NATIONAL MEDIA TAKES NOTICE OF UNINTENDED CONSEQUENCES OF NEW REAL ESTATE COMMISSION RULES
African American Real Estate Professionals May Be Significantly Harmed
WASHINGTON – RealEstateRama – The national media is raising awareness of the threat to African American real estate professionals posed by changes to the structuring of commissions paid to agents working on behalf of buyers in home sale transactions. The changes, negotiated in a proposed settlement of a Missouri lawsuit, are upsetting the industry and creating an unsettling environment for Black agents and minority home buyers.
USA Today published a comprehensive story this weekend entitled, “Residential real estate was confronting a racist past. Then came the commission lawsuits.” The article, written by reporter Andrea Riquier, outlines the unintended consequences of the National Association of Realtors (NAR) proposed settlement of a case that challenged a decades-old system requiring the agents of home sellers to split the commission on sales with the agents of home buyers. Starting last Saturday, August 17, home sellers and their agents can no longer outline compensation for agents representing buyers within their MLS listings. They can, however, negotiate outside of the official listing.
The new arrangement significantly impacts Black agents, who overwhelmingly represent home buyers in sales transactions. In fact, the National Association of Real Estate Brokers (NAREB), whose members include Black real estate professionals, said Black agents represent buyers in more than 70% of their sales. The fear is that many minority home buyers who don’t have generational wealth due to systemic racism over the decades won’t be able to pay the commissions for agents representing them. In the past, the seller picked up that fee, and this change could further financially disadvantage the buyers.
“By decoupling the commission paid to buyer brokers from seller proceeds, the landmark class-action lawsuits brought against NAR and other large national brokerages on behalf of consumers have unintended consequences, advocates say,” the USA Today reports.
Further, the article adds:
“The concern: Black buyers, who often come to the house hunt with the deck stacked against them, will be further disadvantaged by having to pay more money out of pocket for an agent to represent them – or will choose to go without representation in a transaction that’s expensive, confusing and laden with unfamiliar pain points…
“One of the biggest challenges for Black and other minority buyers is that many are not just first-time buyers, but the first among their generation in their families to purchase property. Just 45.3% of Black Americans are homeowners, compared to 74.4% of whites, Census data shows. Thanks largely to higher homeownership rates, white Americans have $1.4 million in household wealth, on average, nearly six times that of Black families, at $227,554, according to the Federal Reserve’s Survey of Consumer Finances.”
Dr. Courtney Johnson Rose, president of NAREB, said there is reason for concern for Black real estate professionals and Black home buyers.
“We have what may become an untenable situation,” Dr. Rose said. “Black agents represent many families who simply can’t afford to have the commission for their agent added to the down payment they have already worked to save. And we will have families who are first-time home buyers who need the counsel that agents provide on everything from where to move to how to find a mortgage loan.”
Furthermore, there is the possibility that more “pocket listings” could arise—situations where houses are sold with limited public listing, which can easily be used to eliminate minority home buyers from purchasing in certain areas.
USA Today writes: “While changes to the commission structure have grabbed most of the attention, many observers are also concerned about the erosion of the centralized databases that previously housed all information about real estate listings. A confirmation that the seller would pay the buyer’s broker was generally included on most listings. Now that piece of information may not be included, which will force buyers and their brokers to reach out to each seller or their agent individually.”
Dr. Rose confirmed this is an area that NAREB is concerned about. “Public policies and private practices frequently discriminated against Blacks seeking to buy homes right up to and past the civil rights movement,” she said. “It would be terrible for Black families and our nation if this change sends us spiraling backward.”
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For print or broadcast interviews with NAREB President Courtney Johnson Rose, contact Michael Frisby at 
ABOUT THE NATIONAL ASSOCIATION OF REAL ESTATE BROKERS
NAREB was formed in 1947 to secure equal housing opportunities regardless of race, creed, or color. NAREB has advocated for legislation and supported or instigated legal challenges that ensure fair housing, sustainable homeownership, and access to credit for Black Americans. Simultaneously, NAREB advocates for and promotes access to business opportunities for Black real estate professionals in each real estate discipline. From the past to the present, NAREB remains an association that is proud of its history, dedicated to its chosen struggle, and unrelenting in its pursuit of the REALTIST®’s mission/vision embedded goal, “Democracy in Housing.”
Contact:
Michael K. Frisby
