A 'Venn diagram' of legal action: Changes coming to Shreveport-Bossier City real estate market
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Justin Burch, an investor and owner of the property, speaks about finance options to visitors during an open house at his property in Shreveport, La., Saturday, March 30, 2024.
A sign welcomes people to visit a house for sale in Shreveport, La., Saturday, March 30, 2024.
In just a few days, the way people buy and sell a house in the area is going to change.
The old process of the home seller paying Realtors for both the seller and buyer is ending in northwest Louisiana on July 29, said Scott Hughes, CEO and Association Executive of the Northwest Louisiana Association of Realtors.
“It will be in place around the country by Aug. 17, but locally July 29," Hughes told The Shreveport-Bossier City Advocate. "We (NWLAR) are voluntarily going earlier. The judge will confirm the final settlement in November.”
The so called “Moerhl” lawsuit was a game-changer, a $1.8 billion jury verdict in a private class action lawsuit against the National Association of Realtors and its members brought by six home sellers in Missouri. The home sellers claimed that the association conspired to inflate real estate commissions through a system that forced sellers to pay unnecessary fees to the buyer’s Realtor. The Missouri jury agreed; the Realtors association did not appeal.
Hughes said the jury's March 2024 decision in the case will alter the real estate business.
"There will be changes to the housing market. There will be no rule on commissions. Cooperative compensation will no longer exist within the multi-list document, but offers can still be made privately between seller and buyer,” he said.
“The easiest way to describe is that the person selling will enter into a contract with their agent, and the person buying will enter into a contract with their agent."
Those contracts will include agreed-upon compensation amounts, he said.
Though the judge in the case will not confirm the final settlement until November, Hughes said this suit is “done.”
By JILL PICKETT | Staff photographer
What is not complete is a plethora of other lawsuits and investigative demands from the Department of Justice. Hughes said the DOJ and the National Association of Realtors have long had an adversarial relationship.
“For 40 years, they’ve battled us with different things, antitrust, collusion, different things,” he said.
Hughes said one DOJ Civil Investigative Demand had to do with use of the word “free,” which Hughes admitted the industry should not have used.
“You hear it all the time, buyers and agents will say ‘my services are free.’ Well, nothing’s free,” he said.
The next Civil Investigative Demand was on the electronic lockboxes used on homes that allow Realtors to show them to potential buyers. Hughes said the DOJ believed the lockboxes were a “hindrance to trade,” because access to them was limited to only those who paid to join a local Realtor association.
“We sat down with the DOJ in 2018, 2019 and worked a settlement out and begin to implement,” Hughes said. “Our members won’t use the word ‘free’, we added one more thing to our code of ethics to clarify, and the big one was we agreed to provide access to our lockboxes to any licensed agent … they don’t have to be a member of our association, but can get access.”
By JILL PICKETT | Staff photographer
Hughes said both sides agreed on the settlement.
“Then at the 11th hour, new people come in and DOJ serves notice that they are not going to honor that signed agreement and want to reopen the investigation," he said. “We have said, ‘whoa, this is not fair. We acted in good faith; we signed an agreement and we’re implementing the terms of the agreement, and now you want to renege on your promise.’”
The issue is currently working its way through the courts.
Meanwhile, though the Moerhl settlement is over for the National Association of Realtors, lawsuits of other of parties were not part of that deal, specifically the MLS services in Boston and Seattle. And then, there is the case in California claiming that real estate contracts and documents are too complicated to decipher.
Hughes said it takes a Venn diagram to illustrate all the lawsuits and actions going on, some of which will affect those buying and selling homes, some that will not.
He has a few takeaways.
On the Moerhl settlement, he says, “This is not going to lower the cost of a house. It may lower the cost of buying a house a little bit because people can negotiate their own fee now on the buyer’s side … you’ll see a little of that going on. But at the end of the day, Americans, buyers, don’t mind paying for service.”
"What you’ll see on the list side, not much is going to change. On the buy side, you can negotiate.”
He worries that buyers may opt to go without representation, "which we would argue is bad for the consumer, or they’re going to find cheap services that won’t give them help, or they’re going to get help and they’re going to ask the seller to pay their buyer’s fee. It will be just the case we had before and will be 100% legal.”
By JILL PICKETT | Staff photographer
His advice for Realtor members is to be very aware that everyone is watching them.
“We’re here (the NAR) because we were sued in a lawsuit by very good plaintiffs lawyers. And if we screw up and you think that you are somehow going to cheat around the edges, these people are going to be looking and they’re going to find people and they’re going to sue you," he said. "Eventually the internet, AI is going to find these things and they’re going to punish you for violating this antitrust.”
This article is courtesy of The Shreveport Bossier Advocate. Here is the link to the original article: (https://www.shreveportbossieradvocate.com/changes-coming-soon-to-real-estate-transactions/article_d478019e-454b-11ef-8db1-13d7a544026c.html#tncms-source=featured-2
