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This post will be updated as reaction around the commission lawsuits develops.
When a jury sided with a group of homeseller-plaintiffs in late October, saying major real estate industry players conspired to keep commissions high, it was immediately obvious something big had happened. Social media lit up. A slew of similar cases quickly appeared in courts across the U.S. And real estate professionals braced for the possibility that their incomes could radically change.
But even now, it’s still unclear just how big that change might be or what exactly it could look like. In the wake of the bombshell Sitzer | Burnett trial, is real estate facing an apocalypse or a nothingburger?
As it turns out, in the days following the verdict numerous major real estate companies began reporting their latest earnings. As part of those earnings reports and accompanying investor calls, many CEOs also shared their views on the impact of the rapidly proliferating bombshell lawsuits. We here at Inman consequently felt that was a good place to start understanding how the industry’s most powerful leaders are thinking about these cases.
Overall, the consensus of most industry leaders this earnings season was that the impacts from the bombshell lawsuits will be minor and slow-moving. And though many took a wait-and-see approach — the National Association of Realtors has vowed to fight the Sitzer | Burnett verdict, and no other cases have gone to trial yet — most executives also argued that their specific companies were well-positioned to thrive even if change does happen.
This commentary stands in contrast to the online chatter about the cases, which has explored a variety of apocalyptic scenarios such as commissions plummeting or buyer agents mostly disappearing. Few CEOs predicted anything so dramatic — though of course, only time will tell who ends up being right.
What follows is a collection of comments real estate company executives have made about the commission lawsuits in recent days. The commentary comes from recent earnings calls, but Inman will also update this post with additional remarks made in other venues if and when industry leaders weigh in on the situation.
Zillow CEO Rich Barton
Zillow reported earnings on Nov. 1, at which time CEO Rich Barton weighed in on the bombshell cases in both an investor call and a shareholder letter. Barton’s key comment came early in the call when he said “We also believe complete disruption to the existence of buyer’s agents is improbable for a few reasons.”
Barton went on to say that he doesn’t envision massive change because it benefits homebuyers to have an advocate during a high stakes transaction, which is the “biggest purchase most people make in their lifetime.” And he added that a small group of buyers aside, the “stakes are too high for DIY.”
“We believe change in the industry has been and will be slow, but will continually bend” toward transparency and buyer representation, Barton also said — though he added that whatever happens, Zillow is poised to thrive in the future.
We’ve placed Barton’s comments first here because, though few other executives were quite so detailed in their remarks, the Zillow chief’s take captured a common tone across the industry. Massive change, other CEOs seemed to agree, is “improbable.”
Compass CEO Robert Reffkin
During an earnings call with investors on Nov. 6, Reffkin also downplayed the potential impact of the suits, saying his company is “well positioned and prepared” for any changes that might come to the real estate industry. He also pointed to the Seattle region, where sellers have not been required to offer buyers’ agent commissions for several years. Despite that change, Reffkin said, commissions in the area remain in line with the rest of the U.S. — an outcome that suggests the bombshell lawsuits may not radically upend the status quo.
“I don’t think there’s any evidence to suggest that there will be pressure on commissions,” Reffkin said at another point during the call. He added that the lawsuits have the potential to “further professionalize the industry” and force companies “to create a buyer presentation at the same level as we create listing presentations.”
RE/MAX CEO Nick Bailey and RE/MAX Holdings interim CEO Stephen Joyce
During a call with investors on Nov. 5, RE/MAX CEO Nick Bailey portrayed his company’s agents as generally adaptable and pleased with the fact that the franchisor moved to settle the highest profile cases before they went to trial. He also said some of the changes RE/MAX agreed to were already things the franchisor was doing, and he downplayed the scale of any potential disruption.
“We’ve had rule changes and changes to our business in the past,” Bailey said during the call. “But the bottom line is, people are still going to buy and sell houses. They still want a trusted adviser. We still believe in buyer agency. And I think one thing that’s interesting to note is we’re about a full generation away from how we got here with buyer agency and MLSs. And really it was all put together to help consumers, with the biggest financial decision of most people’s lives. And so, we still believe in absolutely consumers being represented by a trusted professional. That’s going to continue no matter what.”
Stephen Joyce, then-interim CEO of parent company RE/MAX Holdings added during the call that his company could benefit going forward.
“This could be a positive piece for us because when people are concerned about where things are going, they fly to quality,” Joyce argued. “And we think we stand at the top of the industry in terms of most agents of brokers’ views of the brands. So, when there’s uncertainty, it usually helps the people that are more of the blue-chip type, and that’s where we sit.”
Redfin CEO Glenn Kelman
Redfin reported earnings on Nov. 2, at which time CEO Glenn Kelman — who has long been one of the more frank leaders in the industry — took a contrarian-in-this-case position and said big changes could be in store.
“The Missouri verdict,” he said, referring to Sitzer | Burnett, “and other court cases may lead to a revolution in our industry, not just reform.”
Kelman didn’t detail exactly how such a revolution might look, though he did immediately add that “if buyers’ agents become less common, Redfin will prosper in that world, too.” Floating such a possibility implies that the bombshell suits could ultimately reduce the ranks of buyers’ agents — an outcome that has been widely discussed among real estate’s rank and file, but which was only infrequently alluded to during this season’s earnings calls.
“If a massive disruption is in fact at hand, we aren’t going to fall behind now,” Kelman added.
eXp World Holdings CEO Glenn Sanford
EXp also reported earnings on Nov. 2, during which time founder and CEO Glenn Sanford said in an investor call that he was “concerned” about what might happen to buyers if they have to pay commissions while contending with down payments, rising mortgage rates, home prices and other transaction-related costs.
“I actually started out as a buyer’s agent, my first five years in the business, which is kind of interesting because I see buyer agency as being a very valuable tool for buyers,” he said. “I’m concerned, quite frankly, about what this might mean to buyers who may not be able to afford representation if things change up too much.”
He added later “It’s just a matter of seeing what [the] next steps are in this business of real estate.”
The comments fall in line with those from Kelman in that they acknowledge, rather than downplay, the possibility of meaningful disruption.
Anywhere CEO Ryan Schneider
Like RE/MAX, Anywhere filed proposed settlements for the Sitzer | Burnett and Moehrl cases before the Sitzer trial began. During the company’s earnings call in late October, Anywhere CEO Ryan Schneider didn’t mention any monumental upheaval coming to the industry but speculated that the settlements could become a model for the type of change that takes place.
“I’m not going to speculate too much on kind of what’s going to happen with the industry, but there are a lot of places in the U.S. that have moved away from some of the mandatory rules and moved more towards this transparency of disclosure that we agreed to,” he said. “And we think those markets operate well. And we’re going to be here supporting our buyer and our seller agents through the future here.”
Douglas Elliman CEO Howard Lorber
Douglas Elliman was not a defendant in the Sitzer | Burnett case but has been named in others. During his company’s earnings call on Nov. 8, CEO Howard Lorber said those cases “lack merit.” He was also among the CEOs who predicted only minor impacts.
“We do not anticipate these lawsuits will result in any changes to our business that will significantly disrupt the agent-buyer relationship,” he said.
Fathom Realty CEO Joshua Harley
During a call with investors on Nov. 8, Fathom Realty CEO Joshua Harley said that it could “be years before we see any changes in the real estate industry as a result of these lawsuits.” He also said that thanks to the company’s flat-fee model, “we might be one of the only real estate brokerages to be a beneficiary of any changes that compress agent commissions.”
“The fact is our flat fee commission model does not change regardless of whether an agent charges 3 percent or 2 percent or even 1 percent,” he added.
Opendoor CEO Carrie Wheeler
Speaking about the bombshell lawsuits, Opendoor CEO Carrie Wheeler said during her company’s earnings call on Nov. 2 that the iBuyer doesn’t earn any of its revenue from commissions paid to buyer’s agents. Instead, Wheeler noted that buyer agent commissions are a cost Opendoor has to pay. As a result, she added, “If the buyer broker commission were reduced or went away, those costs to us would be reduced.”
She added that Opendoor is “well-positioned” to respond to “changes within the real estate ecosystem.”
Offerpad CEO Brian Bair
Offerpad CEO Brian Bair briefly touched on the commission lawsuit cases during his company’s Nov. 2 earnings call. Similar to rival Opendoor, Bair indicated that the implications for his company specifically will likely be minimal. But he did entertain the possibility that significant changes could be in the offing for other sectors of the real estate industry.
“I think you’re going to see a lot more changes on the traditional side,” he said, though he did not elaborate further.
News Corp CEO Robert Thomson, who oversees Realtor.com parent Move Inc.
An analyst asked News Corp CEO Robert Thomson about the commission lawsuits during the company’s investor call on Nov. 9, but Thomson mostly avoided weighing in. Instead, he merely said, “We’ll have to see what transpires on appeal in that particular case.”
Thomson did mention Australia, which lacks a U.S.-style MLS system. The comment appeared to be discussing the strength of the market generally. But some observers have suggested the bombshell suits could make the U.S. market look more like those in other countries, so it was notable that Thomson’s mind went to Australia after he was asked about the suits’ impacts on the U.S.
In any case, at another point during the call, Thomson noted that the U.S. market “has already been evolving, if rather incrementally.”