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Events at last year’s mid-year meeting of the National Association of Realtors highlighted the industry group’s confusion in resolving multiple antitrust lawsuits against the real estate industry.
At the May 6 NAR MLS Forum, comments from panelist Anthony Lamacchia, broker and owner of Lamacchia Realty, sparked nervous chatter among the approximately 750 attendees, most of whom were multiple listing services executives and at least one Attendees left the room after shouting.
What did Lamakia say? During a panel discussion about leading change, Lamacchia said his agents have been asking what they should tell clients as changes are coming with the NAR settlement, including banning listing agents from selling to buyers on the MLS Brokers provide compensation.
“I have some listing agents in my firm — 35 years in the business, selling $40, 50, $60 million in homes a year — who say to me, ‘What do I tell my clients?’ ” Lamacchia said.
“Tell the client what you think is best for them, because that’s your job. When they ask you: ‘Do I really need to offer any more compensation? ” Do you need to? No, do you have to do this? No, have you ever had to do this? … Hey, potential sellers, you can give up on offering it. You may not be willing to pay… but if you do, You’re going to turn away a lot of buyers. When a lot of buyers hear the agent say, “Hey, what house do you want to see? Oh, ABC and D?” and the agent realizes that House C… People pay any compensation.
The more Lamacchia spoke, the louder the complaints in the room grew, at which point one attendee shouted, “Get out of the meeting!”
Lamacchia continued, “The agent has to discuss it with their seller. They’re going to have to discuss it with the client. If the buyer’s agent is doing a good job, they’re going to have to discuss it with the client. .
Charlie Lee
Then Lamacchia noticed Charlie Lee, NAR’s senior legal counsel, running to the podium and pacing in front of him.
“Did I make you nervous?” Lamakia asked Li.
“Um, no,” Lee replied. “I think that’s great insight, I think, you know, it’s about consumer choice, and I think that’s your point, right?” The comment drew nervous laughter from the crowd.
Lee continued, “But I don’t think we’re going to get into the specific ways that all of these conversations can go forward because it’s going to depend on the circumstances. It’s going to depend on the consumer. It’s going to depend on the transaction. So I would just say, let’s not Discuss these details. I don’t think it’s necessary.
“But we can just talk about how to enforce it and … the transparency and clarity that consumers want and brokers want to provide.” Some in the audience applauded.
“If we as an organization are afraid to talk about these things, I don’t know how we’re going to help our real estate agents do their jobs,” Lamacchia responded. Others in the audience clapped, indicating there was no consensus in the room.
The panel was not broadcast live but continued, but word of the incident spread, prompting comments from industry consultants Rob Hahn and Greg Robertson and a video from Lamacchia himself. Lamacchia has made similar remarks before, including during a HousingWire debate with Michael Ketchmark, a lead plaintiff’s attorney in multiple commission lawsuits.
Michael Kagemak
“This is a classic example of agents being trained to manipulate prices by exploiting fear of a turn,” Ketchmark told Inman of Lamacchia’s comments on an MLS forum.
“NAR was right to shut it down. This price-fixing mechanism is so entrenched that it will take a lot of training and education to overcome. But the law is the law. Whether you like it or not.
Inman contacted NAR to ask whether the trade group would consider Lamacchia’s guidance on comments, whether brokers should train their agents as Lamacchia does, whether it supports Lee’s response, why Lamacchia was invited to the panel and whether Lamacchia is NAR’s agent-designated representative NAR addresses the media.
“The REALTORS Code of Ethics requires real estate agents to protect and promote the interests of their clients and to put their clients’ best interests before their own interests,” a NAR spokesperson told Inman in a statement.
“Real estate agents have an obligation to have honest and transparent conversations about agent compensation and make sure their clients know how much they are getting paid, who is paying them and, for sellers, the benefits and benefits of the type of marketing that can be done for agents. cost.
“Under no circumstances may a real estate agent withhold information about or access to a specific home based on the amount of compensation offered by the listing agent. Ethics is one of the defining characteristics of being a real estate agent and something we strive to win in every home transaction.” and ways to maintain customer trust.
What is steering? According to the U.S. Department of Justice’s (DOJ) statement of interest in the Nosalek case, “As long as sellers are able to make a buyer’s agent commission offer, they will continue to offer ‘customary’ commissions out of concern that buyer’s agents will direct buyers away from homes with lower commissions. Source – This phenomenon is called steering, and it is a well-documented phenomenon.
Hahn and Lamacchia both said they heard more than one MLS executive left the room during Lamacchia’s speech, but both witnessed it firsthand.
Rob Hahn
“Many people trained as antitrust lawyers are advised to immediately leave any meeting where anti-competitive conduct is discussed or promoted, while declaring a protest to avoid future liability for attending the meeting – ‘complicity’ in anti-competitive conduct elements related.
“One of my sources described what Lamacchia said as a ‘pivot master class,'” Hahn added.
Lamacchia said in the video that he was “completely wrong” in advocating steering systems.
“When I was on stage, I never promoted the idea of mentorship, I never promoted the idea of buyer agent mentorship, I never promoted the idea of listing agents intimidating sellers into compensating sellers or offering higher amounts of commission,” La said. Machia said. “Absolutely. I’ve never even touched on that.
He said his purpose was to teach that “an agent should always adhere to his fiduciary duties” and act “in the best interests of his clients.”
“So if a seller asks this question, a good real estate agent…will explain to the seller, ‘Hey, if you don’t offer to offer compensation, or you’re at least unwilling to discuss it, if compensation is included in the offer you receive on the home, There will be some buyers who stay away from your home.
Listing agents have a fiduciary duty to disclose “information regarding the buyer’s ability or willingness to complete the sale or offer a higher price” and “any information that may affect the seller’s ability to obtain the highest price and best price,” he said. .
Lamacchia said buyer’s agents have a similar fiduciary duty to disclose “any information that affects the buyer’s ability to obtain the property at the lowest price and on the best terms.”
“What if the septic tank breaks and the buyer doesn’t have the money to pay for a broken septic tank or a broken well?” Lamacchia said. “What if there is a problem with the house that prevents you from getting an FHA loan within FHA’s guidelines? The buyer’s agent is obligated to warn the buyer about this. So is the commission.
on May 9 tweetLamacchia believes it will be the buyers themselves who will guide the process, rather than the buyers’ agents.
“The buyer drives the process, and the buyer will almost always choose the path of least financial resistance,” Lamacchia wrote.
Hahn predicted that view would land Lamacchia in legal trouble, as most commission lawsuits to date have argued that listing agents used the threat of guidance from buyer’s agents to convince home sellers to agree to commission rates that were much higher than they expected. otherwise.
“Guidance is more than a buyer’s agent refusing to show or market a home,” Hahn writes.
“Here’s the first half. The second half, the cause of a seller’s successful lawsuit against his listing broker, is Leverage the threat of mentoring to get higher commissions. Since Lamacchia is teaching his agents to do this and preaching to the entire industry, I thought it was important to point out some facts. Ask your own attorney whether this strategy is appropriate to pursue.
When contacted for comment, Lamacchia told Inman: “[Hahn] Everyone is excited about the things I’m talking about and what’s really going on in our industry.
But a May 15 episode of Industrial Relations, the podcast Hahn co-hosts with Robertson, showed that Lamacchia and Hahn’s views are not as far apart as first appeared.
While Hahn emphasized his point that using the threat of a buyer walking away from the home to get the seller to pay compensation to the buyer’s agent is a guideline, he also said, “You do have a fiduciary duty to tell you when a decision is made.” client”. Decisions are made that could affect the sale of their home, and one of them could be whether they offer compensation. “
But both Hahn and Robertson said balancing the two issues is “difficult.”
“That seems to be what NAR is for,” Robertson added. “Give me best practices. Give me policies to manage the balance of fiduciary responsibility and guidance.
Hahn responded, “You’d think. That would work. Instead, we performed a clown show with our agent liaison.”
NAR issued the above statement when approached for comment.
Inman has reached out to Hahn and will update this story if he hears back.
Editor’s note: This article has been updated with a statement from NAR.
Send an email to Andrea V. Brambila.
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