NAR Lawsuit Explained | Are Real Estate Agents Scamming? – Shawn McNeil
On this episode of The Closing Table, we sat down with Shawn McNeil!
To watch the full episode, check it out on YouTube below. In the meantime, here’s a summary of the conversation…
Here’s what you missed from Shawn McNeil…
The conversation began with Shawn and Kevin delving into the recent class-action lawsuit against the National Association of Realtors (NAR), dissecting its implications for the real estate sector. Shawn categorizes the issues into two main points. Firstly, there’s the question of why sellers are compelled to pay a buyer’s agent commission. Secondly, he addresses the alleged predatory practices involving free services, emphasizing the role of certain companies using training methods to inflate commissions, leading to dissatisfaction among sellers and the subsequent initiation of the class-action lawsuit.
As the investigation extends to all agents affiliated with the NAR, concerns arise about potential involvement in deceptive practices. Shawn reassures that not all agents, including himself and his team, are part of this. He points out that the investigation pertains to a specific time frame, and he wasn’t even operating as a brokerage during the alleged misconduct. Moreover, he emphasizes that the lawsuits are geographically confined to certain parts of the United States.
When the conversation shifts to accountability for the overall industry practices, Shawn, as a brokerage owner, acknowledges a level of liability. However, he expresses frustration with NAR dictating how he runs his brokerage. Shawn grapples with the challenge of adhering to NAR policies, unsure if the issues he faces are his fault as an owner. He describes the restrictive nature of operating within the confines of NAR rules, even when he disagrees with some of them. Shawn highlights the changing landscape of the real estate market, particularly during the COVID-19 pandemic, where rules haven’t adapted to the evolving conditions. He criticizes the organization’s approach, suggesting that while they aim for an even playing field, it may not always serve the best interests of sellers, despite potentially benefiting buyers.
Next, Shawn discusses the benefits of joining the National Association of Realtors (NAR), primarily focusing on the tangible advantages he perceives. Firstly, he mentions the privilege of using the Realtor title, highlighting the direct benefits he gains. Additionally, he acknowledges the value of NAR’s training programs, ongoing education, and adherence to a code of ethics. However, he expresses uncertainty about the broader benefits, questioning the organization’s relevance in his perspective. As he sees it, the primary incentive for membership in his area is the necessity to access local Multiple Listing Services (MLSs) and have listings syndicated to various websites, a requirement tied to NAR membership.
Shawn then delves into the complex structure of NAR, likening it to a big government with federal and local components. He notes the role of local boards, which have the authority to dictate rules specific to their areas. However, he voices concerns about the lack of cooperation among these boards, emphasizing the financial burden on brokerage owners like himself who must be part of multiple boards, each with its associated fees. This fragmentation, he argues, limits the reach and effectiveness of realtors, potentially to the detriment of consumers.
When asked about the disadvantages of joining NAR, Shawn points to the restrictive rules imposed by the organization. Furthermore, he highlights a broader issue facing NAR—the ongoing lawsuits and sexual harassment allegations. He underscores the multifaceted challenges the organization is currently navigating, suggesting a complex landscape that extends beyond one singular concern.
Following that, Shawn outlines the key to rebuilding trust with consumers, emphasizing the crucial role of education. He asserts that daily conversations centered around educating clients are integral to overcoming challenges and fostering understanding. Shawn underscores the value of NAR’s potential role in providing educational resources, but notes a current lack of awareness regarding such initiatives.
Addressing the issue of negotiating commissions, Shawn points out a gap in NAR’s approach. He highlights that commission negotiation falls under state law, presenting it as an untapped avenue for NAR to address. Shawn questions why NAR didn’t emphasize the common licensing requirements during the trial, suggesting a missed opportunity.
Regarding the fairness of the ruling amount, Shawn expresses uncertainty, citing a lack of insight into the trial specifics. He critiques NAR’s response, deeming it a weak statement banking on appeal. Shawn questions the astronomical figure of $1.7 billion, suggesting a more constructive approach would have involved acknowledging past practices and committing to change.
Asked about realtors’ compensation, Shawn opines that, personally, he feels adequately compensated for his work. However, he acknowledges the industry’s fair compensation and highlights the financial intricacies involved. Shawn touches on the financial burden of joining boards, illustrating the disparities in fees for brokers and everyday agents. He shares personal experiences with commission splitting, shedding light on the challenges agents face compared to other stakeholders in the real estate process.
Discussing the perception of buyers not paying for a broker as a potential marketing ploy, Shawn acknowledges it as such, citing the Truth in Lending Act as the governing law for lenders. He notes the limitations imposed by NAR on realtors regarding this tactic, emphasizing the distinction between realtors and non-NAR affiliated real estate agents. This clarification highlights the prevailing confusion among consumers who often consider both terms synonymous.
Shawn also delves into the anticipated long-term effects of the recent ruling, noting that major brokerages have opted not to mandate NAR membership for their franchisees. While this is a strategic move for larger entities, Shawn points out the challenge for smaller independent businesses like his, unable to follow suit without potential repercussions. This discrepancy raises concerns about fairness within the industry.
The conversation wraps up with Shawn addressing broader issues in the real estate industry that need improvement. He emphasizes the need for enhanced education. He critiques the current 40-hour licensing requirement, arguing that it falls short for individuals handling significant assets. Shawn advocates for a shift in perspective, urging consideration of real estate as a career rather than a part-time endeavor. He questions the rationale behind minimal testing and suggests adopting a model similar to other professions, like nursing or law, where continuous testing ensures ongoing competence. In his own brokerage, Shawn implements stricter educational requirements to benefit everyone involved in the real estate process.
Check out Shawn McNeil:
Facebook: https://www.facebook.com/shawn.mcneil.90
If you loved this episode subscribe so you never miss one! Want more The Closing Table content? Head over to our blog.