Jason Oppenheim, star broker, says the real estate industry could be upended soon.
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. He warned that the commission structure could change forever after the far-ranging conversation.
He said that in order to be specific about real estate agents, there have been federal regulators and a couple of lawsuits coming down the pipeline that could be an armageddon for real estate agents. The commission structure is now uncoupled with regulators, where the seller is paying for the buyers' and agents' commission. In the year 2019 two home-sellers filed a lawsuit naming them Sitzer et al v. National Association of Realtors NAR, alleging that several NAR rules violate the Sherman Antitrust Act, an 1890 law that prohibits activities that restrict interstate commerce and competition.
One of the NAR rules requires listing brokers to offer a commission to list a property. The lawsuit alleges that this practice inflates sellers' costs and is anticompetitive.
It's traditionally taken two agents to sell a house: a buyer's agent and a seller's agent. Unless NAR loses the suit, the real estate industry would see buyers' agents removed from the equation. The number of real estate agents in the US is 1.5 million right now, according to NAR. The number could be hundreds of thousands of real estate agents leaving the profession, and major brokerages could go out of business, said Oppenheim. We're on the precipice of an armageddon that nobody talks about. There is a chance that the marketplace for real estate agents is about to get majorly overhauled, according to Oppenheim. He said that the US could see the US eventually switch towards a model with less commissions, as is the case in Australia.
He said that there are too many real estate agents and I don't think that's part of the problem. 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. The seller said that this could cause a situation in which the agent would have a fiduciary duty to one side.
In 2022 a federal court ruled that a private real estate listing service could sue the NAR over anti-competitive practices. The U.S. Supreme Court rejected the trade association's attempt to challenge the ruling earlier this month.
It's something that's not talked about, and it's possible that it's going to be difficult in 2024, but it's coming, Oppenheim said.