‘Unfiltered’: ‘More litigation’ coming, predicts industry leader 

Editor's note: The Real Estate Insiders Unfiltered podcast explores the people and forces that shape the real estate industry. Check out our top takeaways and watch the latest episode from NextHome CEO James Dwiggins and Keith Robinson, NextHome's chief strategic officer.

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On this episode of Real Estate Insiders Unfiltered, Collabra CEO Russ Cofano — whose industry credentials include state association CEO, president and general counsel at eXp, and head of industry relations at Realtor.com — discusses the future of real estate, touching on hot topics like cooperative compensation and the CCP, while warning of a leadership void and the likelihood of further lawsuits.

"What this whole thing has created is a bullseye on the real estate industry, and there is going to be more litigation," Cofano predicted. "We obviously have not seen the final shoe drop from the Justice Department," he added — a prescient observation in light of the DOJ's recent statement of interest in the NAR settlement, which was filed after the podcast was recorded. During the NAR and HomeServices settlement hearing on Nov. 26, the DOJ also hinted at future investigations.

Agents aren't equipped to adapt: In the post-settlement era, Cofano thinks agents will "find it more difficult to manage their duties to their clients," particularly in terms of commissions. "We're already seeing some agents that, for example, think they can modify buyer agency agreements or buyer representation agreements to increase commissions. Well, you can't do that." 

Agents are struggling, Cofano said, because they're not getting the support they need: Over the past 20 years, brokerage companies have "walked away from leadership through business models that have given individual agents and teams ownership of the industry." He identified Keller Williams and eXp as "the two most impactful models" to emerge — but called them out as "low oversight, heavy body count" models that have contributed "to an overabundance of agents in this business." 

And NAR, he added, is no longer positioned to fill what he calls a leadership void. "They used to be, but I don't think they are (anymore)."

Time to ditch cooperative compensation: "The sooner the industry can walk away from cooperative compensation, the sooner we can start feeling good again," Cofano said. "So cooperative compensation needs to be out of our vocabulary."

But CCP can stay: "I personally think some element of the philosophy behind clear cooperation, which is getting all listings in a marketplace, is good for the industry, good for consumers," Cofano said. 

But he believes the debate over the CCP reflects a bigger issue: "I think what we're seeing today is a function of the fact that brokerage companies are sick, and this is economics at play." And without strong brokerage entities, Cofano said, the industry could "completely morph into something else."