By now, most folks know that changes are likely coming soon with real estate commission structures in Nashville and beyond. While some celebrate the settlement between the DOJ and NAR and heralding it as a win for consumers, others aren’t so sure. As in most things, a nuanced view of the situation is probably the most useful.
One of the groups opposed to commission changes is the National Association of Real Estate Brokers (NAREB). Dr. Courtney Johnson Rose, president of NAREB, which represents Black and minority Realtists who work primarily with Black clients, fears “the impact for Black agents, brokers, and home buyers will be devastating.”
Dr. Rose worries that the altered commission structure resulting from the MLS eliminating advertised compensation for buyer brokers “risks exacerbating disparities, particularly for marginalized communities.” This is because buyers will be required to sign compensation agreements that detail their representation costs. In reality, many, if not most, buyers will still negotiate for the seller to pay commissions, at least in the short term. Even so, being contractually obligated to pay commissions will further disenfranchise first-time buyers and capital-poor buyers of all races. The fact that Black buyers are denied loans at a 146% higher rate than Whites and still suffer from discriminatory lending practices will likely worsen existing disparities in homeownership between Black and White Americans, many of whom will be unable to pay additional commission costs for housing.
She is also concerned about the settlement opening the door to the re-emergence of “pocket listings,” a practice that allows sellers to select their potential buyers, potentially discriminating against Black or other minority buyers.
Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals (NAHREP), feels that the plaintiffs and supporters of the settlement claim to be representing consumers but, in fact, have orchestrated “nothing more than a vicious attack on first-time home buyers and small businesses.”
Hyperbole aside, no one knows for sure what the settlement’s effects will be. Still, we should certainly be aware of criticisms that highlight potential hazards as we all try to navigate this new real estate landscape.
All quotations and statistics are from an Inman article (paywalled) by Dr. Courtney Johnson Rose, reflecting concerns relevant to the Nashville real estate community.
