REX: Realogy’s Stance Is Prelude To A Reckoning On Commissions
Realogy says it believes in buyer agents and cooperative compensation, but not in forcing brokers to enter a commission amount to list in a multiple listing service.
Discount real estate brokerage REX Real Estate applauded real estate giant Realogy for joining the fight against mandatory commission sharing Monday, saying the move was a prelude to an industry reckoning for alleged excessive fixed commissions.
On Thursday, for the first time, Realogy publicly called for NAR to end a requirement that listing brokers offer commissions to buyer brokers in order to submit listings to Realtor-affiliated MLSs. Some agents criticized the position, but REX praised the move in a press release Monday.
REX Co-Founder and COO Lynley Sides
“It’s a great day for consumer choice when the leadership of a major brokerage declares independence from mandatory commissions,” said REX President and Co-Founder Lynley Sides in a statement.
“At REX, we have always said that mandatory commissions deprive real estate consumers of the same choices that they have in other services like buying stocks or a vacation. Realogy’s move is a sign that the real estate industry now knows it is facing a reckoning for excessive fixed commissions.”
But there is a big difference in the stances between REX and Realogy. REX has touted that it doesn’t pay buyer agents — even though it sometimes does — and has said that buyers should pay their agents directly.
Ryan Gorman | Photo credit: Coldwell Banker
Meanwhile, Realogy Brokerage Group President and CEO M. Ryan Gorman stated in an op-ed Monday that “Realogy and Coldwell Banker fully support and believe in cooperative compensation” and that Northwest MLS’s decision to end mandatory commission sharing in 2019 showed that even when it’s not required, listing brokers continue to offer buyer brokers commissions because of the value that they bring.
Due to scrutiny of the mandatory rule by Washington D.C. regulators and the courts, “the current rule appears to pose unnecessary complications with little to no actual benefit,” Gorman said.
“As Ryan stated in yesterday’s Inman Op-ed, Realogy of course believes in buyer’s agents and cooperative compensation,” Realogy spokesperson Trey Sarten told Inman Tuesday, in response to REX’s release. “We do not, however, believe brokers should be forced to enter a commission amount as a condition to list on the MLS, especially when that amount can be as little as $1.”
REX has been decrying what it deems “excessive” real estate commissions in the industry since its inception. In recent years, the brokerage has taken to calling out the National Association of Realtors for a multiple listing service rule that requires listing brokers to make a blanket, unilateral offer of compensation to buyer brokers that is either a percentage of the gross sale price of the home or a definite dollar figure when entering a home in a Realtor-affiliated MLS.
That rule, called the Participation Rule, the Buyer Broker Commission Rule or the NAR Cooperative Compensation Rule, is the rule that Realogy said last week should be made optional. The rule is the subject of multiple antitrust lawsuits by several high-profile law firms against NAR, Realogy, Keller Williams, RE/MAX and HomeServices of America.
In these suits, homesellers and a homebuyer seek to have homebuyers pay their broker directly, rather than have listing brokers pay buyer brokers from what the seller pays the listing broker. That change could upend the U.S. real estate industry by effectively forcing changes in how buyer’s agents are traditionally compensated.
The U.S. Department of Justice (DOJ) is also currently investigating the rule, which its detractors allege is anti-competitive and inflates real estate commissions, costing consumers billions annually.
“The next 50 weeks of 2022 could make the year one that consumers remember for real change and transformation in the real estate industry,” REX said in its release. “REX remains committed to the fight for consumer choice.”
Inman reached out to NAR for comment and a spokesperson reiterated NAR’s previous statement in response to Realogy’s call for making the commission rule optional. The statement reads, in part, “NAR continues to believe that the guidance regarding cooperative compensation that appears in its Handbook on Multiple Listing Policy serves the best interests of both consumers and brokers. It gives them the freedom to choose how much commission to offer the buyer broker, including as little as one penny.”
Inman has reached out to REX to answer additional questions. We will updated this story if and when we hear back.
Editor’s note: This story has been updated with a comment from NAR.