed real estate professionals engage in steering their buyer clients away from lower-compensation listings and towards “standard” compensation listings, whatever “standard" means to you??I can only assume that happens ALL THE TIME.?Laws cannot guarantee compliance.?The laws governing real estate activity clearly state that all commissions are negotiable.?But grown-ass men and women break laws all the time:?real estate laws, traffic laws, income tax laws, peeing behind a tree in a public park laws, and so on, and so on.?Laws influence compliance but they do not guarantee compliance.

Which brings us back to Burnett vs. NAR.?The primary problem I have is the fact that this antitrust trial was handed to a jury of consumers rather than a judge of law.?Somehow our judicial system allowed a jury of Home Depot do-it-yourselfers to be asked by Burnett, “Wanna save a buck??Here’s how!?Let’s break up a make-believe monopoly by using this monopoly myth as a Trojan horse for devaluing service."?Let’s be clear.?The plaintiffs asked a jury rather than a judge to interpret the Sherman Antitrust Act.?That is on par with asking me to rebuild your transmission.?It’s ludicrous.?But that’s what was allowed to happen in the weeks leading up to and culminating in today’s decision by eight would-be auto mechanics who once stayed at a Holiday Inn Express (https://youtu.be/eHCTaUFXpP8).

Am I a homer in writing this??Damn straight.?My opinions are very much colored by my desired outcome as a Realtor.?That doesn’t mean I can’t call bullshit on six-degrees-of-separation-to-Kevin-Bacon price-fixing conspiracies.

I am not opposed to industry change, unless the change is simply for the sake of creating chaos at the expense of needless marketplace disruption.?Right this very minute in Texas, you the consumer can choose to sell your home by yourself.?You can choose to hire one — or more — of the thousands of Realtors in your area to sell your home.?You can find Realtors who will list your home for 6% , 7%, 4%, or 1% of sales price.?You can agree to participate in compensating the buyer’s agent, or you can refuse.?You can find a Realtor who will sell your home for two tickets to a Rockets game (street value $2.44).?You can find a Realtor who will sell your home in exchange for tattoo services, a year's supply of Apple Cider Vinegar, and/or the naming rights of your next child.?Commissions.?Are.?Negotiable.

Not every Realtor brings value commensurate with their client-contracted compensation.?But many Realtors bring tremendous value to their clients, consumers who otherwise would have been financially pillaged and/or legally exposed without the counsel/care/protection of and by a real estate professional.?You want a $2.44 realtor??They are out there, despite what today’s verdict by an unqualified panel of jurors suggests.?Pick a $2.44 agent, and you’ll get what you paid for.

Today’s Burnett vs. NAR decision will most likely be litigated through appeals for the next several years.?Meanwhile if you or anyone you know wants to engage a T-sip who left corporate to give home buyers and sellers the complete opposite of a jury’s misplaced suspicions, please introduce them to Mark Inman, proud member of the National Association of Realtors since 2002.

Yep, I just went third-person on you.?Peace out.

Mark