The real estate industry could soon be upended, says star broker Jason Oppenheim.
Oppenheim – who leads a team of glamorous agents on Netflix (NFLX) reality series "Selling Sunset" – recently sat down with Yahoo Finance to talk about the current state of the U.S. real estate market. During the far-ranging conversation, he warned that the industry's commission structure could soon change forever.
"To be specific about real estate agents, we've got federal regulators and a couple of lawsuits coming down the pipeline that at worst case could be an armageddon for real estate agents," he said. "You might see regulators uncouple the commission structure where the seller is now essentially paying for the buyers' and agents' commission."
In 2019, two home-sellers filed a lawsuit [Sitzer et al v. National Association of Realtors (NAR)], alleging that several NAR rules violate the Sherman Antitrust Act, an 1890 law which prohibits activities that restrict interstate commerce and competition.
One of the NAR rules in question requires listing brokers to offer buyer brokers a commission to list a property. The lawsuit alleges that this practice inflates sellers' costs and, therefore, is anticompetitive.
Traditionally, it takes two agents to sell a house: a buyer's agent and a seller's agent. However, if NAR loses the suit, the real estate industry would effectively see buyers' agents removed from the equation. That means the number of real estate agents in the U.S. (there are 1.5 million right now, according to NAR), could drop precipitously .
"You could see hundreds of thousands of real estate agents leaving the profession, and major brokerages go out of business," said Oppenheim. "We're on the precipice of an armageddon that nobody talks about."
There's hope for a settlement with regulators or an appeal process, but there's a high likelihood the marketplace for real estate agents is about to get majorly overhauled, said Oppenheim. He added that we could see the U.S. ultimately turn towards a model with lower total commissions, as is the case in Australia.
"I think there are too many real estate agents anyway, so I don't think that's part of the problem," he said. "I think the problem is that if we remove the buyer's agent's commission, you'll see the listing agent representing the buyer in 90% of transactions. It's called dual agency," said Oppenheim. "I don't think that's healthy for the consumer, because I think that the buyer should have their own representation. It would be no different than going into a courtroom and you have one lawyer, representing both sides."
This could create a situation where the agent would have a fiduciary duty to one side, the seller, Oppenheim added.
In 2022, a federal court ruled that a private real estate listing service could sue the NAR over anti-competitive practices. Earlier this month, the U.S. Supreme Court rejected the trade association's attempt to challenge the ruling.
"It's something that's not talked about that much, and it could be difficult, probably more in 2024, but it's coming," Oppenheim said.
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
Click here for the latest trending stock tickers of the Yahoo Finance platform.
Read the latest financial and business news from Yahoo Finance.
Download the Yahoo Finance app for Apple or Android.
Follow Yahoo Finance on Twitter, Facebook, Instagram, LinkedIn, and YouTube.
EV startup Arrival is cutting half of its workforce in a bid to survive until it can start producing vehicles in the US.
For American wines, the only sector of growth is with those over the age of 60.
State Farm and Progressively are reportedly not writing new insurance policies for some models and years of Kia and Hyundai vehicles because of a rise in thefts.
While January has seen a number of improving analyst calls on real estate investment trusts (REITs), there have also been some downgrades. Take a look at three REITs that have recently received multiple analyst downgrades but still managed to show positive results this month: Crown Castle Inc. (NYSE: CCI) is a Houston-based specialized REIT that focuses on owning, operating and leasing cell towers. Crown Castle was founded in 1994 with a portfolio of 133 cell towers. Today, the REIT has over 40,
Retailers now are making returns more challenging, more confusing, and potentially more expensive.
Doug Duncan of Fannie Mae predicts how housing market perform in 2023, and reveals why he believes prices will fall this year.
Residential real estate investment trusts (REITs) were subpar performers in 2022, but like many other REITs, they are beginning to find their footing in 2023, as the entire residential subsector has shown recent positive gains. These three residential REITs have performed the best among the entire residential subsector within the past four weeks: NexPoint Residential Trust Inc. (NYSE: NXRT) is a Dallas-based residential REIT that acquires, owns and operates middle-income multifamily properties i
Slow burn start for the housing market in 2023 as buyers wait to see if house prices and mortgage rates start to fall more quickly
Sandy beaches, blue water, swaying palm trees and lei-clad islanders probably enter your mind when you think about Hawaii. And if you've vacationed there lately, you know that a trip to this state is…
More than 16 million people are owed some serious cash from Wells Fargo. If you happened to be a customer of the banking institution during the period of 2011 to 2022, this could apply to you,…
Squirrel Hill consolidation is the local transaction, other closures are in Ohio and North Carolina.
It has been a wild few years for the housing market. If you're thinking about buying or selling in 2023, you're probably feeling a bit apprehensive about the process. See the List: GOBankingRates'…
November's anticipated cooldown in home prices probably won’t be news to home buyers and sellers who have been watching the market come down from its pandemic highs.
Experts say two local cities have some of the most overpriced homes in the country and those people hoping for a dramatic drop in prices, may be out of luck.
Florida is one of the most expensive states for housing, and Miami is the least affordable city in the country, according to a report. High demand, short supply, increased migration trends since the…
Rumors are swirling that Truist is planning to either spin off its insurance arm or sell a portion of the unit.
Make sure you select a professional who has the experience, guidance, and resources you need to get the transaction completed the right way.
As of last month, 75% of U.S. homebuilders were offering mortgage rate buydowns, according to John Burns Real Estate Consulting.
Across the 50 largest metropolitan markets in the U.S., renters, who are also experiencing rising costs, still on average had a 41.4% lower monthly payment than a first-time homebuyer in December, spending nearly $800 less, according to a new report from Realtor.com. Rising mortgage rates — the average rate on a 30-year fixed-rate mortgage was at 6.13% as of Jan. 26 — were largely to blame for that yawning price gap, Realtor.com said.
The new White House "Renters Bill of Rights" isn't exactly a nothing burger, but it doesn't take any direct action against the sky-high cost of rentals in many sections of the U.S. The new plan aims to give U.S. renters some relief in the form of government protection against landlords and rental property owners who might otherwise take advantage of any of the estimated 44 million U.S. rental consumers.
