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Real estate commissions are negotiable, no matter what any lawsuit says

(FINANCE) An anti-trust lawsuit against major players in the residential real estate industry sheds light on misinformation and misunderstandings about commissions – when you’re buying or selling a home, you’re in the driver’s seat. Negotiate!

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Minnesota home seller, Christopher Moehrl, has filed an class action anti-trust lawsuit [in April], alleging a “conspiracy” to price fix broker compensation in the 2.5-3% range, naming the National Association of Realtors (NAR), Realogy, HomeServices of America, RE/MAX, and Keller Williams (with more to be named, inevitably).

The complaint intimates that by requiring brokers to offer buyer broker compensation when listing a property on the MLS, fees are “fixed” and inflated, violating anti-trust laws. In short, they believe buyer’s agents shouldn’t be paid because buyers can find their home online now.

The class action suit claims that because the seller has to pay the buyer’s agent, commissions are inflated. The truth is that although it is NAR’s rule to require compensation, it could be as little as one cent, and Associations support all compensation models (flat-fee, discount, rebates, traditional 3% per side, and even higher on luxury listings).

Let’s take a look at some of the court documents directly:

8. Defendants’ conspiracy has kept buyer broker commissions in the 2.5 to 3.0 percent range for many years despite the diminishing role of buyer brokers.

This point continues to outline how buyers agents are essentially useless in an era where homebuyers have direct access to listings and can find their own home online. That claim is similar to claims made by anti-Realtor bloggers in the early 2000s, and is wildly uninformed. All agents, no matter which side they represent have a fiduciary duty to their client, negotiate on their behalf, and walk them through (and oversee) a complex financial process.

Beyond that, buyer’s agents are often the person that has to inform a buyer that their dream home they found on Zillow (or other sites that use non-MLS data) actually sold several days ago, or was not real to begin with.

They’re the individuals that have to not only be educated on real estate law and contracts, lending options and processes, but be experts in a certain geographical area and be informed of architectural styles, smart home features, green home features, and so on.

The indication that a buyers agent’s sole value is to pair a homebuyer with a home is ludicrous and objectively false.

17. In that sales transaction, Mr. Moehrl was represented by a RE/MAX franchisee, and the buyer was represented by a Keller Williams franchisee. As part of the sales transaction, Mr. Moehrl paid a total broker commission of six percent, and 2.7 percentage points of the six percentage points were paid to the buyer broker.

It is important to note that it is not illegal to buy or sell a home without representation. It happens every day across this nation. If there was a legal requirement to hire a real estate professional, this lawsuit might have merit. But there is not.

Further, the fact that the buyer broker was only given 2.7 percent indicates that Moehrl negotiated against the supposed 3.0 percent standard the lawsuit is so aggressively fighting against.

Obviously this home seller knew he could negotiate commissions.

Not only did the Plaintiff not have to hire a Realtor, he didn’t have to allow any negotiation of the compensation, given that the buyer side earned 2.7 percent, and his own Realtor earned 3.3 percent.

38. As required by the Buyer Broker Commission Rule, the seller broker makes a blanket, non-negotiable offer of a three percent commission to the buyer’s broker when it lists the home on the local MLS.

The Plaintiff’s attorneys have clearly not done any homework. Compensation is required, that is factual, but there are no bylaws that dictate the amount. It can be as little as one cent. Or as high as 100%, it is all negotiable. All of it.

63. For years, buyer broker commissions have remained steady at two-and-a-half to three percent in the areas in which the Covered MLSs operate despite both an increase in home prices (increasing the dollar amount of the commission) and the diminishing role of buyer brokers described above.

NAR does not track or store broker commission data, and while brokerages individually do, they don’t uniformly or openly share that information with any competing brokers. There is no conspiracy regarding commissions.

The responsibilities of a buyer broker have actually increased over time, not diminished. Ask a broker in 1980 if they had to be well versed in modern marketing, social media strategies, analytics, paperless contract technologies, know the privacy laws regarding the collection and dissemination of information online, and so forth.

To repeatedly argue that anything other than market conditions have determined commission levels is dead wrong. In fact, some would argue that commissions on both sides of the transaction should be higher (and therefore, some brokerages offer services at higher commission levels than 3%).

The takeaway is that all commissions in real estate are negotiable, it’s not a legal requirement to hire a real estate professional when buying or selling a home, and that buyer agent responsibilities and values have actually increased over time.

Anyone in America who doesn’t like a Realtor’s services offered at a specific commission level can negotiate or hire a different Realtor – there is no conspiracy here. This lawsuit has a variety of factually inaccurate statements regarding commissions, and is laughable.

This story was first published in April of 2019.

Lani is the Chief Operating Officer at The American Genius - she has co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Business News

Top 15 jobs that will see hiring growth in 2020

(BUSINESS NEWS) LinkedIn releases the 2020 Emerging Jobs Reports which looks at trends and growth. A lot of changes are happening, especially in tech.

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While many are hanging their stockings by the chimney with care, we’re digging into the end-of-year data that runs rampant at this time of year – and we love it. Such data has been released from LinkedIn in the form of its 2020 Emerging Jobs Report.

LinkedIn explains this report as: “The Emerging Jobs analysis is based on all LinkedIn members with a public profile that have held a full-time position within the U.S. during the past five years. Once the talent pool has been identified, we then calculate the share of hiring and Compound Annual Growth Rate for each occupation between 2015 and 2019 to identify the roles with the largest rate of hiring growth. These become our Emerging Jobs.”

The report finds that trends for U.S. jobs in 2020 will see data and artificial intelligence continue to grow as time marches on. Additionally, data science is booming and is starting to replace legacy roles.

The trends also state that increased insurance for mental health is driving up demands for behavioral health professionals. Lastly, the report finds that it’s never a bad time to be an engineer.
As for overall industry trends, it was found that online learning is here to stay while more smart cars are coming our way. Also, the future of tech will rely heavily on people skills.

Location trends found that secondary cities have the jobs (like Austin, hollaaaa!) and tech is taking over Washington D.C. And, as pointed out in many of my articles this year, remote work will continue to become more and more mainstream.

The report then listed the top 15 emerging jobs in the U.S. These include:

1. Artificial Intelligence Specialist (74% annual growth)
2. Robotics Engineer (40% annual growth)
3. Data Scientist (37% annual growth)
4. Full Stack Engineer (35% annual growth)
5. Site Reliability Engineer (34% annual growth)
6. Customer Success Specialist (34% annual growth)
7. Sales Development Representative (34% annual growth)
8. Data Engineer (33% annual growth)
9. Behavioral Health Technician (32% annual growth)
10. Cybersecurity Specialist (30% annual growth)
11. Back End Developer (30% annual growth)
12. Chief Revenue Officer (28% annual growth)
13. Cloud Engineer (27% annual growth)
14. JavaScript Developer (25% annual growth)
15. Product Owner (24% annual growth)

When looking at how your company is growing, it is worthwhile to look at how the world around you is expanding, and if you’re job hunting, this list shows job titles that are quickly getting more competitive!

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Business News

Unicorn goes extinct – is the scooter movement in trouble?

(BUSINESS NEWS) The scooter war may be coming to an end with many companies, like Unicorn, closing their doors and refusing to fulfill orders and/or refund customers.

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Scooters, scooters, scooters – it seems like that’s all us city-dwellers have heard about these past 3 years.

Since the inception of rental scooters in Santa Monica in 2017, more and more companies have thrown their hats into the ring, resulting in intense competition. Through this brand rivalry, many of the scooter-centric companies have gone bust, including the most recent shut-down, Unicorn.

Unicorn is a newer brand of electric scooters, under the brand name Unicorn Rides. The supposed up-and-coming scooter company was created by well-known tech CEO, Nick Evans, the maker of the ever-popular tracking device, Tile.

Unicorn was meant to be a product that wowed customers, with special bells and whistles not seen before with other scooter brands. The company boasted a unique, rugged and waterproof battery, enhanced motor output for riding through hilly areas, an integrated smartphone app, and even extra storage for grocery shopping and other errands.

But when Unicorn sent a very worrisome email to a large portion of its customers last week (350 paid-up, un-served customers), it quickly became clear that the company wasn’t going to live up to the hype. In fact, it was obvious that the company wouldn’t live any longer at all.

The gist of the email included an announcement that the company would be shutting down, strictly due to finances. Apparently, the company spent the majority of it’s money on Google and Facebook ads, as well as loan repayments which, they explained, resulted in their inability to fulfill existing orders or refund anyone who had already purchased the $699 device – a huge blow to customers.

In the email, Evans stated that they actually could have continued to press forward with production and fulfillment, and that it may have been enough to fund the business, but they ended up opting against this route as a lack of sales could have resulted in future customer upsets.

In the same email, Evans went on to more deeply explain their money trouble: “Unfortunately, the cost of the ads were just too expensive to build a sustainable business. And as the weather continued to get colder throughout the US and more scooters from other companies came on to the market, it became harder and harder to sell Unicorns, leading to a higher cost for ads and fewer customers.”

This explanation isn’t leaving a better taste in their customers’ mouths though. Buyers like Rebecca Buchholtz are very unhappy, and rightfully so. Buchholtz told The Verge “I am upset he basically robbed everyone of his customers and is closing without delivering any scooters.”

It’s important to mention that Unicorn did not go the typical funding route for its product, either. Instead of just using angel investors and investment firms, Unicorn chose to go a different route – scooter pre-orders. Crowd-funding through pre-orers is not a completely unheard of avenue, though. Unagi Scooters, for example, successfully funded its first campaign for its new scooter (appropriately named Unagi) on Kickstater in 2018, raising over $242K. The main difference here is that Unicorn’s “pre-order” was not through a platform such as Kickstarter, which actually protects buyers from incidents like this.

In his email, Evans alludes that they’re still trying to refund (at least partially) their customers, but he also specifically said that it “looks unlikely”. Their website is still working, but pages like their shipping update and pre-order cancelation pages, which still show up in Google’s search results, are now dead links, resulting in 404 errors. This makes for a pretty clear statement on what’s to happen with the company’s existing customers.

unicorn 404

But it’s not over yet! If you are an affected customer of Unicorn’s, don’t fret. Most banks have fraud-protection and buyer-protection, so if you pre-ordered using a credit or debit card, we recommend contacting your bank.

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Business News

Court green lights demoting an employee for physical disabilities

(BUSINESS NEWS) Court rules the Americans with Disability Act doesn’t fully cover employees – but is the law actually open to some interpretation?

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disabilities wheelchair

Wrongful termination is a hot topic these days, especially in relation to employees with disabilities. It’s commonly thought that if you have a disability, you’re safe and that no one can fire you for simply being disabled. But did you know that’s actually a myth?

When ex-Sheriffs Deputy Brigid Ford injured herself on the job, she was faced with the hard truth about the law surrounding disabilities.

Ford, who worked 12 years as a Sheriff’s Deputy, was injured when a car ran a red light and ran into her patrol car, smashing her hand. This resulted in constant pain and an inability to use her right hand. She spent the next few months working in alternative, lighter-duty areas of the department. But even after a year, she was unable to return to her initial post.

Because of this, the Sheriff’s department offered her 3 options:

1. She could move to a civilian job, with a cut in pay. This would include any associated accommodations she may need.

2. She could resign.

3. If she didn’t choose either of the above, they claimed she could be terminated.

Ford ended up choosing a demotion, and then elected to sue the department for violating the Americans with Disability Act (ADA). At the end of these proceedings, the court found that the demotion was reasonable.

But is this really the standard application for the law?

Although there are many myths associated with the ADA, the law clearly states that in order to provide reasonable accommodation for an employee, you must go through an “interactive process”, which means there must be some back and forth to accommodate the employee.

In Ford’s case, she was unable to continue her initial job as she was not provided with all the accommodations she requested and therefore, only had enough accommodations to continue with a civilian job.

What’s strange about this situation is that she was provided with a few in-depth provisions that would meet her needs, such as training for her supervisors, extra breaks when needed, so she could deal with her pain, and a more ergonomic work station. However, when she requested a voice-activated software for her computer, which would limit her need to use her right hand, she was denied.

The court stated that if there had been a lateral position available, with no decrease in pay, and Ford was qualified for the job, the ADA would have protected Ford a bit better, favoring this option over demotion.

Nevertheless, with the rise of documented disabilities in America, the lines the ADA draws for employees and employers-alike continue to seem blurred. Just like many other laws, the act seems to be open to some interpretation, but at the end of the day, when something like this is brought to the court system, American citizens are truly at the mercy of our court’s Judges and how they translate the laws.

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