Bill Gates Got It Wrong in 2000 and He’s Still Wrong Today
In 1995, Bill Gates predicted that real estate agents would become obsolete by the year 2000 because people would purchase their homes on-line. Today, Gate’s prediction is still wrong.
According to NAR, only one percent of all buyers purchased a home without viewing it first. In fact, 81 percent of all buyers viewed the homes they purchased between two and six times.
Home buying is an emotional process for most people. Looking at on-line pictures can never duplicate the sense of what it’s like to walk through the property. When it’s time to purchase, close to 99 percent of us want to see what we are buying in person.
Brave New World
If you’re affiliated with Better Homes and Gardens, Century 21, Coldwell Banker, Corcoran Group, ERA, or Sotheby’s International, your company will be among the first to implement changes that are most likely to result in buyers having to negotiate their own commissions.
The question is what will this brave new world look like? In July of 2021, the NWMLS implemented a series of changes that address this issue and apparently meet with the DOJ’s approval. Here’s the explanation from the article I did back in July of 2022 about what they did and how this may look for anyone selling a property listed by the firms above. 
The NWMLS made two significant changes that allow the buyer and the buyer’s agent to negotiate directly with the seller the amount of the buyer’s commission.
The first step in killing future commission bombshell litigation involves ending the current model of sharing commissions. Instead,
“The compensation the seller offers to the buyer broker will be determined by the seller, rather than commission sharing between the two brokerage firms.”
The second step clearly allows commissions to be negotiated between the buyer, the buyer’s agent, and the seller.
The compensation the seller offers to the buyer broker will be prominently stated on the first page of the NWMLS purchase and sale agreement, with an opportunity for the compensation to be accepted by the buyer and the buyer’s broker or modified by the parties in an addendum.
This week’s CoachingClues ** is vital to your business if you intend to continue to represent buyers. Use this column as a starting point for how you will create your personal buyer value proposition Second, if your local or state board of realtors, MLS, or your company offers “buyer broker” training, sign up for it now.
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Most Notable Findings from the NYT Sexual Harassment Investigation
On Saturday August 26, 2023, New York Times Reporter Debra Kamin broke the story about sexual harassment at NAR. Here’s the press release concerning the story along with a link where you can read the entire report.
The New York Times’s Debra Kamin reports: The powerful National Association of Realtors (N.A.R.) has ignored sexual harassment complaints, including those against the group’s president, Kevin Parcell.
Debra Kamin spoke to more than 25 members about complaints of sexual harassment, discrimination, and retribution by Mr. Parcell and other N.A.R. leaders. 
For more than 100 years, the American housing industry has been dominated by N.A.R., which has 1.5 million dues-paying members, 66% women, making it the largest professional organization in the country, controlling access to nearly every American home listing and owning the trademark to the word “Realtor.”
Despite the organization’s size and reach, employees and Realtors interviewed by The Times criticized its leadership as a tight circle of allies who deflected wrongdoing and punished those who complain. Sixteen of the allegations examined by The Times of either sexual harassment or an abusive culture involved Mr. Parcell, which several women described as a boss who crossed lines.
From the story:
- One woman said the man put his hands down his pants in front of her. Another woman said the same man texted her a picture of his crotch. A third woman said she had a consensual relationship with the man, only to have him retaliate after it ended.
- “There is the sexual harassment, and then woven into it, this culture of fear,” said Stephanie Quinn, the organization’s former director of business meetings and events, who worked at N.A.R. for more than a decade.
- Many women who brought concerns to N.A.R. said that the response from leaders discouraged them from ever speaking up again about harassment inside the organization.
- Nineteen women who worked at or were active in N.A.R. or its affiliates told The Times in interviews that they had endured sexual harassment on the job.
- Another 10 said they were subjected to a sexist, belittling culture.
Click here to read the complete investigation.
As this story has continued to unfurl at lightning speed, I still must wait on my editors at Inman for their editorial comments before I can share those columns with you. Next week there will be a special edition with at least two articles documenting the unbelievable events that are taking place even as you read this column.
Sexual Harassment Bombshell on the Horizon
On August 8, 2023, at Inman Connect, Brad Inman dropped the biggest bombshell of the week when he told a rapt audience inside the Aria Resort & Casino in Las Vegas about a text message he’d received earlier that week from an unidentified source. It was a big public confirmation of what many had already been whispering about before the event.
“New York Times is investigating NAR for sexual harassment,” he announced to the crowd, apparently quoting from a source privy to a big expose The Times may or may not be working on involving recent allegations, since withdrawn,
made against the trade organization in June.
Spokespeople for both the National Association of Realtors and The New York Times declined to comment when asked by Inman to confirm whether a story about the trade organization was in the works, with NAR saying it can’t comment without first seeing the contents of the article and The Times saying it doesn’t comment on stories that “may or may not run in future editions.”
But if The Times has evidence of widespread sexual harassment at NAR with multiple people coming forward on the record — which, to be clear, has not been confirmed — it would give credence to sexual harassment and retaliation claims Janelle Brevard made in her short-lived litigation. Even more importantly, it would completely discredit the narrative being put out by the current leadership team and their attorneys.
What’s ahead for NAR and any perpetrators
If allegations of sexual harassment and retaliation are indeed true, additional litigation is on the horizon. Below is a list of the type of actions that could be filed against both NAR as well as any perpetrators of these acts. An even bigger bombshell would be if the current NAR leadership team has engaged in a coverup of these acts that was paid for with membership dues.
Civil lawsuit complaints alleging sexual harassment
Sexual harassment is a form of sex discrimination under Title VII of the Civil Rights Act of 1964, administered by the Equal Employment Opportunity Commission (EEOC).
Victims may file civil lawsuits against the perpetrator(s) and the organization for monetary damages. The organization can be held liable, especially if it is proven that they were aware of the harassment and failed to take appropriate action.
EEOC complaints 
The EEOC enforces federal laws against workplace discrimination, including sexual harassment. According to the EEOC website, sexual harassment can include:
Unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature. Harassment does not have to be of a sexual nature, however, and can include offensive remarks about a person’s sex. For example, it is illegal to harass a woman by making offensive comments about women in general.
Both victim and the harasser can be either a woman or a man, and the victim and harasser can be the same sex.
Although the law doesn’t prohibit simple teasing, offhand comments, or isolated incidents that are not very serious, harassment is illegal when it is so frequent or severe that it creates a hostile or offensive work environment or when it results in an adverse employment decision (such as the victim being fired or demoted).
If the employer has 15 or more employees, victims must file a complaint with the Equal Employment Opportunity Commission (EEOC) within 180 days. After investigating the complaint, the EEOC may sue the employer on the victim’s behalf or issue a “right to sue” letter, allowing the victim to file a lawsuit.
Criminal charges
In some cases, if the sexual harassment includes criminal conduct such as sexual assault, the perpetrators may face criminal charges. In this scenario, the state attorney general and/or local law enforcement would prosecute the accused. The victim would likely serve as a key witness.
Retaliation and whistleblowers
What is retaliation? According to WB&S LLP:
The Civil Rights Act protects employees from sexual harassment in the workplace. What many people don’t realize is that these laws also protect employees from retaliation. Retaliation occurs when an employer punishes an employee for filing complaints regarding sexual harassment or discrimination in the workplace. Various federal laws protect against retaliation and establish the rights of “whistleblowers” (people who file complaints about unsafe workplaces). Retaliation can take a variety of forms, including:
- Demotion
- Salary reduction
- Job termination
- Denial of a raise
- Denial of promotion
- Missed training opportunities
- Job reassignment
- Less desirable schedule
- Poor performance review
- Micromanagement
- Exclusion from staff activities
Some forms of retaliation are obvious while others are subtler. Any negative action from an employer following a harassment claim is potentially retaliation. The Equal Employment Opportunity Commission (EEOC) deems retaliation illegal, regardless of whether the claim was true, if the employee made the claim in good faith. In other words, an employer isn’t legally justified to commit retaliation just because sexual harassment never really occurred in the workplace.
Defamation claims
If an organization or its representatives make false statements about a victim in an attempt to discredit them, the victim may have grounds for a defamation lawsuit. According to Britannica, defamation is: The act of communicating to a third-party false statements about a person that result in damage to that person’s reputation. Libel and slander are the legal subcategories of defamation. Generally speaking, libel is defamation in written words, pictures, or any other visual symbols in a print or electronic medium. Slander is spoken defamation.
Constructive discharge or dismissal
According to the U.S. Department of Labor,
The term “constructive discharge” is when a worker’s resignation or retirement may be found not to be voluntary because the employer has created a hostile or intolerable work environment or has applied other forms of pressure or coercion which forced the employee to quit or resign. This often arises when an employer makes significant and severe changes in the terms and conditions of a worker’s employment. What constitutes a constructive discharge is usually defined in state law and varies from state to state.
In a sexual harassment case, constructive discharge occurs:
When sexual harassment becomes intolerable, a woman may quit her employment and sue for constructive discharge (forced resignation). Constructive discharge claims are in many respects like unfair firing claims and permit the same remedies, such as damages for emotional distress and lost wages. To establish a constructive discharge claim, a sexual harassment victim must show that the employer either intentionally created or knowingly permitted working conditions that were so “intolerable” or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.
Employment contracts and arbitration clauses
Some employment contracts include arbitration clauses, which means that disputes, including those about sexual harassment, must be resolved through arbitration rather than through the court system. While these clauses can sometimes be seen as favoring employers, they can also result in settlements for victims.
Breach of contract or breach of duty
If an employer fails to uphold certain contractual promises or duties regarding workplace safety and environment, they may be liable for breaching those obligations.
Systemic issues
Inman has continued to report example after example of inappropriate behavior throughout the real estate industry: embezzlement, sexual harassment, and sex trafficking. If The NYT has indeed found extensive evidence of sexual harassment and other related claims arising from those allegations, the fallout for NAR will be catastrophic.
The litigation would further bury an organization that already has three major antitrust cases on the horizon. It would put the national spotlight on NAR’s integrity, and it would put NAR’s leadership team and its ability to lead in question, which could potentially trigger mass resignations.
What Happens to NAR and the Industry If They Lose the Bombshell Lawsuits? (Part 2)
Click to read Part 1, which gives background on these lawsuits.
Major risks if the suits are not settled:
Failure to settle these suits could force a complete overhaul of the industry:
- Copycat lawsuits ensue nationally. Brokerages, MLS’s, and associations across the country are all named.
- There is no coverage by E&O, D&O, GL Insurance because these are antitrust claims.
- This can result in massive bankruptcies taking place across the industry.
How can the industry prepare? 
The most important step that the industry can take across the board is to make buyer-broker agreements mandatory in every transaction. Dwiggins described what this would entail.
Where buyer broker agreements are required before a listing (can be posted) in the MLS has shown that is a smart, tactful decision that should be enacted today. There are a lot of things that need to be worked out about that (especially) if dual agency is banned in your state. But in general, it should happen. It’s important for fiduciary to the buyer, it creates less looky-loos coming through a property for the seller (because) they know that there’s actually a genuine client working with an agent. There’s (also) no downside from a consumer perspective.
It also levels the playing field, so it’s not just one agent asking for a buyer broker agreement—it’s a requirement. By the way, there are 12 states currently in the US that require this anyway.
He went on to say:
I don’t think you’ll see the FTC, or the DOJ have an issue with any of that. It’s pro consumer and they’ve been wanting to establish fiduciary for a long time—you’ve now done it. That is a smart move that should occur.
Dwiggins also made the following suggestions for NAR, MLSs, brokerages, and agents to be better prepared for what’s coming.
NAR should:
- Rescind the Buyer Broker Cooperation policy to make it optional since MLS’s are going to do it anyway.
- Immediately pass a mandatory rule to its MLS policy and Code of Ethics that requires buyer’s brokers to have signed buyer broker agreements that clearly spell out compensation terms signed before showing MLS-listed properties.
- Mobilize national lobbying resources to explicitly allow mortgage loans to finance the buyer broker compensation and educate members on how to talk to consumers about the value of buyer representation.
The Multiple Listing Services should: 
- Make Buyer Broker Cooperation optional, just like Bright MLS, Northwest MLS, and now MLS Pin have done. It’s going to happen regardless.
- Prepare for commission pressure and attrition amongst their membership and continue to focus on consolidation to bring MLS’s costs down further. Dwiggins believes this could result in a 30-40 percent drop in NAR membership.
- Think beyond being a repository of homes for sale and work together on driving more innovation for their membership.
According to Dwiggins, many of the MLSs he works with are starting to prepare for these changes by considering how they can change their value propositions and thinking about how MLSs will function in a new world. What can they offer their membership? How can they offer cooperation?
Brokerages should:
- As soon as possible, require signed, executed buyer broker agreements at the beginning of their agents’ engagements with buyers.
- Develop educational, marketing, and training materials for agents that clearly explain the specific value of their buyer agent services and audit their existing materials to comply with NAR rules on buyer agent compensation messaging.
- Cut down on overhead and expenses. They will need to be much leaner operationally in the next 12 – 24 months.
- Come up with different compensation model options for their agents. They will need to adapt just as their agents will. Buy side commission pressure will occur.
Agents should:
- Start using buyer broker agreements at the beginning of their engagements with all buyers.
- Start using buyer presentations, clearly articulating their value and why they get paid the compensation they do. It must be 10X better than they are today.
- Develop different compensation models such as (percentage, hourly, flat fee) depending upon clients’ needs.
- Listing agents should update their materials to address how they and any agent representing a buyer are compensated, the pros and cons of sellers offering or not offering compensation to buyer’s agents, as well as language in their contracts regarding compensation, services, and fiduciary duties in states that allow dual agency or transaction brokerage.
We don’t need to be fearful of this—the sky’s not falling, it’s going to change
Dwiggins believes the industry needs to be able to articulate its values to buyers and have the buyers pay us. These changes make sense—they need to happen.
The end result in three or four years will be (that) it’ll be a better organized business, and you won’t see any more DOJ investigations. You won’t see a lot of this government intervention because it’s set up in a structure where you are representing one individual, you are working as a fiduciary with that one individual, and that one individual is paying you for those services. It is going to end that way, one way or the other, and I think we will be a better industry long term for it.