‘Unfiltered’: ‘Smashing the system’ won’t benefit buyers
Watch the conversation with Gary Acosta, CEO of NAHREP, as he offers a candid view of the NAR settlement, which he says gives sellers power — but at great cost.
NextHome CEO James Dwiggins has emerged as a significant voice on the topics that are shaping the real estate industry: lawsuits, innovation, leadership. But Dwiggins doesn't just answer questions, he asks them of guests on Real Estate Insiders Unfiltered, his podcast with Keith Robinson, NextHome's chief strategic officer.
On this week's episode of Real Estate Insiders Unfiltered, Gary Acosta, CEO of the National Association of Hispanic Real Estate Professionals (NAHREP) — the largest Latino business organization in the U.S. — shares his views on the NAR settlement (and whether consumers really win), and the challenge of getting policymakers to understand the negative consequences.
An 'imperfect' commissions system is better than the alternative: Real estate has been transacted in a pretty consistent way over the past 100 years, Acosta said, "and with all of its flaws and imperfections, the net result has actually been fairly good, right?" He pointed to high rates of homeownership overall, and an increasingly diverse population of homebuyers.
The outcome of the settlement, said Acosta, is that "we're now saying we've got to basically smash the system and start over." The NAR deal gives sellers more power in the transaction, but that comes "at the expense of the people who can least afford to do that. So we're now putting more burdens on buyers."
The argument that changes to commissions practices hurt buyers has "been a tough case to make to policymakers and people who are not in the industry but are in influential and powerful positions, because the idea on a high level doesn't seem crazy. Buyers should pay for their agents, sellers should pay for their agents — that doesn't sound like a crazy idea, except when you break it down into more detail and you understand how the business actually works."
A game with no clear winner: "People think by decoupling these commissions, somehow consumers are going to be in a better negotiating position, and that's going to drive commissions down. When I was talking to the DOJ and we were having that conversation about how this is going to play out, I kept urging them to say what the end game is here — where do you see this all going? Even if commissions do come down, who benefits from that at the end of the day? They think that by reducing commissions, somehow that's going to result in lower home prices."
But buyers will still get the short end of the stick, Acosta said: "There's no circumstance that I see where first-time homebuyers benefit from this."
The views, thoughts and opinions expressed in the Real Estate Insiders podcast belong solely to the podcast creators and guests, and not Real Estate News.