I recently watched an interview that I’m going to give you the link to see below, in which two leaders within the residential real estate industry discuss the recent bombshell courtroom decision, in which the National Association of Realtors and two brokerage firms were held liable in the amount of $1.8 billion, having been accused of helping to facilitate larger brokerage commissions being paid within the industry.
The two industry experts discussed the potential ramifications to the industry because of this decision, and they also discussed how an additional lawsuit has now been filed, in which major individual brokerage companies have now been named as defendants, and the plaintiffs are seeking what could amount to between $200 and $600 billion in damages.
So this then got me thinking, “What if one or more parties filed lawsuits similar to this against the commercial real estate industry? Could you see them suing broker trade organizations, and the organizations that now allow brokers to post their listings online? And could you see them suing the major commercial real estate brokerage companies, too?”
In my opinion, this may all come down to whether or not some people believe that a favorable judgment for this could be obtained for them within the courtroom, or whether they believe that a big enough settlement could be obtained from all defendants combined, to make it worthwhile for these people to then file their lawsuit.
The two industry executives discussing the information in the interview mention how the defendants currently involved in the litigation have a big incentive to want to settle, because a major judgment against them could bankrupt them all…and the plaintiffs are most likely smart enough to recognize that it will be best for them to reach a settlement with everyone involved, too, rather than risk getting a massive judgment against all of the defendants, which would then bankrupt all of these organizations, resulting in the plaintiffs then getting nothing.
With this in mind, several major real estate brokerage companies have now reached a settlement agreement with the plaintiffs, and have now agreed to pay them $140 million to be done with this. (Click here to read an article that discusses this lawsuit and the court decision.)
So even though this describes something that has been happening on the residential side of the business, the parallels between both sides of the industry are close enough to make one consider that something like this could happen on the commercial side, too. All it would really take is for someone to see this happening on the residential side of the business, and then think, “We can do this on the commercial side of the business, too, there could be big money in it for us, so let’s be the first ones to file the lawsuit.”
In addition, some of the ramifications mentioned in the interview from all of this involve the potential for dual agency to now be eliminated, the potential need for buyers to now have to pay their own broker separately within the transaction, and the potential elimination of any mention of commissions within online listing services.
Click here to watch this interview, and as you watch it, I believe you’ll recognize certain trends and ramifications that could easily begin coming to the commercial side of our industry, too, if something similar were to ever happen within our side of the business.