Kevin Sears
Appearances
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
Coming up after the break, what does the NAR have to say for itself? The settlement was part of our agreement where we didn't admit to any wrongdoing. I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
The free market is working, and I think the consumer is benefiting while still receiving professional representation.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
My name is Kevin Sears. I am a broker associate with Lamacchio Realty in Springfield, Massachusetts. OK, also. And I'm the 2024 president of the National Association of Realtors.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
Yeah. You know, typically when I do the interviews, I'm used to just talking with local media and they want to know the brokerage I'm with. Yeah. I understand.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
The National Association of Realtors is a trade organization that has about 1.5 million realtor members across the country. We are a trade association that advocates for our members and for property owners' rights across the country. What share of all real estate agents belong to the National Association of Realtors?
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
I think that there's probably close to about 3 million licensees across the country. And so we've got about half of them that are members of the National Association of Realtors, which, you know, part of the requirement to be a member is you have to subscribe to the Code of Ethics, which is very important for us. And it's been around for over 100 years.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
Yeah, I'm not sure where you read that. That was the New York Times. Yeah, the New York Times has been known to get some things wrong. What I'll tell you is that the National Association of Realtors, we absolutely do have some assets. And part of the assets that we have are properties that we own, that we use. We also have reserves built up from dues from our members.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
We also have different wholly owned subsidiaries that invest in property technology and that sort of thing.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
Here's what Kevin Sears says. Commissions are entirely negotiable, and they have been for the entirety of the 30 years that I've been a real estate licensee and a realtor.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
Yeah, I take great offense at that characterization. There's over 3 million across the country, and we have only half of those licensees as members. Consumers have tremendous choice right now. They can choose who to hire, what to pay, or to go it on their own. The fact that we are...
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
the only national organization that has reached to all 50 states, and we have the ability to lobby in our nation's capital, that's a good thing, not only for our members, but for our industry and for the American consumers who rely on us to promote private property rights and the protections thereof.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
Unfortunately, a jury of eight in Missouri found us liable in federal court. And as a result, there was a jury verdict of $1.8 billion. Since it was an antitrust case, that meant it was tripled up just shy of $5.4 billion. We did not have the resources when it came to being able to satisfy that jury verdict. And so... we negotiated with the plaintiffs on a settlement.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
The settlement does have a financial component. Over the next three years, the National Association of Realtors will pay $418 million as part of the settlement. There are a couple of other things that come along with that. The first is that the settlement was part of our agreement where we didn't admit to any wrongdoing.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
We do believe that the practices were legal, meaning that they were allowed by the law. But with that said, we did agree to make some practice changes. There's two major components to the practice changes. The first has to do with the multiple listing service. There will no longer be allowed an offer of cooperating compensation displayed on the multiple listing service.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
With that said, offers of compensation can still be made off the MLS. The second big change has to do with buyers. If buyers want to tour a home, they can expect to have a written agreement presented to them where it will spell out the services that will be provided by the realtor and the fee that that realtor will be looking to get paid.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
The seller may still offer compensation to their agent, but what the buyer will need to understand is that if the seller does not offer compensation, does not offer the amount that is in their agreement, the buyer will have to come to the closing table with extra money to pay for their representative.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
I do think there may be a little time of a learning curve for agents that are not used to having to present a written agreement to a buyer. What I can tell you is that on the sell side, the seller is going to have a professional representative and the conversation is going to be very, very similar to how it's always been.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
They're just going to make sure that they clearly explain about the compensation for the buyer's agent and the fact that commissions are negotiable.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
This is just giving our members a great opportunity to have those extra conversations with the consumer up front about what they can expect in the buying process, what services and expertise and value the realtor will bring to the transaction, and how much they are looking to get paid and how they will get paid.
Freakonomics Radio
618. Are Realtors Having an Existential Crisis?
I take great offense at that characterization.