Brokers prepare for changes after Sitzer/Burnett commission lawsuit verdict

Key Takeaways:

– The real estate industry is facing uncertainty and potential major changes due to the guilty verdict in the Sitzer/Burnett commission lawsuit.
– Brokers are concerned about how they will pay the $1.8 billion in damages, which could increase to $5.36 billion if treble damages are allowed.
– Brokers are also worried about how they can handle client meetings and what language to use on open house fliers.
– The National Association of Realtors, Keller Williams, and HomeServices of America plan to appeal the verdict, so it’s unclear when changes will take effect.
– Some industry professionals believe changes will happen soon, while others think it may take time due to legal processes and appeals.
– Agents and brokers may need to shift how they work with buyers and sellers, including using buyer’s agency agreements and negotiating commissions.
– There is uncertainty about how NAR will navigate the situation, with some believing they should have made changes beforehand to prevent the lawsuits.
– Copycat lawsuits are expected to arise in other states and potentially target other brokerages, teams, and agents.
– Despite the challenges, industry professionals remain optimistic that the industry will ultimately work through the issues.


The real estate industry as agents and brokers know it has been turned upside down.

It remains to be seen exactly what the guilty verdict in the Sitzer/Burnett commission lawsuit means for agents and brokers, as the industry waits for Judge Stephen Bough’s injunction. However, real estate brokers across the country have already begun preparing themselves, their firms and their agents for the worst.

Gretchen Pearson’s greatest concern is how the industry is going to potentially pay the $1.8 billion in damages. (It would swell to $5.36 billion if the court allows treble damages.)

“I think it will come down to the individual brokers to get the damages, and that kind of money will put a significant amount of the brokers out of business,” the Berkshire Hathaway HomeServices Drysdale Properties broker-owner said.

Pearson also has concerns about what this will now mean for how she and her agents handle client meetings or how to word things on open house fliers.

“I am working with an attorney to figure out how we are going to talk to people that come into open houses and what language we use on open house fliers,” Pearson said. “Can we ask if the buyer is represented now? Can we even discuss things about the house because if we inform the potential buyer of something about the house that makes them not want the house, even if it isn’t something necessarily bad, are we going against our agreement with our seller?”

Although Pearson’s concerns are warranted, she is certainly ahead of the game.

With Bough’s injunction not yet known and the National Association of Realtors, Keller Williams and HomeServices of America all vowing to appeal the jury’s verdict, it’s uncertain exactly when changes will go into effect.

“As of today, as of tomorrow, next week, next month, two months from now, it is business as usual,” Anthony Lamacchia, broker-owner of Lamacchia Realty, said during a live episode of his Crush It YouTube show Tuesday afternoon. “This doesn’t have some immediate impact on the way that we conduct business.”

On the other hand, Glenn Kelman, CEO of Redfin whose company has been named in the recently filed Gibson commission lawsuit, believes changes are coming sooner rather than later.

“The judge may take days or weeks to decide what structural changes the jury’s verdict will entail. There will also be years of appeals about the legal standard used in the case and other issues,” Kelman wrote in a blog post. “For now, the initial size of the damages alone will ensure major change. In the weeks leading up to the verdict, the National Association of Realtors already updated its guidelines to let agents list homes for sale that don’t offer a commission to the buyer’s agent.”

Like Kelman, Chip Stella believes a shift to how agents work with buyers and sellers is imminent, and he’s working to prepare his agents for a variety of outcomes.

“Some states currently require buyer’s agency agreements, but now they are a must and agents need to know how to use them,” the LandVest broker said. “I am also supporting my agents by helping them to be able to better articulate their value in the marketplace.

“And I think every brokerage should be meeting as a group or having discussions around the language we use to talk about commissions, because those are some of the reasons we are where we are today. We need to have the conversations that commissions are negotiable.”

As Stella looks to navigate all of these potential changes to the industry, he is confident NAR and his local Realtor association will be there to support him, a sentiment echoed by Lamacchia.

“I do believe they will. They sent us an email right away informing members of the plan to appeal and answering questions,” he said.

Lisa Chinatti, the broker-owner of Chinatti Realty, doesn’t share Lamacchia’s optimism.

“I don’t have faith that NAR is going to navigate this, and I think that there were some changes that were necessary that will come out of this,” Chinatti said. “And we should have made those changes, as an industry, beforehand to prevent it from getting to this level. I think NAR is partly at fault, and I know that is not a popular opinion.”

Chinatti, who owns a large independent brokerage in Eastern Massachusetts, is also concerned about copycat lawsuits.

“Without a doubt they are coming,” Chinatti said. “I think it is just a matter of time until the copycat lawsuits are in every state going after every brokerage. I think the questions mark is whether it retains itself to just the brokerage level or whether it trickles down to the team or even agent level.”

Lamacchia echoes her concern.

“[The Sitzer/Burnett verdict] probably means that Michael Ketchmark, this money-grabbing lawyer, is going to go out and sue many other companies,” Lamacchia said. “If he keeps this up, he might get down to suing our company.”

Despite his dour outlook, Lamacchia remains optimistic that the industry will ultimately prevail.

“Somewhere along the line this is going to get worked out,” he said.

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Property Chomp’s Take:

is an essential element in web development that plays a crucial role in creating and structuring web pages. It is a tag used in HTML to define a division or a section of a webpage. With the recent developments in the real estate industry, the use of

takes on a new significance in the context of how agents and brokers conduct their business.

The real estate industry has been shaken by the recent guilty verdict in the Sitzer/Burnett commission lawsuit. This verdict has left agents and brokers uncertain about the future and has forced them to rethink their strategies. One of the major concerns is the potential $1.8 billion in damages that brokers may have to pay, which could lead to the closure of many businesses.

Furthermore, the verdict raises questions about how agents and brokers should handle client meetings and communicate information about properties. Brokers like Gretchen Pearson are already seeking legal advice to ensure they comply with the new regulations. They are trying to determine what language to use on open house fliers and whether they can discuss certain aspects of a property without going against their agreements with sellers.

While the industry awaits Judge Stephen Bough’s injunction and the appeals from the National Association of Realtors, Keller Williams, and HomeServices of America, there is uncertainty about when the changes will be implemented. Some brokers, like Anthony Lamacchia, believe it will be business as usual until the verdict takes effect. However, others, such as Redfin CEO Glenn Kelman, anticipate changes in the near future.

Agents and brokers are now preparing for a shift in their approach to working with buyers and sellers. Chip Stella emphasizes the importance of buyer’s agency agreements and helping agents articulate their value in the marketplace. Additionally, he suggests that brokerages should discuss the language used to talk about commissions, acknowledging that commissions are negotiable.

As the industry braces for potential changes, there is a divide in opinions about the support they can expect from organizations like the National Association of Realtors. While brokers like Lisa Chinatti express skepticism, others like Lamacchia believe these organizations will provide guidance and support during this challenging time.

Another concern is the possibility of copycat lawsuits emerging in different states, targeting various brokerages. Chinatti predicts that it is only a matter of time before these lawsuits become widespread. This raises the question of whether the lawsuits will be limited to brokerages or if they will extend to teams or even individual agents.

Despite the uncertainty and legal battles, Lamacchia remains hopeful that the industry will find a resolution. He believes that a solution will be reached eventually, but acknowledges that there are challenges ahead.

In conclusion, the real estate industry is experiencing a period of upheaval with the recent guilty verdict in the Sitzer/Burnett commission lawsuit. As agents and brokers navigate this uncertain landscape, the use of

takes on a new significance. It represents the need for adaptation, preparation, and collaboration within the industry. While the future remains unclear, the industry is determined to overcome these challenges and find a way forward.

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