Realtors Are Sorry About All the Discrimination
Bloomberg Businessweek|December 27, 2021 - January 03, 2022 (Double Spread)
The National Association of Realtors wants to make amends. As long as it doesn’t have to talk about that 6% commission
Peter Robison and Noah Buhayar
The awkward Zoom call is now a staple of office life, but even by that low bar, this one in November 2020 was painful. A middle-aged White man with a gold pin on the lapel of his gray suit stared into the camera: Charlie Oppler, president of the National Association of Realtors and chief executive officer of Prominent Properties Sotheby’s International Realty, with 15 offices in northern and central New Jersey. Oppler was speaking at a diversity and inclusion summit, an occasion marked with a mea culpa—and not a small one. The NAR, America’s largest trade group, issued a formal apology for decades of racist policy that excluded non-White people from owning homes.

Real estate agents helped create today’s deeply segregated communities. In the 1930s they provided the raw neighborhood intelligence, using starkly racist language about “negroblighted” districts and the “infiltration of undesirable racial elements,” that aided in the creation of the infamous redlining maps denying federally backed loans to people of color. They came up with the idea of loading property deeds with restrictive covenants that kept Black people out of the most desirable neighborhoods. The NAR’s predecessor organization opposed the Fair Housing Act of 1968, which barred discrimination in home sales. In case that all sounds like ancient history, multiple instances of members airing racist views on social media in 2020 led the group to adopt a formal code barring hate speech.

“Many may not realize just how far-reaching this systemic housing discrimination was, particularly for African Americans,” Oppler said on the call, before asking, “Bryan, can you speak to that a little bit?” The camera shifted to the group’s first director of fair housing policy, Bryan Greene, who had worked for 29 years at the U.S. Department of Housing and Urban Development.

As one of the top federal officials in charge of enforcing the Fair Housing Act, Greene once stayed late at HUD’s offices in Washington writing a speech commemorating the law’s 32nd anniversary, then walked to a nearby hotel to hail a cab. The driver turned him down after seeing he was Black;

Greene sued in federal court and won a settlement. Now he had the unenviable job of explaining a century of civil rights struggles to his audience, most of whom looked a lot like Oppler (78% of NAR members are White). After a high-level summary—he mentioned that Black people were once excluded from membership in the NAR—Greene concluded that “it’s a tough history” but “we have turned the corner.”

Trade groups often shift with the political tides, but the NAR’s apology and awareness campaign amounted to a backflip worthy of an Olympic diver. The group had largely supported the administration of Donald Trump, hosting him at its 2019 legislative summit, where the onetime property developer drew cheers as he touted his distaste for government bureaucrats and said the gathering felt like “home.” The internal fallout from the group’s apology—two weeks after Joe Biden defeated Trump in the presidential election—has mapped the divisions in American society. Some NAR members have called for even bolder systemic changes, including reductions in commissions for minority homebuyers and sellers, and others have expressed outrage over what they see as the empowerment of “cancel culture.”

The open brawling comes at an awkward time for the NAR, whose 1.6 million members account for the lion’s share of U.S. real estate agents. (The group has trademarked the word “Realtor” to refer to its members, and its members only, thank you.) Nothing is more central to its mission than protecting the commission of 4% to 6% that agents typically take on American home sales. In this pandemic year of soaring sales, commissions in the U.S. are forecast to top $100 billion for the first time. Yet the commission is under threat as never before.

Consumers have filed class-action lawsuits in Illinois and Missouri, challenging the NAR on antitrust grounds. Separately, the U.S. Department of Justice’s antitrust division is pursuing an investigation of its own. The heart of the matter is the Realtors’ control of the Multiple Listing Service, or MLS, where 89% of sellers in the U.S. listed their homes in the year through June. It’s an essential data source feeding into the maps of newer digital services such as Zillow Group Inc. and Redfin Corp. Before listing a home on the MLS, sellers must agree to participate in the “cooperative compensation” system, in which two agents, one for the seller and one for the buyer, split the commission from the sale proceeds. Commissions in the U.S. averaged almost 5% last year, according to the publisher and consultant RealTrends. They’re less than 2% in countries including Ireland, the Netherlands, Norway, Singapore, Sweden, and the U.K.

The same month Trump lost the election, the Justice Department reached an agreement with the Realtors that would have kept the cooperative system in place while requiring greater transparency about costs. The Biden administration ripped up the deal in July, however, and sought documents from the NAR showing how the association enforces the mandatory offer of compensation to buyer brokers. (The group sued in federal court in September to block what it called the “unprecedented breach” of the earlier settlement.) A Biden executive order also directs the Federal Trade Commission to investigate “unfair tying practices or exclusionary practices in the brokerage or listing of real estate.”

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