Industry Leaders are saying, “Not much will change”, but I think one of the first things to change will be their opinion.

The Basics of the NAR and DOJ Lawsuit

The recent lawsuit involving the National Association of Realtors (NAR) and the Department of Justice (DOJ) centers around allegations of anti-competitive practices. The DOJ claims that NAR's practices regarding buyer-broker compensation violate antitrust laws, resulting in the settlement requiring significant changes. Key among these changes is the prohibition of offers of compensation on the MLS and the mandate for MLS participants to have written agreements with buyers before touring a home.

Notable and Historical Changes in the Real Estate Industry

The real estate industry has seen numerous significant changes over the years. From the introduction of online property listings to the rise of iBuyers, the landscape has evolved tremendously. Historically, the industry has adapted to shifts in technology, consumer behavior, and regulatory changes. 

Most in the industry are saying things similar to Ricky Carruth, a real estate influencer with 272k followers on Instagram, “When you understand the new game at the highest level, you realize how little things will change.” accompanied with a meme making a bold and definitive statement that he never has and never will ask for a buyer to “come out of pocket to pay my commissions.”

Not only are industry experts promoting self-serving messages, they seem to also believe the industry operates in some sort of void from other influences. 

Understanding the Game

To be clear, I’m not intending to pick on Ricky here. He has a great following and I deeply appreciate his commitment to the industry. He’s simply saying the things most others are saying as well so he’s just one of hundreds of examples I could have used. 

While they are all saying, “Not much will change”, I’m looking at the following changes and asking, “How can things possibly stay the same?”

Here are seven examples of factors I believe will have a direct impact on the immediate future of the way residential real estate is transacted…

1. Emergence of Revolutionary Tech in Artificial Intelligence

Artificial Intelligence (AI) is transforming the real estate landscape. AI spending in the retail industry is expected to reach $20.05 billion by 2026, with a compounded annual growth rate of 39% since 2019 (Source). Experts predict that Artificial General Intelligence (AGI) could arrive as early as 2029, with a 50% chance by 2060 (Source).

With the looming compression to average real estate compression, brands and brokerages will be forced to look to technology to cut costs and drive efficiencies of all kinds. 

2. Changing Consumer Sentiment Toward Agents2

Consumer dissatisfaction with real estate agents is rising. According to recent statistics, only 17% of consumers believe it is a good time to buy, reflecting frustration with the industry and overall homeownership outlook. (Source). Additionally, 61% of home sellers are now comfortable negotiating without an agent, up from 48% in 2019 (Source).

3. The Effect of Capitalism on Industry Efficiency

Capitalism drives industries to maximize efficiency, especially in sectors worth billions of dollars. The profit motive incentivizes companies to innovate and optimize operations to remain competitive (Source). This relentless pursuit of efficiency often leads to significant productivity gains, benefiting consumers with better services and lower costs.

4. Emerging Business Models in the Industry

New business models are reshaping the real estate market. Brokerages are evolving into service-based platforms, offering a la carte services rather than traditional commission-based models. This approach provides consumers with more flexibility and control over their real estate transactions (Source). Although this is nothing new to the industry, the models being developed are more aligned with consumer demands than ever before. 

5. Industry Spillover from Other Sectors

Other industries, including legal and financial services, are increasingly intersecting with real estate. Lawyers and financial planners are becoming integral parts of the home buying and selling process, offering expertise that complements traditional real estate services (Source) and may end up being a direct competitor to real estate agents.

6. Macroeconomic Factors

Macroeconomic conditions such as inflation, economic growth, and housing affordability are critical factors influencing the real estate market. High inflation rates and economic uncertainty can affect consumer confidence and purchasing power, while rising home prices impact affordability, particularly for first-time buyers (Source).

7. Generational Shifts in Homeownership Views

Generational attitudes towards homeownership are shifting. Millennials and Gen Z are less likely to prioritize homeownership compared to previous generations. According to recent data, 34% of Millennials believe renting is a better option than buying, reflecting changing lifestyles and financial priorities (Source).

But here is where things get especially spicy and I don’t see anybody else talking about it…

Taxes, NAR, and the DOJ

There's been a lot of discussion about how the DOJ is mishandling this lawsuit, with critics pointing to government ineptitude. The claim is that the supposed "transparency" achieved by decoupling commission from the MLS has only complicated matters and highlights yet another case of misguided government intervention. 

However, I think it’s the industry that’s mistaken. 

Many agents and industry leaders criticize the NAR, claiming it failed to protect their interests and commissions, which I believe is short-sighted. The NAR is a powerful lobbying force, defending homeownership benefits like the mortgage interest deduction, capital gains exclusion on primary residences, and more. 

Why would the federal government want their hands on those tax benefits? The current debt to GDP ratio is somewhere between 97-100% and is expected to reach 116% in just a few short months. 

With the 2025 Tax Cuts and Jobs Act set to expire, the NAR's role becomes even more crucial. The expiration could significantly boost federal tax revenues by increasing individual taxes by roughly 10%, primarily through higher rates and lower deductions.

A strong NAR is essential to preserve these benefits, preventing the federal government from raising taxes by up to $5 trillion over the next 5-10 years. 

This isn’t about government oversight gone awry; it’s a strategic move to access trillions of tax dollars, driven by a government in debt and over budget.

Connecting Change to the Consumer

The real issue is that industry leaders are too focused on protecting buyer's agent commissions, missing the broader picture. It’s not the federal government that's inept; it’s an industry lacking self-awareness and struggling to protect its relevance.

The NAR could have managed this situation better, but the real failure lies with industry leaders who are distracted by minor issues while overlooking significant ones. 

Consider the broader implications beyond articulating value to a buyer before showing homes. 

Most importantly, prioritize the consumer before your commission. 

If you're a homeowner, discuss these points with your Realtor or real estate agent. 

Share this viewpoint and encourage them to dig deeper.

I highly recommend staying away from statements of absolute certainty in a changing economy and industry like Ricky posted today on his social media. 

If you really care about something, you’ll dig deeper than headlines and bullet points on social media.

Saying you’ll “never” or “always” do something in the face of historical industry pressures may be great to get clicks and follows, but it is also a surefire way to disappoint clients in the future who are already looking for more reasons to replace the average buyer’s agent with an app on their phone.