The Impacts of the NAR Lawsuit on Real Estate: Hoarding Listings and Changing Dynamics

The real estate industry has always been a dynamic and ever-evolving sector. However, recent developments, particularly the National Association of Realtors (NAR) lawsuit, have sparked significant changes and raised concerns over the future of buyer representation and compensation. Amidst the dust kicked up by the Halloween jury verdict, a key trend is emerging: listing hoarding by big brokers.

The Trend of Listing Hoarding

For years, major brokers have been experiencing a steady decline in profitability. This challenge has nudged them towards strategies aimed at increasing the likelihood of selling their own listings. Post-verdict, this trend is not just continuing; it's accelerating.

Compass and the Rise of Private Exclusives

Compass, a notable player in the industry, made an early and significant move in this direction with their Compass Private Exclusives. This initiative allows them to market properties exclusively within their network, bypassing the broader market exposure typically afforded by Multiple Listing Services (MLS).

Followed by Other Major Players

Coldwell Banker and EXP Realty have followed suit, each launching their exclusive offerings. This shift indicates a growing preference among large brokerages to keep listings in-house, reducing reliance on MLS.

Howard Hanna’s Strategic Exit from IDX

A different but related strategy was observed with Howard Hanna's withdrawal from Internet Data Exchange (IDX) in one of its key markets. This move aligns with the broader theme of brokers preferring to sell their properties internally rather than letting competitors have a chance.

Implications for the Industry

This shift towards hoarding listings will likely favor large, listing-heavy brokerages. These entities have extensive agent networks and the marketing prowess to effectively sell properties while adhering to NAR’s Clear Cooperation Policy. However, this change isn't without its consequences.

Changing Competitive Dynamics

The real estate brokerage business is set to experience a significant shift in competitive dynamics. Large brokerages with hefty listings will gain an upper hand, potentially marginalizing smaller players who rely heavily on MLS for property exposure.

Potential Side Effects

1. Reduced Market Transparency: With more properties being sold in-house, there's a risk of reduced transparency in the real estate market. This could make it harder for buyers to access a full range of available properties.

2. Impact on Smaller Brokerages: Smaller brokerages may find it increasingly difficult to compete if they can't access a wide range of listings.

3. Consumer Choice and Cost: This shift could limit choices for consumers, possibly impacting the cost of buying property, as in-house sales might not always fetch the best market price.

Conclusion

The NAR lawsuit's fallout is a multifaceted issue. While it may benefit large brokerages in the short term, the long-term effects on market dynamics, transparency, and consumer choice are yet to be fully understood. It's clear, however, that the real estate landscape is changing, and all industry players must adapt to these new realities.