Above: Bob Goldberg (left), Helen Hanna Casey (center), and Leslie Rouda Smith (right).
Why should clients pay agents as much as they are these days?
Sure, that’s a loaded question, but it sits at the crux of several ongoing lawsuits and federal probes that pose an existential threat to the real estate industry. Those legal challenges also happen to be among the top issues facing real estate, according to Bob Goldberg, CEO of the National Association of REALTORS® (NAR).
“Our industry, our profession, is being victimized,” said Goldberg to several hundred industry leaders and brokers in attendance at RISMedia’s 34th Annual CEO & Leadership Exchange held earlier this month in Washington, D.C.
Goldberg was joined by NAR President Leslie Rouda Smith and Helen Hanna Casey, CEO of Howard Hanna Real Estate, in a panel discussion titled, “The Road Ahead: The Top 3 Issues Facing Real Estate.” During the session, each leader delved into several challenges they believed to be the most pressing and earth-changing for the industry as agents, brokers and stakeholders look toward the future.
With a captivated audience, an impassioned Goldberg unpacked the legal challenges that have come to a head in the past year and a half, including an ongoing investigation that the U.S. Department of Justice (DOJ) has been waging on NAR’s Participation Rule and the Clear Cooperation Policy.
“We have aggressive government action trying to break down what they perceive as a large monopoly,” Goldberg said.
He also stated, “we spend a lot of time—hours and hours of depositions—educating regulators and lawyers that we’re really an amalgamation of mom-and-pop organizations that serve every zip code in this country, so their attack on us is an attack on small businesses and small, independent providers.”
It’s been slightly more than a year since the DOJ rocked the industry by withdrawing from a settlement with the trade association—an unprecedented move amid a working relationship between the two entities that spans 50 years.
Goldberg candidly delved into the background of NAR’s dispute with the Justice Department.
According to Goldberg, the probe’s goal was to improve transparency and competition in the market—admittedly something he and the association agreed on. Both parties had come to terms on their settlement in 2020, with NAR establishing policy changes based on suggestions made by the DOJ.
NAR and the DOJ have had a contentious relationship through the decades, with the latter taking issue with different NAR policies and how real estate has operated.
Despite the disputes, both sides have typically come to agreements where NAR made necessary policy changes leading to probes being dropped, and legal battles averted for the most part.
According to Goldberg, that changed when the DOJ reneged on its agreement last year.
At the time, NAR lambasted the Justice Department for the move and tried to get the court to compel the Justice Department to honor the settlement because the government breached its contract but to no avail.
“The faith and guarantee of our U.S. government backing out are not in good faith,” Goldberg said. “However, we are in good faith putting all the things we agreed to. We will continue to do so and continue to fight it.”
Goldberg also rebuked several class action lawsuits that targeted the association and some of its longstanding MLS policies.
“It’s a money grab by attornies in class action space far more than any clients,” Goldberg said.
Goldberg also acknowledged a growing need to secure a victory in the court of public opinion. To do that, he urged real estate professionals to educate consumers about their value proposition, highlighting several of NAR’s efforts.
Among them is Competition In Real Estate, which addresses many of the points mentioned in the antitrust lawsuits while providing agents talking points and information they can share with their clients as far as how NAR advocates for consumers.
“The advantage we have is 1.6 million strong,” Goldberg said. “If everyone were out there explaining to consumers their value proposition, it would help this problem go away.”
Rouda Smith refrained from delving too deep into the lawsuits, however, she acknowledged the “daunting” challenges they pose for the association, which has been vehemently fighting them even before she took office.
“Being the president of the National Association of REALTORS®, we are in a situation where we are fighting more lawsuits than we’ve ever had in our 115-year history,” she said. “ has gotten very adept at depositions, not because he wants to…but there’s just so many things that we are dealing with.
“Thankfully, we have an amazing legal department that spent overtime fighting these for us while we are enjoying the real estate business,” Rouda Smith added.
Looking beyond the lawsuits, Rouda Smith also acknowledged that the industry faces several challenges that could pose headwinds (some have already) for real estate professionals.
“As we all know, market changes are always hard on people who have never been through changes in the markets, but I do know one thing: what goes up will come down, and what comes down must go up because I’ve been in this business my whole life and I’ve experienced many downturns,” she said.
Among some of the challenges that were top of mind, Rouda Smith highlighted persisting affordability issues along with regulatory challenges that the association has been trying to address on Capitol Hill.
“I want to leave our profession better than we found it, and I don’t think our members know exactly what goes on behind the scenes while they are out there selling real estate,” she said, pointing out NAR’s role in influencing the use of PPP loans for independent contractors during the height of the pandemic.
“Never in our history have independent contractors been part of a stimulus program, so we can thank NAR and our lobbyists for that, among many other things,” she continued. “Those kinds of things are so important…there are so many things that NAR does behind the scenes that nobody knows about. We’re not always the best at tooting our own horn. We just do what we do.”
The real estate sector has its work cut out with inventory shortages, which was top of mind for Hanna Casey.
“The lack of inventory is there whether a market is feeling this recession or not, so the question is, what do you do in those individual markets?”
Getting back to basics is a good start, according to Hanna Casey, who also opined that there’s a need for more education and training to help agents thrive in the market, regardless of the conditions.
“There are less than 1.3 million listings right now as opposed to…5.5 million listings just a couple of years ago,” she said. “Closely look at our markets. Whether our markets have 50 people or 500 people, look at them and say, ‘are we offering what we need to offer today to help our agents get listings and price them this year and to work with consumers properly?'”
Hanna Casey’s concerns regarding inventory shortages also focused on its implications on consumers, particularly in underserved areas.
“There is so much focus on millennials that we have forgotten that three years ago, there were 75 million baby boomers, and nobody talks about them or their housing options,” Hanna Casey says.
While she commended NAR’s fair housing efforts, she also indicated that there is still room for improvement on several fronts.
“We have to create the housing, and I worry where that housing stock is coming from in all communities where we cannot build,” she continued.
While highlighting the steps being taken to finance and build rental properties, Hanna Casey also took issue with the lack of construction to provide a mix of affordable housing options.
“Why is everyone building rentals, and you can’t build condominiums?” she asked. “There’s no place for empty nesters to move because we can’t build condos. We have to say, ‘you have to go to a rental and sell your house,’ and that’s where the housing shortage is.
“We have to do more with our own individual communities and legislatures to work with them to reduce the cost of building houses,” Hanna Casey concluded.
Stay tuned to RISMedia for additional coverage of this year’s CEO & Leadership Exchange.
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