Once upon a time, when the real estate market was just getting familiar with internet technology, prospective Realtors® dreamt of using the new technology to both excel and fine-tune their craft. One Realtor®, Aaron Farmer, thought about offering his services based on “per task” scale, rather than the standard 6 percent fee. Not long after he considered this scale, the Texas Real Estate Commission passed rules establishing what they termed “minimum levels of service” that real estate agents had to meet (effectively making Farmer’s idea of a fee scale, illegal).
Since Farmer’s idea was in line with the beginning of the internet boom, he felt as though TREC’s rules were unfair. In 2002, he decided to sue them for restricting his trade and was assisted, astonishingly, by the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC). Surprisingly, the government was investigating the real estate industry already, mainly claims that new players to the real estate game were not afforded the same opportunities as vested professionals. In many instances, veteran professionals were blocking or restricting access of the newer agents (particularly it seemed those agents who had an eye for the budding technology that was/is the internet).
After years of back and forth debates, the DOJ came to an agreement with the National Association of Realtors® (NAR). This settlement, set forth in 2008, outlined and limited anti-competitive practices, as well as situations where agents were denied access to listing data.
The decree specifically outlines acceptable and prohibited conduct for Realtors® and brokers. The decree clearly states how VOWs (Virtual Office Websites) should operate. In essence, since the internet was just getting started, VOWs were the primary way technologically-minded brokerages presented their information to consumers.
Nowadays, these VOWs are commonplace through multi-state online brokerages like Redfin, Compass, and Zillow, as well as, smaller, local brokerages which allow customers to search for homes currently on the market in any given location.
Here’s the issue: The “VOW policy” imposed restrictions on how brokers could access listings from the MLS across the US, but simultaneously exempted other “traditional” brokers (those who weren’t using VOWs, but were instead keeping to the “old school” principles of using mail, faxes, paper, or postcard to deliver their information).
Given this inequity, the Antitrust Division of the U.S. Department of Justice launched an investigation and began to conclude that the playing field wasn’t equal, and was in fact, violating antitrust laws. Thus, why they interceded and why the decree to block their current VOW policies was created and put into effect. The decree basically states play nicely and everyone should have a fair shot at accessing MLS data and sharing it, regardless of whether or not you share this data through traditional “old school” means, or the new online method.
The decree stated that the NAR shall not adopt, maintain, or enforce any rule, or enter into, or enforce any agreement or practice that directly or indirectly prohibits a Broker from using a VOW (Virtual Office Website).
VOW includes all of the listing information that a Broker is permitted to provide to customers by hand, mail, facsimile, electronic mail, or any other delivery methods. It also stated the NAR® cannot unreasonably discriminate against a Broker who uses a VOW to provide customers all listing information.
It also details the required conduct expected from the NAR. The original decree states, that within five business days, the following actions are expected: the NAR shall repeal the policy and implement the new VOW policy; NAR shall not change the new policy; the NAR shall direct each coveted entity to adopt the new VOW policy; NAR will notify the DOJ if the coveted entities do not comply, the NAR shall notify the DOJ if any member board violates the new VOW rules after notifying that member to cease; NAR will furnish the DOJ copies of communication with any person that alleges a member boards’ noncompliance or failure to enforce the new rules.
In order to ensure the NAR complied, authorized DOJ representatives would inspect and copy records, including books, ledgers, accounts, records, data, and documents. They are also allowed to interview NAR® officers, employees, or agents and more.
The decree is set to expire on November 18th of this year.
The industry is already beginning to assess what will happen. Already, two members of Congress have written to the DOJ and asked them to consider extending the 10-year decree. It is possible the decree could be extended, but both the DOJ and the FTC may hold hearings to determine the continued validity of the decree.
If the decree is not renewed, the NAR and MLS will no longer be required to support VOWs. While I don’t expect they will go back to the “old school” methods, it does beg the question, will they restrict current brokerage services?
The bigger question seems to be, not if the decree will be extended or not, but rather, since the internet has become such an incredibly integral part of our lives, is the decree even valid any longer? To clarify, aren’t VOWs a common practice now? Would extending the decree change anything? Instead of worrying about whether or not the NAR and their associates will revert to practices that kept individuals like Farmer from operating, perhaps our government should be looking at the bigger picture: is the decree even valid in this technologically-driven age?
NAR and other industry groups call for caution before ending conservatorship
(REAL ESTATE ASSOCIATIONS) The National Association of Realtors joins industry groups to urge the Treasury to avoid a rushed end to conservatorship.
The National Association of Realtors (NAR) joined the Mortgage Bankers Association (MBA), the American Bankers Association (ABA), and the National Association of Home Builders (AHB) in voicing their concerns about a rushed effort to end the conservatorship of Fannie Mae and Freddie Mac.
In response to the financial and housing crisis of 2006 through 2008, the Federal Housing Finance Agency (FHFA) placed Fannie Mae and Freddie Mac (government-sponsored enterprises, or GSEs) into conservatorship in September 2008. To stabilize the firms, the Treasury gave the companies a $190 billion lending package. In return, the Treasury would receive senior preferred shares, and Fannie Mae and Freddie Mac would be required to make quarterly dividend payments to the Treasury, among other things.
It’s 12 years later now, and FHFA’s Director Mark Calabria’s top priority is to remove the company from government control and place it back in private hands before President Trump leaves office. And, the housing industry associations argue abruptly ending the conservatorship of Fannie Mae and Freddie Mac could destabilize the housing market.
In a letter to the U.S. Treasury Secretary Steven Mnuchin, the housing industry associations said, “We are concerned that other potential actions to release the GSEs from conservatorship without the necessary safeguards would undermine investor confidence, create volatility in the single-family, and multifamily mortgage markets and impede access to credit for consumers.”
“During conservatorship, investors have relied on the Treasury backstop of the GSEs, which totals over $250 billion, as well as the effective control of the GSEs by the federal government.” By ending the conservatorship with the GSEs without anything in place, the groups say it “could cause investors to reassess the nature of any backstop and result in severe market disruptions.”
The letter points out “examples of potential harm” such as: “a sharp pullback in investor demand for GSE mortgage-backed securities (MBS) by investors concerned about a diminution of government support and an associated increase in credit risk exposure”; And, “an increase in mortgage credit costs during economic crises, negatively impacting the GSEs’ ability to support the market in the next crisis.”
The housing industry groups strongly oppose the swift ending of the conservatorship of Fannie Mae and Freddie Mac, but they don’t say they expect this will go on forever. They want to flesh out a plan that works for everyone.
“Our associations and the members we serve have worked over the past twelve years to develop reform plans and advance efforts – both legislative and administrative – that would correct structural flaws in the GSEs’ pre-conservatorship business models and allow them to transition safely out of conservatorship.”
“We have not supported, nor do we currently support, an “endless” conservatorship. Our position is quite the opposite – we wish to see the GSEs reformed and operating outside of government control. We therefore favor actions that move the GSEs closer to the preferred end state in a timely manner that does not disrupt the housing finance market and inflict broader economic harm.”
And, the NAR, along with the MBA, ABA, and NAHB now have a response to their letter.
According to The Wall Street Journal, Treasury Secretary Steven Mnuchin suggested, “he is unlikely to support a legal move—called a consent order—to end the government conservatorships of the mortgage-finance companies before President Trump leaves office.”
“We’re going to not do anything that jeopardizes taxpayers and puts them at additional risk. We also want to be careful that we don’t do anything that overnight would limit access to mortgage finance.”
For now, it looks like Sallie Mae and Freddie Mac will remain as government-sponsored enterprises.
NAR teams up with AARP to improve options for senior real estate
(REAL ESTATE ASSOCIATIONS) Senior real estate has unique challenges for those who need it, but NAR is teaming up with AARP to provide Realtors the resources they need.
The National Association of Realtors® (NAR) and AARP have teamed up to create a new relationship forged to better assist and engage older Americans in senior real estate. This collaboration is planned to inform NAR members about community factors that support people as they age. With the number of Americans 65 and older expected to more than double to 80 million in 2040, this is important for a growing national demographic.
For NAR members using the REALTORS Property Resource® website and mobile app, a practical implementation of this partnership will be the integration of the AARP Livability Index data through those platforms. The AARP Livability Index includes robust national data that is broken down by ZIP code. It can offer vital insights into factors that impact property owners of all ages, including healthcare and transportation. This information can be passed on to clients for more informed decision-making.
AARP CEO Jo Ann Jenkins stated, “One of our goals is to help people better understand their housing needs over a lifetime. Clearly, homebuyers and other movers can use more information to help them make choices that meet their needs.” Ms. Jenkins continued to say, We want to address the barriers that prevent people from living in their desired communities as they age and I know this relationship with NAR will help us better accomplish that goal.”
The announcement was made during the fully virtual 2020 Realtors® Conference & Expo. Bob Goldberg, CEO of the nation’s largest trade association, said, “Understanding and better assisting older Americans in their real estate transactions has been a priority of NAR for some time, and partnering with AARP is a continuation of that focus”.
Mr. Goldberg continued on to say, “Highlighting AARP’s Livability Index to Realtors® through the REALTORS Property Resource® will provide valuable insight to our members while positioning them to better safeguard and advise home and property buyers.”
Previous to the collaboration between the NAR and AARP was the NAR Seniors Real Estate Specialist® program. The Seniors Real Estate Specialist® (SRES®) designation is for REALTORS® who want to be able to meet the special needs of maturing Americans when selling, buying, relocating, or refinancing residential or investment properties and complete in-depth training in a wide variety of topics specifically related to senior real estate, homebuyers and sellers over the age of 50.
“Realtors® are put through a rigorous course to earn their SRES® designation and upon completion they’re equipped with expertise on counseling senior clients through major financial and lifestyle transitions,” said Goldberg. “This collaboration with AARP will take Realtors’® efforts in serving older Americans to the next level.”
How do you react to housing discrimination? Learn from NAR’s new course
(REAL ESTATE ASSOCIATIONS) NAR’s new interactive training simulation confronts housing discrimination by putting agents in the shoes of homebuyers.
Would you know housing discrimination if you saw it?
Are you sure?
And what would you do about it?
If you’re a real estate agent, broker or Realtor, you’ve had a fair amount of training on fair housing laws. But discrimination can sometimes creep in in subtle ways – from which listings you offer a client to which clients you decide to work with to just an offhand remark about a neighborhood.
What if you’ve been part of the problem – and you didn’t even realize it?
Now you can test yourself while sharpening your understanding of housing discrimination to ensure you’re offering all clients a fair, equitable, and positive experience.
In the fictional town of Fairhaven, you work against the clock to close four different transactions that involve some kind of discrimination. You must choose how to respond, and those responses determine your journey through the simulations. Built-in feedback along the way illustrates how you could avoid the fair housing pitfalls in each situation.
To deepen the impact, the course puts you in the role of a client experiencing discrimination and pairs that with testimonials from real people whose lives have been impacted by it.
“Fairhaven uses the immersive power of storytelling to deliver powerful lessons that will help promote equity in our nation’s housing market,” said Charlie Oppler, CEO of Prominent Properties Sotheby’s International Realty, NAR’s incoming president for 2021. “NAR will continue our work to create innovative anti-discrimination training and to champion efforts that encourage diversity, fight racial bias and build more inclusive communities.”
The online platform is free to real estate professionals and doesn’t require NAR membership to use. NAR will also offer Fairhaven as a software package for brokerages and associations to incorporate into their learning management systems. It was developed in partnership with global professional services firm Ernst and Young.
Fairhaven.realtor is the latest resource offered to realtors as part of its Accountability, Culture Change and Training (ACT!) initiative designed to promote equal opportunity in real estate.
At the Nov. 19 Diversity and Inclusion virtual summit hosted by The Hill, Oppler offered a formal apology for the role realtors have played in the history of housing discrimination, including the practices of redlining and blockbusting.
“We can’t go back to fix the mistakes of the past, but we can look at this problem squarely in the eye,” Oppler said. “And, on behalf of our industry, we can say that what Realtors did was shameful, and we are sorry.”
Bryan Greene, NAR’s director of fair housing policy, discussed the effects of housing discrimination, including creating disparities in wealth. Discrimination denied Black families the same opportunities to build wealth through home ownership, Greene said, adding that white Americans own 10 times the wealth of African-Americans.
“Realtors have an admittedly tough history,” Greene said. “But we have turned the corner and now have emerged as leaders on these important issues.”
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