The lack of understanding around how real estate transactions work—and misunderstandings and misinformation regarding the recent National Association of REALTORS®’ (NAR) settlement agreement—goes all the way to the top.
In a campaign event yesterday, President Joe Biden, while speaking on housing affordability, incorrectly stated to thousands of people that “NAR agreed for the first time that Americans can negotiate lower commissions when they buy or sell their homes,” seemingly referring to NAR’s agreement to settle seller class-action lawsuits.
Biden added, seemingly reading from a teleprompter, that the average consumer would begin saving $10,000 in commission fees on a typical home purchase.
“I’m calling on REALTORS® to follow through on lowering commissions to protect homebuyers,” Biden continued.
This blatant misunderstanding of the settlement—and the basic dynamics of real estate agent compensation—coming from the highest office in the country highlights a tremendous frustration felt by many in the industry, who have watched the average consumer misled by mainstream media regarding the still-ongoing lawsuits.
RISMedia has reached out to the Biden administration to clarify those comments.
NAR, responding to Biden’s comments, pushed back against the “incorrect claims,” while still making sure to note that the organization supports the president’s broader priorities around affordable housing.
“While (NAR) appreciates President Biden’s continued focus on the affordable housing crisis, the President unfortunately repeated incorrect claims that the recently announced settlement agreement allows Americans to negotiate commissions for the first time,” said Kevin Sears, current president of NAR, in a statement. “Commissions were already negotiable before this resolution was reached and will continue to be negotiable as they have been.
“Real estate agent commissions are driven by the market and are not the cause of the affordability crisis,” Sears continued. “Until there is an all-of-government approach to a historic lack of inventory and supply in communities across the country, the dream of homeownership will remain out of reach for millions of middle-class Americans.”
Biden is far from alone in misstating the substance of the NAR settlement. Several mainstream outlets published misleading or objectively incorrect headlines in the hours following the settlement, seemingly unfamiliar with the core allegations of those critical of NAR policies, as even the plaintiffs in the class-action cases have never alleged that NAR directly or overtly controls commission rates.
Despite Biden’s gaffe, the broader real estate industry continues to mostly laud the president’s policy—though NAR recently criticized some proposals in the State of the Union address, in which Biden pushed for reforms in the rental market.
