Real Estate Redefined: How the NAR Settlement Is Forcing Agents to Rethink Everything!

In this eye-opening episode of The 121% Podcast, host Kevin Johnson is joined by real estate attorney Andrew Doyle to dive deep into the aftermath of the NAR antitrust settlement and what it means for agents, brokers, and the future of the real estate industry.

With sweeping changes to commission structures, new MLS rules, and a host of legal implications, agents across the country are scrambling to understand how to adapt. Andrew sheds light on how the NAR settlement is reshaping the way agents do business—from increased fines to shifting compliance requirements—and why it’s forcing everyone to rethink their approach to real estate.

Tune in as we explore:

• The Sitzer/Burnett case and how a $1.7 billion verdict is shaking the foundations of the industry.
• Why agents and brokers are facing a “new normal” in commissions and transparency.
• The real-life impact of these changes on agents’ livelihoods and the future of homebuying.
• Andrew’s insights on future litigation and what’s next for real estate professionals.

Whether you're an agent, broker, or just someone interested in the evolving real estate landscape, this is a must-listen episode that will leave you thinking about where the industry is headed.

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Andrew Doyle 0:00
I just have a fundamental issue with the fact that there really isn't any meaningful choice for agents, right? And honestly, I never had a problem with it until there was this massive lawsuit that puts agents, I represent, a lot of agents and brokers, right? I never had a problem with it until there's this massive lawsuit that is now reaching into their pocketbooks and saying, you can't make enough. You can't make what you could have made before because I NAR a an Illinois company needed to save my rear. You.

Kevin Johnson 0:40
Music. Welcome to the 121% podcast. My name is Kevin Johnson, and today we are excited to welcome back once again one of our favorite guests, Andrew Doyle from C bank. Doyle a real estate attorney, dirt dirt paper money here in Central Florida, works throughout Florida though. Welcome Andrew. Thank you. One of our favorite topics is back to for us to chat about. I feel like

Andrew Doyle 1:04
this is the only thing that we talk about for like, the past, like, six months. It's like there's nothing

Kevin Johnson 1:09
else. Yeah, right, not really, right, because it's that thing that sucks the oxygen out there on every conversation. So for those that have been living under a rock and don't know what we're talking about. Give us a recap of the journey where we're at today with the lawsuits and settlements. Halloween

Andrew Doyle 1:30
2023, right? October 31 Sicily, we paint the picture right. So right around October, end of October of 2023, we had the verdict coming from the sitzer Burnet case. That's an anti trust case. The long and short of it is a whole bunch of sellers in Missouri got together. Catch mark, Michael. Catch Mark, I think is his name, right? He represent. He was the attorney, very, you know, talented attorney. Represented wealthy now, yes, represented a class of sellers against a number of large brokerages, their parent companies. The claims raised in that lawsuit were one of antitrust right you have created a scenario where it has suppressed competition, driven up costs for commission through the roof. Sellers had no meaningful choice, so on, so forth. Jury in Missouri bought it. They rendered a verdict. It was nasty. A few of the defendants had settled before that. Those were the smart ones. Nar stayed till the end. National Association of Realtors. They lost. Jury awarded about $1.7 billion of damages, which could have been troubled or tripled, that would have been a lot of money. So between November of 2023 and mid March of 2024 Nara was trying to figure out what they were going to do. First, they said they were going to appeal. Ultimately, they decided not to move forward with an appeal. Obviously, they didn't move forward with bankruptcy or anything like that to discharge that, probably good decision. So they settled the damages portion, and they also entered into this convoluted settlement agreement that

Kevin Johnson 3:15
for seven years, yeah,

Andrew Doyle 3:18
paragraph 59 right? The infamous they entered into this settlement agreement that essentially dictates policy, but not law. Practice changes throughout the real estate industry, all throughout the country, and those rules have basically taken effect. I think it was the deadline was like August 17. Here in Florida, a lot of the MLS has had, it had complied early, maybe 12 days or 14 days before. So we had about four months of hysteria. Nobody really knew what they

Kevin Johnson 3:58
were. No it was, it was three and a half months of absolute calm, like we have our head in the sand, and then like two weeks of hysteria.

Andrew Doyle 4:07
Anyway. So you know, that brings us to mid August, when these practice changes are implemented by real estate participants and MLSs. And we've learned a lot in the past 30 days or so, we now know that agents will get fined if their MLS listings don't comply with these new rules. We, I personally, have seen some interesting fact patterns developed that have come across my desk. A lot of advisory opinions I'm giving to brokers about, hey, this is what your documents need to say. And we also, of course, here in Florida, have a lot of new forms. So if we didn't have enough already to learn and to stick to, it's the

Kevin Johnson 4:54
form of the week club. Yep, you know, just give the book of the month. We have the form of the week club from, in fact,

Andrew Doyle 4:58
literally, we had. Two more forms come out this week. You

Kevin Johnson 5:01
know, just, just, just because, you know, I Why not, and I love the advanced communication that we get that this is coming, like to to brokers, so that we could figure it out before our agents figure it out. It's really helpful. They did that. Didn't do that. So, you know, we're finding out, as our agents are finding out. It's just, it's frustrating, always fun. You know, one of the things I see a lot online is there's this, I mean, even, and what talk about them in just a second land, Ian, a lot of agents and other companies saying these new laws that are impacting real estate from 24 Thank you. Can you explain to you, for those people sitting in the back row why the settlement agreement is not new law,

Andrew Doyle 5:41
nor is not a lawmaker. Nar is not a state or federal legislature. Nar is not even a local legislature. They are a private company, I believe, incorporated under the laws of Illinois and through their network of ownership of state and county level realtor associations, as well as their ownership of MLSs, it seems like laws have been passed, but there have been no laws passed. The closest we get to a law being passed is what's known as precedent, right? So in the law, as a lawyer, when I have an issue, I'm always looking for case law to support my position, but it's not enough for me to say, Oh, well, this court in California said this about these facts. Law Courts in Florida do not need to follow opinions from California Judges. Courts in Florida need to follow opinions from judges in Florida, and they don't even actually need to follow the opinions from county different counties, there's District Courts of Appeal, so we're in the Fifth District Court of Appeal here in Central Florida. So appellate opinions from the fifth DCA are binding on any county within that fifth DCA, and generally, judges will look to neighboring DCA and say, Oh, well, the judge in Miami had a similar opinion. So you know, we're going to borrow that opinion. But that's what's called persuasive authority. Mandatory authority is the is the the body of case law that develops within the actual district, right? So to put this into perspective, we're in Florida. This is a Missouri trial court case, which actually didn't even go up on appeal, right? There's no interpretive opinion about any issue in that case, so there's really no case law at all, right? It's just that it was so significant and likely because of NARS. I'm going to use the word Stranglehold, because I don't think there's really any other way to put it. But there's stranglehold on the structure of the real estate industry across the country. It seems like it's law, but it's not their rules, practice changes, industry, reactions, guidelines, policies, but they are not law. Nobody's violating a law here. Now that doesn't mean people won't get sued as a result of it. You can sue anything. You can sue a ham sandwich, and

Kevin Johnson 8:28
that's what you know, for those watching or listening. It not just because you have a real estate license doesn't make you a realtor or a member of the National Association of Realtors, right? And there are lots of agents, you know? I mean, obviously the vast majority are, but there are, there are agents out there, specific, most in the commercial space, or maybe just exclusively in property management, that aren't members of NAR. Therefore, nothing in this settlement agreement is binding upon them. Right?

Andrew Doyle 8:57
Can I go on a soapbox here for sure? Okay, if you're an agent, let's limit it to Florida. If you're an agent in the state of Florida, you're gonna make money by selling a house, either listing or representing a buyer. To sell a house, you have to find a house. To find a house, you really need MLS access. To get MLS access, you have to be a member of a board. Now, I don't know about all boards across the state, but I know that here locally, when you join one of the local boards, you automatically become a member of the National Association of Realtors.

Kevin Johnson 9:36
Is right that the state and the and the National Do

Andrew Doyle 9:40
you have an opt out? Nope. So what that means is someone in, again, limiting it to Central Florida, right? Someone in Central Florida that wants MLS access, that is going to be a board member, basically has no choice but to become a member of the National Association of real That is correct. Okay, that's why they got sued. That's why they got sued Was

Kevin Johnson 10:04
that was that game we played Monopoly. I love that game. That's

Andrew Doyle 10:07
why they got sued. So, you know, now the reverse of it is, when they got sued, they settled it. They entered into this self serving Settlement Agreement of every self every settlement agreement, self serving right? They needed to hedge their losses, but what they've done is deployed through that Stranglehold network, basically tie the hands of every agent. Anyone that wants to make a living selling property, you have no choice but to comply. So I understand that some MLS is which also are oftentimes owned by the National Association of Realtors. Some MLSs have non realtor member. You're smirking, because you know exactly where I'm going with this, right? They have non realtor member. I don't know what the term is, subscriber, access, right? Or Thompson brokerage, right, in the fifth district, right? Right? So they you don't have to be a member of NAR or a board to join, because that would obviously be too far, but it costs you an arm and a leg non member assessment. Yeah, non member set. Did you know the difference? I don't know how much they are. It's actually

Kevin Johnson 11:15
more to just join the MLS where we're at than it is with the non member assessment, than it is to join the local board and get access that way.

Andrew Doyle 11:27
Kind of sounds like price fixing or suppression of competition or something like it smacks of exactly what the sit server. I have a

Kevin Johnson 11:38
more inappropriate term. It's blanked up, but I'm not gonna, you know anyway,

Andrew Doyle 11:42
I'm stepping off my soapbox, but, like, I just have a fundamental issue with the fact that there really isn't any meaningful choice for agents, right? And honestly, I never had a problem with it until there was this massive lawsuit that puts agents, I represent, a lot of agents and brokers, right? I never had a problem with it, until there's this massive lawsuit that is now reaching into their pocketbooks and saying, you can't make enough. You can't make what you could have made before, because I NAR a an Illinois company needed to save my rear Mm, hmm. Fundamental problem with that, I take that personally and professionally, because that hits my customers right in the

Kevin Johnson 12:20
pocketbook. Yeah, and only thing I will say that an unpopular opinion here, so I'll probably be chastised across social media for this. I don't find any fault in catch mark. They either they did what our systems of law allow to be done. They did it brilliantly. They, I mean, they brought their A game to court. Apparently, my opinion, NAR went and found some guys on the street and said, Hey, you want to practice law. I mean, I don't know. No,

Andrew Doyle 12:48
I gotta disagree with you there. NAR has some fantastic has fantastic attorneys. They just had really bad facts. Or, put another way, catch mark. Had a really good case. He had a good case. But, you know,

Kevin Johnson 12:59
I was watching someone Tom Ferry podcast this, this episode came this week. One of the gentlemen on this podcast, he's on some governing awards, and he was up in Illinois a year out and, you know, and a year ago now, and they were in so we're coming up on, it's gonna the case, right? And they were, they were so confident and that they had this thing locked down. They were like, don't worry about it. We're going to win full stop. And, you know, just look at some of, I don't know I look from a layman. I'm not an attorney, but like, I don't think they put on a good enough argument on some of the core facts. Like, they a lot and whether, I guess I remember the whole transcript, but like to say that sellers have never paid the buyers broker. The seller paid the listing broker and the listing broker, you know, then if, if they cooperated, the another agent helped. They chose to market that property through the MLS, find another cooperating broker, then they shared their commission. If they found the buyer too, they got to keep the entire commission,

Andrew Doyle 14:00
you know, Kevin, we agree on a lot, yeah, but I think that this was a losing case for NAR and all the defendants from the get go, and I think it's because the truth was too complex to make a coherent, meaningful, easy, simple argument to the jury, right? Remember, as realtors, as attorneys, as brokers, we understand what we do at a very high level, at a very deep level. So to us, it's obvious sellers are not paying buyers, right? But the Occam's Razor shortest distance between two points in straight line. I bastardized that. That's not actually what it is. But you know, that's what I stated anyway, right? Basically, the argument is, follow the money, and when you when you look at it in that vein, it looks like sellers are paying buyers. There's complexity to it, right? Not technically the way it is. Listing agent has a listing agreement. Seller pays listing agent all of it in turn. There's a co broke an offer of compensation through the MLS. Buyer's agent accepts. Buyers accepts those terms. Buyer's agent bound to it through the contract, right? But that's really difficult to explain to a jury of laypersons. And I said this when we did our very first sitzer Burnett podcast, I think that the venue bringing that case in Missouri was somewhat intentional. There's 49 other states that that case could have been brought in, but there are not 49 other bread basket states where median household income is what it is, level of sophistication is what it is. You know, average juror will have a certain educational background, and if you go to Manhattan, you're probably going to have a higher likelihood of pulling people with terminal degrees than in Missouri. And that's just the facts. It's not a slight on anyone from anywhere. But the fact remains that the jury pool was a little bit less sophisticated than it would have been in other jurisdictions. So I think that the argument from sitzer Burnett and the rest of the sellers was easier to understand than the defense argument from NAR, because even though NAR would have been truthfully arguing, look, it's not really going there. I don't think it's reasonable to say that a jury in Missouri ever would have understood that, and I think that's why they lost. So

Kevin Johnson 16:49
we agree on why they lost. I just think they could have done I know we disagree. They could have done a better job of presenting the case in a way

Andrew Doyle 16:57
that facts and bad law and a bad jury, which is, you know, the trifecta right before a plaintiff can

Kevin Johnson 17:05
argue the catch mark. I mean, they, you know, we can be mad at them all we want, if you want to, if you want to waste your energy and time on that, folks. But like, at the end of the day, they work the system. They did a they did a great job for their for their customers, and we can argue about how much each of those people in the class actually ended up with in their pocket versus what the attorneys did, but different story. I just love what he wants for his hourly rate, but he argues with us for our hourly rate. It's really kind of gotten right. That's the one thing that irritates me. One of the funny byproducts of this thing was just a couple weeks ago. We're recording this in September of 24 a new real estate company, brokerage, whatever, hit the market called landion, and it turns out that one of the founders is this guy named sitzer. You know? Yeah, that sitzer. And my first reaction was, okay, who cares, right? And it still is my reaction, but I was shocked at the visceral reaction from the community as a whole. A Yeah, it's, it's, in my opinion, is dirty, whatever. But what they're trying to do has been tried before it was allowed before the settlement it's allowed now. The market has overwhelmingly said that these discount brokerages don't work, and they've refused. They they've not succeeded. And this is like the discount brokerage of discount brokerages, where, hey, go on the website, 49 bucks, and we'll go, well, a local realtor will show you a house. So if you just launched a lawsuit that tried to seek to destroy my profession and my family's way income and take food off my family's table. Yeah, I'm gonna be the first one to sign up to work for you,

Andrew Doyle 18:48
right? You know? So I think in a vacuum, it seems a great idea, right? Like, make a name for yourself, so to speak, with one of the most prolific class action cases that is literally named after you, right? And then launch a business while you're still in the limelight. That makes perfect sense. I don't blame sits or for that, but I do think that fundamentally, the business plan is flawed. Oh, yeah. And, you know, I'm not a business coach or anything like that, but I'm looking at this and I'm like, This guy needs agents who he just pissed off universally, right? He needs agents to want to want to like him enough to do business with his company. Two, to actually see the value in it. Three, and not attribute the fact that they are that they now have to to make up for the loss of income. They now have to do business with a discount brokerage like that, which is not a brokerage. It's not he says it's not a broker, or the company says it's not a brokerage, right? Even though they're offering commission anyway. He needs agents to partner with them. I don't know how he's going to get seed funding for

Kevin Johnson 19:57
this and that if you look at the way the real estate math. Work. So the 49 bucks I this is second I got this from Jared James in this show, like what's actually paid to the broker, just 35 and then from that 35 bucks, you have to pay your broker insurance and gas and tolls. So from 35 bucks, maybe half of that, let's call it 20 bucks. They get to go show a house. I don't if an agent is so desperate for money that they will go show houses for 20 bucks, do you really want that agent working with you? I'm just saying

Andrew Doyle 20:32
it's, I mean, there's that, but you know, there's the other issue, which is he, I think he's trying to fit a square peg into a circle hole here, because he has that flat fee package on landing 100 bucks or 1500 bucks, like, we'll do everything for you, right? But they're not gonna do everything. No, they're not gonna do everything. They do a limited number of dogs, a limited number of offers, one and I'm pretty sure that 49 times three and 200 times three is not 1800 it's not right. Now, the reason why I break down those numbers is because $49 is the price per showing so the flat fee package is I'm going to show three houses and submit three offers or five. Oh, I thought it was one offer. I think it's more than one offer. I didn't go that far because I believe it's three. But it was such an honest like you can go to the landian website and you can take a look at their pricing, but I don't believe that the math actually works out. What does

Kevin Johnson 21:36
it and if again, go back, I don't know what agents or brokers are gonna sign, because remember, in order for an agent to do this, the brokerage has to sign up, right? Because you have to pay the brokerage, right, not the agent, right, which is in the way that the system, yeah, so, and I love how, again, on their website, they cite the new laws, again, uh huh, clearly he doesn't understand the law, you know, or whoever wrote that, I should say, So,

Andrew Doyle 22:00
nice website, though. Yes, decent. Yeah, it's well done. Yeah, you can tell that it was something that was, it was an idea that was cooking for a while this, yeah, Wix. It

Kevin Johnson 22:12
was just waiting for the settlement so you could go live. Yeah, no, so I had to meet with our agents yesterday, and we're talking about just, you know, every month now we're going over like, what are some of the trends we're seeing, things we're saying, and I used an analogy with them, that the sitzer Burnett case is not the final act of the play, you know, it's not the credits of the movie. It's at best, it's the opening act. And I'm probably gonna say it's more like, you overture, right, where this is the beginning. What do you mean? We have DOJ out there. And that's the thing. Is, DOJ was not involved in said super net at all. Right? This was not a DOJ action, but we have, there's other litigation out there. I'm sure there's other litigation to come that people are going to try to score, you know, and ride the surf in. And then there's also the DOJ on the horizon, and what they're involved will or will not be, right? There's a case now. Nara said they're going to our DOJ wants to reopen the investigation into the clear cooperation policy, and now Nara is going to appeal that to Supreme Court. I think clear cooperation is a bunch of bull and needs to go. It's one of the worst decisions and a host of bad decisions that NARA has made. And I'm of the belief is, you know, Nara is responsible. They're the arsonist, and we're asking the arsonist to put the fire out. I just disagreed that approach, but that's my opinion. Only what do you see is next on the horizon in the on the legal front for the real estate industry, so I definitely agree

Andrew Doyle 23:33
that DOJ investigation is going to open up a new can of worms, if I recall correctly, NARS. Major issue with the DOJ investigation is, well, you told us a couple years ago that this was closed and we needed to give you some documents, and that made you happy, but now you're reopening it. So they're appealing that that basically the closure or the perpetual openness, for lack of a better term of the investigation, I don't think that really gets us anywhere. I don't think that really moves the needle. Because if the DOJ is, if the DOJ wants to move forward and they suspect that there's something there, there's a there, there, they're gonna, they're gonna, they're gonna get it. The only reason they wouldn't would be a political decision from the Supreme Court, right? So we have a right leaning Supreme Court with a left leaning administration right now. So if the case gets before the Supreme Court, the split right now, I think, is six, three, right? So maybe,

Kevin Johnson 24:37
I think, if it gets this case gets there, nor wins, I

Andrew Doyle 24:41
think so too, but maybe not purely on the marriage of the law. But that's neither here nor there, right? So I definitely think how that DOJ investigation, whether it remains open and they really approach that level of decoupling that they've been going going after, that's huge. Right, completely separating commissions from purchase price. And that's if we thought that this was earth shattering. I don't even know what the adjective to describe that would be, if they truly decoupled. Yeah, in

Kevin Johnson 25:15
my understanding, what they're what DOJ is asking for is buyer, you pay your own agent out of your own money. It can't come from any proceeds of the real estate transaction whatsoever. So you can't get a concession from the seller. The seller can't, you know, or the listing broker can't if you got to pay. So that means instantly, if you're having to bring three to three and a half percent to closing for closing costs, now you're gonna be bringing additional X percent of whatever your buyer's agents fee is. We're talking about doubling of closing costs.

Andrew Doyle 25:44
I mean, I guess the thought would be, if we had that, then the property value would have to come down. I don't think it will, no, but I think that's the idea is, well, if everyone has, if the buyer has all these other costs, and every buyer has all those costs, then every seller will necessarily have to reduce the price of their their home. But it still

Kevin Johnson 26:14
is not going to impact the amount of money a buyer has to bring to the closing table, going up, even if you had a, say, a 3% reduction in home values, the buyers still having to bring x more money to the table.

Andrew Doyle 26:28
Kevin, all we have to do is go to Congress and change federal lending laws and allow lenders at all levels in all different types of loans to allow a borrower to roll that commission into the mortgage, that's all they have to do. I see

Kevin Johnson 26:45
two fundamental issues with that. A you're expecting Congress to pass a law, and last year's Congress was the most or the second least effective Congress in the history of our nation, in terms of no bills passed, fine, yep, and we only surpassed the one from the Great Depression era, where they were only their flight four months. So that was the only one that actually had less legislation passed. But the other issue is that now we're asking a buyer to take, say, a on a $3,000 house. Say it's a $9,000 Commission, and we want to finance that over 30 years. And that $9,000 is now, what 20,000 big

Andrew Doyle 27:19
deal, right? Kick it down the road. Look, that's what Congress is good

Kevin Johnson 27:24
at. So they might agree with that. They like to both parties. I'm just saying in general, right? Not being political, but we are really good at, like, let's not pass that budget. Let's just, we'll keep overspending for that six months. We'll vote on it again. Then,

Andrew Doyle 27:35
yeah. So I definitely think that the first major horizon for litigation is going to be dependent on what happens with this DOJ investigation. The other thing I think that we're going to see is possibly some offensive litigation, not dissimilar from sitzer Burnett in the antitrust but speaking to clear cooperation, I think that's probably the next target, right catch Mark has openly said that we are watching your every move, which is kind of creepy. Great song.

Kevin Johnson 28:10
But my favorite headline was from Inman. Catch Me If You Can using the first part of his last thing. That's great. So Inman, I'll give you props on that one. That was, that was the icon I chuckle like, brilliant, yeah.

Andrew Doyle 28:22
But I really think where we're going to see litigation is going to be at a transactional level. We're going to see a host of issues. We're going to see buyers breach their contracts right at least here in Florida, I can't speak to what other states have but our our form EVO, from Florida realtors, says that in a buy side, agent is entitled to their commission even if a buyer defaults on the contract. In other words, buyers failure to close does not relieve the buyer of the obligation to pay their agent. So what that ostensibly means is, if their financing falls through, they've defaulted, right? Is the broker going to sue the agent? The I'm sorry, is the broker? Is the buyer's broker going to sue the buyer on the strict language of the other they'd have a cause of action for breach of contract if they didn't pay. Maybe they can forgive that and or just ignore it and move on to a different house. But that doesn't mean that there are not brokers out there that will look at that and say, You owe me 2% of $300,000 because that's what your EBIT said, pay me or you're getting sued. And in this framework, that seems perfectly permissible, right, conversely, right we used to have. I know that this whole scissor Burnette thing was all about transparency, increasing transparency, but the system that I, that we used to have, seemed pretty transparent to me, at least when it came to what the. It's the seller was offering, right? So when you stuck it up on the MLS and it said two and a half whatever, right? The buyer's agent knew. Everyone just kind of knew.

Kevin Johnson 30:09
And it was on public websites. That was other thing. It was on Zillow. It was on right website. It was the idea, yeah, it was everywhere. So consumers knew. Everyone knew, right?

Andrew Doyle 30:18
But now without those fields, those websites don't have that information, those external, third party websites, and certainly the MLS doesn't have that information, because to do that is a violation, and you get fined for it. It's a big no, no, Bad News Bears. So what do we have now? We got a game of chicken, right? So we have the seller, I'm sorry, the listing agent that knows what the seller is willing to offer because they put that in the list in the listing agreement, but they don't have the obligation to put that anywhere else. So buyers now have to sign these written agreements that tell their agent how much they're going to pay. But the agents are playing chicken with one another, because regardless of what the settlement did, it didn't relieve the desire for agents on both sides to make a living. We want to get paid for our work, right? I think it's fair. I think it's perfectly reasonable, too. And when it's a commission structure, you're looking for the larger commission, and there's really nothing wrong with that, because that's the nature of the business, unless you're the DOJ who wants to completely decouple, right either way, the point is this, you have these agents that are maneuvering against one another trying to figure out what's the sweet spot. I'm sure the plaintiffs, plaintiffs council would call that rich negotiation. I call that misrepresentation and a lack of transparency, and I call that potential ethical violations. I call that fraud, in some cases where, you know, I can foresee a scenario where a buyer's agent sends a point blank email to the listing agent and says, What is your seller's offer of compensation? What's their max? And rather than saying, I'm not going to tell you, they say 2% but it's actually three. That is an intentional misstatement of facts, upon which the buyer's agent would have relied upon. The smart answer for the listing agent would have been, I'm not going to tell you, but to state a position one way or another, to definitively say two when it's actually three, that's fraud. Yeah. So I see litigation arising at that transactional level there as well, because that buyer's agent, thanks to the cap on commissions, thank you, NAR for taking money out of buyers agents pockets. That agent lost out on 1% which is a substantial amount of money, really, on any transaction, right? But, and I think I'm gonna go a step further, because I think I see this on the distant horizon, and I think it's reactionary litigation. I think someone agents and brokers taking deep issue with NARS control is probably not too far off. We've already seen it in Michigan, but Michigan is different, right? Michigan? Correct me if I'm wrong. But I think the state of Michigan requires every agent to be a member of NAR that's the thrust of that law. So I think it's MLS is required. It's like,

Kevin Johnson 33:31
down here because of the Thompson case we don't have, so they don't have that ability there. So they're trying to get that

Andrew Doyle 33:38
right. But it's, it's from the top down, yep, and that's that we don't have that here in Florida, there are a lot of states don't have that right. And then there's some other litigation that popped up Utah. Is that Utah or Colorado, one of them attempted to pass an EBA statute, right? And there was a challenge to that in that state court. So we're seeing all this ancillary litigation, and it's being brought by agents and brokers because they're oppressed. It once was the sellers. Right now, it's the agents. Well,

Kevin Johnson 34:16
I agree, when you look at and before, I don't think there was any price fixing. But now I would like to say there is price fixing, because I agree there is a rule now in place that if I sign an agreement for a certain number, not you know, the other side is willing to pay, you know, there's a bonus at a build or something, then the agent cannot accept that income. Now, by rule, the National Association of REALTORS saying, No, we're going to cap how you can earn income. We're mandating how you earn a commission. Why

Andrew Doyle 34:44
do agents, and this is somewhat rhetorical but conversational as well. Why do agents need to follow that role? Why do agents in the state of Florida need to say, My income is capped because a private company out. Of Illinois settled its lawsuit,

Kevin Johnson 35:04
because if we don't, and we remember them off, we get fined, and third violation, you're off the MLS, and

Andrew Doyle 35:09
then your livelihood is basically taken away from you, right and now, somewhat extreme, but at the same time, this is the system, and it's a system that's a product of the structure created over time by the National Association of Realtors. Granted, I never had a problem with it until the sitzer Burnett case. I didn't think there was a problem with it, but that case, if that case would have turned out in favor of the defendants, I wouldn't have these issues. I don't think anyone would have these issues, but they're here now, and I'm looking for again, you know, I'm biased. I represent brokers, so I'm looking at who is responsible for my customer's damages, and it's not, yeah, so what are some of the things

Kevin Johnson 35:59
like? You know, I watch social media, and sometimes it's just for entertainment values, but it was on TV, and there are lots of agents who are putting things in writing in social media groups that they're going to regret later. Matter of fact, it was an article that came out where they interviewed the group that was kind of behind the funding for catch marks, case in which they used screenshots of social media posts from agents who are trying to work around the settlement. Like, okay, you're already on the radar. You did not want to be in that article, right, right? So people stopped posting stuff on a public forum anyway. But you know, one of the ones I saw just recently, an agent said they turned away seven people from their sellers open house because they refused to sign a buyer broker agreement where they entered the home. Why is that? Well, because the settlement says they have to have one, they have to have a written agreement, signed, fact or fiction. We thought, I know the answer, right,

Andrew Doyle 36:58
like no. So when you're doing an open house, right? You're working for the seller. You don't need to run up to the threshold, wave your arms and don't let anyone in unless they sign a buy or broker grant, because you're not representing them, you're there for the seller, correct? Now, it's a little bit gray, if you're doing something that I always advise not to do, which is piggybacking on an open house, right? Like, you know, some agents or brokers will have an agent or a broker from a different brokerage do an open house there. They're not working for the seller, they're there for the buyers. So in that scenario, I think, yeah, you probably do need to run up there and say, This isn't my open house. I'm here in case you need an agent. So before you tour it and I take you through, need to sign the other Yeah, because this the rule. The rule, not the law, but the rule coming from the settlement agreement, is that an agent needs to have a signed buyer broker agreement in place that ticks certain boxes, caps buyers, I buy side income obligates the buyer, so and so forth, right before the tour, before the home is toward that's that's what it is, right? So, but if you're working for the seller, and at that moment, you're not doing anything for the buyer. You're not obligated to do that now, also, it can change, because while touring the home, right, the conversation may may be from the buyer. We don't have an agent. Would you mind working for us? I'd be happy to. But understand Mr. And Mrs. Buyer. We have to have a conversation. And professionally, I have some different obligations now, so just do me a favor. Let me go back, let me grab some documents. We'll pull up a chair over here, and we'll have a conversation about it. There are some documents that we'll have to sign, and I want you to make sure that you understand them. That's what has to happen. Now, practically, is that gonna happen? No, because you got to move, move, move, move, move, move, move. If you don't, you're going to lose that buyer. They're going to go to a different agent down the street, right? So legally, the advice is, pump the brakes. Do it the right way. Practically, I don't know that that's going to get that deal done. Well, the

Kevin Johnson 39:18
flip side is, well, it's not a law. If you violate the settlement agreement, then they can come after you and sue you, right? One would think, because, again, cash Mark, I said he's watching, you know, and you never know that. They've made it clear they will be sending shoppers out to shop stuff. So, you know, you don't know if that party walking into your open house and challenging that is someone that they've hired to come in and shot the

Andrew Doyle 39:42
rules like it's terrifying, like, how, how can you be an agent and just be okay working with buyers or sellers doesn't matter anymore, without worrying if every. One of them is a wolf in sheep clothing.

Kevin Johnson 40:04
Those is like, you know, the big hope, and you know, I hear it from the consumer side more as well. Commissioners are come down. I doubt that. But even still, your hope is that here's your profession, that you know of whatever is that it's not with the line on the Alta or on the Closing Disclosure. That's not what the agent gets to keep, right? They have their brokerage fees they have to pay, and then after that, you know, a third of you needs to go pay Uncle Sam, because, you know, they want their money. And then they have their business expenses to pay after that. So what they actually get is not that big check, and that's where this big, huge misconception is, and they're fronting a lot of this money when they're out showing homes to a buyer, they're spending money on gas and tolls and their time, which adds value, right? And that's time they're not spending with another customer, right? It's, it's so frustrating that they attack the, I mean, agents work their butts off, right? That is, it's a hard industry. It's hard to get started. It's hard to, you know, even once you start to be successful, you have to maintain that it's not like it's autopilot. And how dare them, you know, try to say, ages make too much as they're collecting 10s of millions of dollars on a settlement agreement. But that's just my opinion. You know, what other things are you seeing out there that are hearing from I know you do work a lot. Work with a lot of ages. What are you hearing? There are just misconceptions, misunderstandings that you're seeing trends on. So

Andrew Doyle 41:24
what I'm the new the new thing now is builders, right? Builders, New Home Builders, are demanding that agents provide copies of their buyer broker agreement when they go under contract, because builders offer commission and then they also offer, sometimes bonuses and incentives, right? So sticking with this capped income issue that's brought up by the NARS settlement, a builder could ostensibly be there's a work. Remember we were talking the other day. I'm using ostensibly, way too much now anyway, builders could possibly be in a position where they're actually violating this NARS settlement, this rule if they pay a buy side agent more than the buyer signed an ebb before, but where

Kevin Johnson 42:21
the settlement agreement says that they have, they get in knowing the submersible for enforcing it, or that it doesn't. So because we want, we want to be not clear on details, it's really important. And we come to so

Andrew Doyle 42:34
we have this. We have this. I mean, it's truly the Wild West, we have builders now telling agents, I need to see your signed agreement. And there are agents out there that are going to show a property to buyers, and they don't have a signed agreement because the property that they're be that they're showing wasn't on the MLS. So why? Why are they? Why are they having one executed? Right? There's an argument to be made. Well, the agent is an MLS subscriber, and comes in within definition, they should have the EB assigned, fine.

Kevin Johnson 43:09
But there's also that whole Nara came out with working with a buyer explanation, which moves the goal post sooner than actually just showing a home

Andrew Doyle 43:17
exactly. I think there should be the EB assigned, but I don't know why the builder gets to see it. Yeah, and

Kevin Johnson 43:32
even so, right? We're not sure the listing agents, right? They asked me, I'm gonna tell them pound sandal. Tell you damn I'll give it the title if I need to. I'm not giving it to an agent, right? I'm not sure my confidence. Show me your listing

Andrew Doyle 43:42
agreement. Yeah. I Well, the other issue, you know, this, this capped commission issue, well, that really the amount of money that a buyer's agent could potentially lose out is tremendously more on a new home, on new home construction, yep, than it is on traditional resale, yep. I mean, you tell me, right here in Central Florida, average new home construction is probably more than average resale. Yep. How much more? I'd probably

Kevin Johnson 44:11
say 10% Okay, 10% and they're typically offering, especially now after August 17, we saw the bonuses go up like crazy. Like, I'm like, wait, wow, because they know they don't pay it most likely exactly, because what age is gonna write it a 3% plus $10,000 bonus here buyer sign, this sign is like, you're gonna pay me a $10,000 bonus

Andrew Doyle 44:31
Exactly. So now I think that that's, I don't know that that's a myth that needs to be busted. It's an issue. And actually, that's probably one of the other major issues that we're going to see for litigation in the future. I

Kevin Johnson 44:44
mean, if you don't show it to them, they cannot pay you if it right, you know, it's not an MLS. So it can't you don't have that rule protecting you anymore. So that we're not been that way. It's on the buyer. I mean, it screws their buyer, which makes no damn sense, right? They're not going to be. Yeah, you know what other things are? Any other major common just,

Andrew Doyle 45:04
just generalized confusion, you know, definitely, confusion about whether or not this is law, confusion about what forms to use, right? We we spoke at the beginning. There were two new riders that came out this, this, this week here in Florida. And now we spoke about it before, for the first time ever, here in Florida, commissions can be contingencies in the purchase contract. So yeah, so

Kevin Johnson 45:31
that was that we talked about that yesterday. So here's my buyers as this fire bar. Here is a writer that says that if us and either the seller or the listing broker don't come to a compensation agreement within three days of the signing this contract, then this contract is void.

Andrew Doyle 45:50
I put myself in the shoes of a buyer as my customer

Kevin Johnson 45:53
would COVID Sue that crap out the agent Exactly,

Andrew Doyle 45:55
exactly. Crud, sorry, exactly. I look at that and I'm like, if I read the buyer in that scenario, and my agent, my agent, could not come to terms with the listing agent on how they get paid when I'm the one buying the house, taking on the mortgage, bringing up the down payment, and but for all of that, neither one of them gets paid, but the children can't sort out their differences, right? I, as a buyer, am going to be furious if I really wanted that home, if I didn't want the home, maybe I wouldn't care, right? But if I'm the seller and I really want to or need to sell that home, maybe it's short sale, right? If I don't sell it, I'm going to lose it to the bank, right? And my listing agent is stuck, focused on that, and because I didn't know any better, I allowed it to be a contingency in the contract this buyer gets to cancel if the buyer's agent doesn't get paid what the buyer's agent wants. There's, there's a host of issues with that, and that's why, for years, I've been training agents. You do not put any language on the contract that has to do with your point. It's not allowed.

Kevin Johnson 47:06
It's not your contract, but it's not allowed by our rule either, right? That's the thing. It's not allowed. This document conflicts with NAR the code of ethics, right? So, you know, the way we trained our agents is, you know, Mr. Buyer, Mrs. Buyer. Here is this agreement. This is what you are responsible for paying me. Now, obviously, if you direct me to right, we can ask the other side for them to contribute some or all of it. However, if they don't, you are still responsible for paying this. So then I like that going there, because I've been very transparent with my customer that you're paying me this. We can try to but if we don't get it, you know, because what if they can't, what if they absolutely need that in order to buy a home? I'll have a conversation. Maybe we're at the wrong price point. Maybe we're not the right time for you to enter the market. Those are conversations but they insist on moving forward. Okay, as long as we've been transparent and upfront, that I do like the one, I forget which one it is, but the one where it makes it contingent, like, you know that we have to have that agreement in place, GG or FF, one that you right, because the other one is like, So Gigi,

Andrew Doyle 48:18
I don't think it specifies that a specific form needs to be signed. No,

Kevin Johnson 48:23
it does. It just that we have to have an agreement, right, right? So, well, that's what I like. So then we have to go use that other, one of the other forms, the two compensation one would think, but

Andrew Doyle 48:32
what if you don't? What if the agents cobble together something and well that, right? Use a damn form. Use the form, sure, but there are scenarios where people are not going to use those forms. So like I was saying for years, I've been for years, I've been training agents to that your commission is separate from the contract, like you're driving on a highway and you're going to the same location, but you're in separate lanes. Yep, you're not in the same car. You have two contracts, and they travel together. Hopefully they get off at the same exit in different lanes. But now we have a potential contingency. Now it's a trailer. We're towing them. Yeah, oh, that's a great tweak on that analogy. Yeah? So, yeah, we're towing this weight behind us that can slow down the process. This works. That was a great one. Kevin, so it slows down the process. It takes longer to get there. There's the potential that, I think I'm losing the analogy, the potential, the potential that there are issues, right? And we know that termination to protect Escrow is a big thing right now we have another deadline, another deadline to observe that if you've not observed, you lose the contingency.

Kevin Johnson 49:53
I guess I I only like it in era where the buyer absolutely cannot afford. Word to pay the comp, and if they don't get it, they can't close. And we've had that honest conversation with them, though, right? That let's reevaluate, because a lot of ages will try to push again the square peg, round hole, right? And sometimes the best way we can serve our customers to say, is this the right time for you to enter the market with time, with that, with talking about that with, you know, one of my agents this morning, right? Maybe it's a conversation with that

Andrew Doyle 50:26
buyer. Yeah, I mean it. Who knows? I just I wish that there were a way for Florida realtors to provide instructive guidance on what the intent behind it is. And I think it's unreasonable for me to actually expect Florida realtors to be able realtors to be able to do that, but when they release these forms, they should. I wish that they were able to tell agents across to say, look, this is what we're thinking. It's not intended for you to use it all the time. We're hoping that you use it in scenarios limited to where the buyer truly cannot pay you, but because of this stupid settlement, you're obliged, they're obligated to. So this will let them out. Don't use it all the time. That's not That's not our plan, right? But they can't do that, or they won't, probably they can't, or and won't, or both. They're not

Kevin Johnson 51:17
going to do it no matter what. So that's good. So lots of great things. You know, I tell everybody, I would call them great well, great topics for us to talk about, right? Hopefully we added some value to you. Got something out of this? The my parting advice, and I'll ask Andrew to give his to is stay off social media, right? If you have questions about what to do, the first thing you should never do is go to a mastermind Facebook group, and ask a bunch of people from across the nation with different laws in their states, brokers that had given different levels of training, go to your broker. Your broker is the one that's responsible. Get that advice from the broker, and if the brokerage has an attorney on retainer, work with that attorney. But don't guess. Don't take advice from social media. Remember, YouTube is where people are idiots go to pretend like they're experts. So, you know, I'm saying this as we're sharing this on YouTube, right? But please, please check with your brokers and take the time to get the education from the boards whenever you can, or from attorneys.

Andrew Doyle 52:15
And I mean, my parting advice is the same. You know, this is a minefield for potential liability. So making sure that you're not crossing the line, making sure that you're not saying things that you shouldn't be saying, doing things that you shouldn't be doing, really the only way that you can know that you're safe is, and I'll be honest, there's really no way for you to know that you're safe right now, but for the foreseeable future, until there's some stability and predictability built into the legal framework here, you really should be doing things with a lot more care and a lot more skepticism, and I can't overestimate the value of having legal counsel, at least you

Kevin Johnson 53:03
at the brewer fields, gonna make a lot of money off all the litigation coming, especially the transaction.

Andrew Doyle 53:06
Thank you cash mark, yeah.

Kevin Johnson 53:08
So all right. Well, thank you so much for watching or listening wherever you're at if you're on YouTube, please do us a favor. Make sure you hit the subscribe button to be notified, or at least new updated videos for the podcast, and hit the bell so you get notified when they do come out. If you're on your favorite podcast network, please, you think about giving us a review. Make sure you subscribe so you can be notified again when we least release our next episode. Thank you so much for tuning in. We appreciate it. You know, we do these just try to help and get the word out, and give people just some clarity on whatever topic we're covering, and help you grow your business and give it that 120 it that 121% so thank you so much for watching. Have a great day, and we'll catch you next