Jason Oppenheim, who leads a team of glamorous real estate agents on the Netflix reality series “Selling Sunset,” recently met with Yahoo Finance to discuss the current state of the US real estate market. During the conversation, he warned that the industry’s commission structure could soon be changed forever.
“To be specific about real estate agents, we have federal regulators and a couple of lawsuits coming up that, at worst, could be an armageddon for the industry,” he said. “It is possible that regulators will de-link the commission structure where the seller now essentially pays the buyers and agents commission.”
In 2019, two home sellers filed a lawsuit, alleging that several NAR rules violate the Sherman Antitrust Act, an 1890 law that prohibits activities that restrict interstate commerce and competition. NAR stands for National Association of Realtors, that is, the National Association of Realtors.
One of the NAR rules in question requires listing brokers to offer buying brokers a commission to list a property. The lawsuit alleges that this practice inflates vendors’ costs and is therefore anti-competitive.
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Traditionally, two agents are needed to sell a home: the buyer’s agent and the seller’s agent. However, if NAR loses the lawsuit, the real estate industry would effectively see buyer’s agents removed from the equation. That means the number of real estate agents in the US (there are 1.5 million right now, according to NAR), could drop precipitously.
“You could see hundreds of thousands of real estate agents leave the profession and major brokerage firms go out of business,” Oppenheim said. “We are on the brink of an armageddon that no one is talking about.”
There is hope of a settlement with regulators or an appeals process, but it is highly likely that the real estate market is about to be heavily overhauled, Oppenheim said. He added that we could see the US eventually turn towards a model with lower total fees, as is the case in Australia.
“I think there are too many real estate agents anyway, so I don’t think that’s part of the problem,” he said. “I think the problem is that if we eliminate the buyer’s agent commission, you’ll see that the agent who handles the sale will also represent the buyer in 90% of the transactions. It’s called dual agency,” Oppenheim said. “I don’t think it’s healthy for the consumer, because I think the buyer should have their own representation. It would be like going to court and having a lawyer represent both parties.”
Oppenheim believes there could be a conflict of interest.
Yahoo Finance Interview with Jason Oppenheim
