This attorney's ideas could change how you buy and sell your home

The National Association of Realtors agreed to pay a $418 million settlement and change the way its members charge commission.

A federal jury ruled last year that the NAR conspired to inflate costs in the housing market.

What could that mean for the way that homes are bought and sold in the U.S.?

Today, On Point: This attorney's ideas could change how you buy and sell your home.

Robert A. Braun, partner in the antitrust practice group at Cohen Milstein.

Doug R. Miller, attorney at Miller Law PLLC. Executive director of Consumer Advocates in American Real Estate (CAARE).

Theresa Hatton, CEO of the Massachusetts Association of REALTORS®.

Roberta Baldwin, realtor in North Jersey with 29 years of real estate experience.

Part I

MEGHNA CHAKRABARTI: This month, the National Association of Realtors agreed to pay a $418 million settlement and change its rules on commissions earned in housing sales. Those rules have defined the industry for decades. It was a culmination of a verdict handed down last fall when a federal jury ruled that realtors have been conspiring to inflate home prices in order to increase the dollar value of their commissions.

Now a federal court still needs to approve the agreement, but experts were already speculating that the new rules could transform how Americans buy and sell their homes. So what exactly happened? And what will this settlement agreement mean for you? We'll start with a person at the center of this agreement and story, Douglas R. Miller. He's a real estate and consumer protection attorney and also the executive director of Consumer Advocates in American Real Estate. Doug Miller, welcome to you.

DOUG MILLER: Thank you for having me on the show.

CHAKRABARTI: Okay. I would love to actually start with your background, your story in real estate itself.

Okay. I understand that you actually got a realtor's license in high school?

MILLER: I did. It was a very easy thing to obtain, and it seemed like a fun thing to do. In most states, you don't need a high school education to get a real estate license. In fact, in my state here in Minnesota, now, you don't even need a kindergarten education.

And it's about 30 hours of training on how to pass the exam and then another 60 hours after that. It's nothing like getting a plumber's license or other professional licenses, it's far too easy. And I did it for fun. And that's how I got started seeing some of the problems in this industry.

CHAKRABARTI: Okay, I have to say that I did not realize that Minnesota's laws were as, let's say, welcoming to potential realtors, as they are.

CHAKRABARTI: It varies from state to state, for sure. In some places it's harder to get into. In fact, so hard, I would say that they create barriers to entry in order to limit the number of realtors.

MILLER: I would not agree with that.

CHAKRABARTI: Oh, you wouldn't?

MILLER: No. No.

CHAKRABARTI: Go ahead.

MILLER: Yeah, most of the very large brokerages have embraced a philosophy and it's called the masses of, it rhymes with masses, philosophy and what they've done is they've tried to lower the entry standards and every state in the nation, as far as I know, it's simple.

It doesn't take much at all. There's no post high school education requirement, no community school. It's you take the test and you're free to go out there. There's no apprentice programs. You can end up negotiating with having somebody represent you who is completely unqualified to do. And that's a big complaint I hear from realtors, as well, all the time.

It's very easy to get licensed. And the reason these brokers do that is they've done a few things. They've created an IRS statute that makes it automatic that these real estate agents are independent contractors, even though they're managed by a broker, they're supervised by a broker, their actions are supposed to be controlled, and they're supposed to represent whoever the broker represents.

Now they've really messed up some of those laws too, but not today. And so what they've done is lower the entry standards as much as they could. Because every one of these independent contractors, which are really employees, are free employees. So the more of them they have, the more likely they are to sell to a friend, neighbor, or relative.

CHAKRABARTI: I see. Okay. You know what? I would actually love to learn more about this from you, but that's not necessarily the focus of our conversation today, but clearly, you're deeply knowledgeable, Doug. So what I wanted to hear from you is that in your career as a young high school realtor, what did you see at that time that began to concern you?

MILLER: I didn't really start to see things until I went to college. And I got another license there in Wisconsin and in law school, as well. I actually placed my license with a brokerage firm, and I believe that brokerage firm, the owner went on to be the president of the National Association of Realtors.

And I saw the focus on exploitation. They would create these fiduciary relationships with consumers and then use those relationships to do all kinds of bad things to them. The main driver, of course, was the 6% commission. They would tell people that it's 6% because I have to share my fee with another broker, and then they would do everything they could to try and make sure the other brokers didn't sell the house.

So that they could collect a double commission, which they would call and celebrate. They'd call them hoggers.

CHAKRABARTI: Wow. Okay. And then you, so you began practicing law in a one-man law firm?

MILLER: That's correct. Yeah, I've always been on my own.

CHAKRABARTI: Okay.

MILLER: I did start a title company and saw even more.

We closed over 100,000 transactions. We were one of the biggest title companies in Minnesota, but we were independent. And that was a whole other set of issues that the real estate brokers got involved with and polluted and ruined, as far as competition is concerned. But I saw so many transactions and I got such a deep view of what was going on inside these transactions, as the owner of this title company.

CHAKRABARTI: I see. Now about that hoggers case, just to be clear, the plaintiffs won that lawsuit, right?

MILLER: Oh, okay. The lawsuit. I was fresh out of law school, and I started a class action. I don't actually do the litigation. But I hired a firm. I presented them with another lawyer. We presented a memorandum to some boutique law firm in town that handled class actions, and we sued them. Because they were claiming to represent the buyer and the seller on the same transaction, the same brokerage firm was.

So when you hire a broker, you need to remember, you're not hiring the agent. Your contract is with the broker. Whomever the broker represents is who those agents represent, and that's the way the law is supposed to read. In any case, they were doing this, they weren't making proper disclosures.

You can't disclose a dual agency in any kind of meaningful way and obtain the consent of a consumer. That's what the common law requires. It's just not something that's possible. Even lawyers, it's prohibited for them to do it. We won that case on summary judgment. A year later, the most powerful lobby group in the U.S., the National Association of Realtors, bankrolled the lobbying effort in Minnesota to legalize dual agency just for realtors. It was still illegal for attorneys, and we're trained on how to manage conflicts of interest and they are not. And then all kinds of laws similar to that got passed throughout the whole United States.

So my win was a dramatic failure in my mind.

CHAKRABARTI: Oh, okay. There comes a point though. Where, I think, it sounds like you just feel like there's so much in the world of housing. And specifically, how realtors are part of the process that troubles you, that you decided to take your ideas to a much larger law firm, is that right?

MILLER: That's correct. After three decades of trying to work within the industry and talk about all the problems and just meeting brick wall after brick wall. And reading all the cases that were out there and watching how so many lawyers were failing in these cases. I came up with an idea that made a lot more sense, and I approached, first I met with my friend here in Minnesota, Prentiss Cox, he's the at the University of Minnesota Law School.

I would run all my ideas by him. And then we were out at a conference in D.C. I was introduced to Ben Elga with Justice Catalyst, he introduced me to George Farah, who was at Cohen Milstein, and then from that point on Cohen Milstein immediately saw how important this case was, and I went to them mostly because I knew that they would also try to institute change.

They weren't just going to try and get a big judgment and get a lot of legal fees. They're very well known for doing the right thing. And that's why I went to them. And Cohen Milstein is a Washington based law firm with, I don't know, a hundred-plus attorneys as part of the firm.

CHAKRABARTI: So we're going to talk to someone from Cohen Milstein a little bit later in the show, but Doug I started the show by saying what happened.

There was a major victory, for not only your case, but your ideas, more importantly in terms of the kinds of reforms that you see that the realty industry needs. But I have to say, this really does sound like a David vs. Goliath and one of those quixotic adventures that you don't often anticipate will succeed.

In the United States, in terms of one person identifying or at least having the courage to publicly identify some major issues in an industry that touches the lives of every single American, practically. What gave you the courage to really press on?

MILLER: I am a very persistent individual, and as one of my best friends says, annoying sometimes.

CHAKRABARTI: (LAUGHS)

MILLER: In that degree. I don't tend to give up. And this was something I just felt so strongly about that. There's nothing else like it in the U.S. They're the most powerful lobby group in the United States, and they've used that power to create some of the most impossible situations. It's socialized real estate, and they're extracting all this money from homeowners.

And it's not just this, I've got a lot of other ideas on what this could lead to, as far as fixing this industry. And so I got to say, I'm 63 years old and I was starting to lose a little bit of faith, and this was the last shot at this, I figured that, if we don't win this one, it's just going to continue like this.

CHAKRABARTI: Yeah. Go ahead. Sorry, I didn't mean to interrupt you, but I was just going to, I couldn't help but thinking you're a very boyish sounding 63, a very young sounding 63 to me, Doug. So we've got a minute before our first break here.

MILLER: (LAUGHS)

CHAKRABARTI: And I just want to quickly ask you what was your elevator pitch to Cohen Milstein when you talked to them about let's bring a big case against the National Association of Realtors?

MILLER: I had put the whole case together and I showed them, people come to listing agents. Our listing agents go to consumers and say, the reason why my commission is so high, 6%, or sometimes 5%, or sometimes 7%, is because I've got to pay this by a broker. And the real question should be, why? Why are you paying somebody else's broker to negotiate against you?

It makes no sense unless you're trying to artificially inflate the buyer brokerage fee.

CHAKRABARTI: This is Doug Miller you're listening to. He's a real estate and consumer protection attorney at Miller Law, PLLC in St. Paul, Minnesota. And he is at the heart of a major lawsuit and then subsequent settlement that was agreed to this month by the National Association of Realtors, which is likely to completely upend or at least radically change the rules around real estate commissions.

We'll hear a lot more about this case in just a moment.

Part II

CHAKRABARTI: Today we're talking about a major settlement agreed to this month by the National Association of Realtors. They also paid a $418 million fine and their agreement to change the rules or practices around realtor commissions. And of course, we want to learn exactly how this happened and what it means for home buyers and sellers in America.

And we're joined today by Doug Miller. He's a real estate and consumer protection attorney in St. Paul, Minnesota. He was the man who came up with the idea of challenging these practices by the National Association of Realtors in court. And we will hear a little bit from the statements that the NAR itself has made in response to coverage of the settlement.

I'll read some of those statements in a moment. But before we go any further, Doug, when you mentioned that the NAR is the largest lobbying group or the most high spending group in the United States, I just wanted to give listeners some numbers to understand exactly what you mean, okay? So the National Association of Realtors in 2022 was the No. 1 group that spent money on lobbying in Washington.

According to Open Secrets, they spent $81,738,132 just that year. No. 2 that year was the U.S. Chamber of Commerce with $81,030,000. And then, only then, at No. 3 are the pharma companies who spent, in comparison, a piddling $29 million. So NAR at the top there.

And then last year, in 2023, the NAR slipped to No. 2, the Chamber of Commerce outdid them,  spending $69.5 million, and then the National Association of Realtors spent $52.4 million. That's the amount of money that we're talking about here that goes to try and shape laws around housing and real estate in this country. I'd like to bring Robert Braun into the conversation now.

He's a partner in the antitrust practice group at Cohen Milstein. It's the Washington law firm that Doug Miller approached to bring this lawsuit against the National Association of Realtors. Robert Braun, welcome to you.

ROBERT BRAUN: Thanks so much. Very happy to be here with you today, Meghna. And you should feel free to call me Robbie.

CHAKRABARTI: Okay, Robbie. So when you first heard about it, Doug's pitch about taking on the NAR and specifically this practice of, the specific practice we'll talk about, but this issue around commissions. What was your first thought?

BRAUN: Doug approached my former partner George Farah and my current partner and head of my firm, Ben Brown.

And they spoke with him about whether it was possible to build a case. And Doug, I think as you can tell, is passionate about bringing change to the industry and has a ton of different ideas. And we're experienced antitrust lawyers and class action attorneys who represent plaintiffs.

And we needed to take those ideas and figure out how to build a case around them.

CHAKRABARTI: Okay. So antitrust. So that indicates that the case had something to do with, If not overt monopolies, then market shaping agreements or collusions that were not in the consumer's best interest. Doug, can you just state specifically what it is about commissions that you believe fell under or fell afoul of antitrust laws in this country?

MILLER: It's interesting. I had looked at this case from many different angles. And a lot of those other causes of action would have been very appropriate. For example, breach of fiduciary duty, interfering with someone else's fiduciary. It even fits under the commercial bribery statute. You're paying someone else's agent to influence the advice and counsel that they give to their own clients when they're negotiating with a seller. There's a lot of bad things about the way this commission is set up. But I'm not an antitrust lawyer and I had done some research on it, and I thought, the simplest way to handle this case is probably an antitrust case.

And I went through a very simplistic approach and analysis and that's what I brought to them, and they took it and ran with it.

CHAKRABARTI: Okay. So Robert, then lay out the legal case that you made. Where was the evidence of conspiring to inflate prices?

BRAUN: Yeah, absolutely. So for more than a century, the National Association of Realtors and its predecessors and its members have effectively required sellers and the listing brokers who represent them to pay the compensation of the brokers, representing the buyers who are negotiating against them.

And in doing so, they created a system that had a tendency to inflate those buyer-broker commissions because any seller who wanted to ensure that buyer-brokers weren't steering their buyers away from their property and towards other properties, offering a higher commission, had to offer a similarly inflated and high commission.

CHAKRABARTI: So steering, let's talk about that in detail. How it had to actually have evidence to back it up in court. Where did you find that evidence?

BRAUN: Yeah, it wasn't as hard to find as one might hope. You'd hope that realtors and real estate brokers wouldn't be engaging in those sorts of practices.

And look, I'm not anti-real estate broker or anti realtor. My grandma, for decades, was a member of the National Association of Realtors and a real estate agent. So I have no antipathy towards her or other folks in the industry, but once we started digging into the case, we found that there were literally thousands or tens of thousands of examples of steering practices in the industry.

One broker who is a discount broker called REX, who is a new entrant in the industry, was trying to innovate and come up with a new lower price model that would benefit consumers. They provided us with more than 600 recordings of real estate brokers who indicated after being told they were on a recorded line that they weren't going to show their buyer clients properties because the commission that REX was offering, wasn't consistent with the standard commission model in the industry.

CHAKRABARTI: Come on. Really?

BRAUN: Really. And we also had other brokers who are talking about, who were discounters, who were innovators in the industry. We were talking about how bricks were being thrown through car windows. Due to their models, how realtors were, traditional realtors were threatening them because of their lower price models.

There were also surveys.

CHAKRABARTI: Actual bricks?

BRAUN: That's what they said. And there were also surveys that various folks had conducted about the industry. And realtors themselves in those surveys were saying that they had seen examples of steering practices and that it was one of the reasons why they were afraid to offer lower prices to buyer-brokers through listings.

CHAKRABARTI: Robbie, and here I was being naive, thinking it would be something as tame as you just looked on MLS, the multiple listing service, and found that, "Hey, maybe in the, I don't know, the houses that were listed with a slightly different than expected commission rate weren't getting as many views."

I don't know. Now you're talking about bricks and people speaking on recorded lines about actual collusion.

BRAUN: Yeah, it was incredible. We also had, we also looked at the multiple listing service data and we hired some of the best economists in the country. Including one who is a professor at Harvard Law School.

And they looked at the data and what they saw, after performing their economic analyses was that steering is very real.

CHAKRABARTI: So, Doug, what's your thoughts or your response to all this as, especially, as you were learning about the evidence that that Robbie and his team were unearthing?

MILLER: I've been complaining about the steering problem for a very long time. Decades. I would see reverse steering, where sellers or builders, for example, are offering bonuses. I saw one builder offering a free Lexus to realtors if they were able to convince five of their homebuyers to buy homes, I've seen, and then the other kind of steering, of course, is if you offer less.

So it created the situation where if you offer, like in my area, you have to offer 2.7%. If you offer below that, realtors are more likely to boycott your listing. If you offer more than that amount, these realtors who are supposedly working for the buyers, are more likely to convince their clients to buy that property.

So it's something that's existed for a very long time, and I've been trying to stop. And --

CHAKRABARTI: Okay, so I want to then just give voice to some of the response from the National Association of Realtors. They did settle, right? That's why we're having this conversation today. But in various statements they've made, they're right there on the NAR's website. They're also pushing back against how the settlement and even the accusations are being framed, okay?

So first and foremost, what they push back on is they basically say it is false, the idea that the NAR even sets commissions. Because commissions have always been negotiable, long before the settlement. And they will continue to remain negotiable for brokers and their clients. And moreover, they say housing prices are dictated by market forces beyond the control of any realtor.

So Robbie, how do you respond to that?

BRAUN: We have gotten a class certified. Right now, we're litigating through summary judgment in our case. There was another case that was brought by attorneys who we're now working very closely with. This is Mike Ketchmark and Brandon Boulware and Eric Dirks and their team.

And they went to trial a few months ago and they presented all of the evidence over several weeks to the jury. And the jury unanimously concluded, after hearing that evidence and spending only really a few hours deliberating, that NAR and some of the largest real estate brokers in the country were liable, had violated the antitrust laws and were liable for precisely the same sorts of practices that Doug and I have been discussing in this interview.

And that first judgment, by the way, that was the billion-dollar plus judgment.

BRAUN: That's right. And under the antitrust laws there's they're subject to automatic troubling. And so you're actually talking about after troubling a judgment that is valued at $4 to $5 billion.

CHAKRABARTI: Okay. Yeah, Doug, please go ahead.

MILLER: Yeah. In regards to commissions always being negotiable, ask any buyer out there. If they've ever negotiated a commission with their buyer agent, you're going to find it's a ridiculously small percentage. Because most buyer agents tell their buyers they work for free.

CHAKRABARTI: Because the seller pays, right?

MILLER: Yeah, because the seller pays. And so if you want to negotiate that commission in today's world, the buyer pays the seller. The seller pays the listing broker, pays the buyer-broker, and then the only way you can negotiate that commission is if that buyer-broker gives you part of that commission back.

It makes a complete circle. And then there are states that prohibit the buyer agent from giving any money to the buyer, and in those states, you can't even negotiate the commission. It's completely impossible. Because the realtors were so successful in lobbying for some state laws that prohibited these rebates, that it made it impossible to even, they basically legalized antitrust activity in a sense.

CHAKRABARTI: Okay, so I want to actually get the voice of a realtor in here to share her perspective. And especially about this argument that NAR continues to make about there's never been a set rate of commission, that technically it is open to negotiation. So this is Theresa Hatton.

She's CEO of the Massachusetts Association of Realtors.

THERESA HATTON: There was a rule that said if you wanted to list, you can use the service to promote and share that listing and offer compensation, but the rates were never dictated as to what they should be. And the 6% quote is not germane in many markets across the United States.

CHAKRABARTI: That's just a falsehood that's been promoted. Now, as we discussed, the legal case made before that federal jury that Robbie has made, said that while that 5% to 6% commission rate was negotiable, in theory, it became a standard practice because of something called steering or the fact that it became essentially, functionally non-negotiable. Because of steering and that's when realtors show properties that pay higher commissions than ones that have been negotiated downwards.

Now Theresa Hatton of the Massachusetts Association of Realtors says steering is highly uncommon and it's also contrary to the primary obligation that realtors have to their clients.

HATTON: The real estate divide by a code of ethics and our code of ethics clearly states that whether you get compensated or not, you are obligated to provide your client with the best service and show all available properties to them.

I personally ran a multiple listing service for many years. And I did not experience my members having steering issues based upon the compensation that was being offered. If compensation was not adequate to what the buyer agency agreement said, then the buyer would compensate the difference.

CHAKRABARTI: Hatton also raised another concern that she says is the most important right now in her mind. And that is how the rules changes will impact home buyers and sellers. I think it's going to be worse for the consumer, because listings may not be available to the widest breadth of audiences, with the lack of multiple listing services providing that in the marketplace.

But I think our members are going to navigate and be successful through this in their pursuit on behalf of their clients.

CHAKRABARTI: So that's Theresa Hatton, CEO of the Massachusetts Association of Realtors. Robbie Braun, let me get your response to that.

First and foremost, I just want to say that there are tons and tons of highly conscientious and excellent realtors out there who maybe people would not have been able to buy or sell a home without them.

And to that point, when Theresa Hatton talks about the centrality of the code of ethics that realtors also have in representing their clients. Respond to that.

It seems to be a very fair and powerful argument.

BRAUN: Yeah, I'm gonna have to respectfully disagree. It was the code of ethics itself.

That was adopted by the National Association of Realtors, that included a number of different rules that were anti-consumer. They restricted the ability of real estate brokers to negotiate lower commissions and offer lower commissions to buyers. They, for many years until our litigation, they expressly permitted buyer-brokers to represent to buyers that they were providing their services for free.

When, in fact, they were actually being compensated by listing brokers, and then that listing broker compensate, that cooperative compensation was being folded into the housing price and increasing housing prices for buyers. And what she doesn't mention is that there's an entirely separate set of rules from the code of ethics, called the Handbook on Multiple Listing Policy, that included a set of mandatory rules that required cooperative compensation offers to be made on a blanket basis on the MLS, regardless of the skill of the buyer-broker.

The level of experience of the buyer-broker, and the services that the buyer-broker was providing to buyers. So a buyer-broker who spent an hour on a real estate transaction would be paid the same amount as one who spent six months. And we think that's patently unfair.

Part III

CHAKRABARTI: Now, Doug, I just wanted to hear your responses to what was said earlier from the CEO of the Massachusetts Realtors Association regarding the fiduciary responsibility, the ethical guidelines that realtors have that should have been enough to make people feel comfortable that they were being fairly represented.

MILLER: It's funny. By reducing the commissions by tens of billions of dollars a year, her allegations that somehow, we are going to be hurting consumers, that these buyer agents out there are truly fiduciaries to their clients. When, in fact, that was what my first case was about.

So many of these so-called buyer agents aren't even buyer agents. They're dual agents. They call themselves different names, designated agents, transaction brokers, all kinds of things. But what they're doing is representing, which you can't do both sides of the transaction, so they're not really providing this fiduciary level of service that they're talking about. In fact, in most states where dual agency is legal, in one form or another, you're not even allowed to negotiate on behalf of your own party. You're not allowed to do anything to the detriment of the other side. So to say they have a fiduciary responsibility really isn't accurate.

And that's one of the things that I think, when we get to it, we can talk about what this case will mean for buyers. But I also wanted to highlight real quick, when you talked about the lobbying power of the National Association of Realtors, they actually spend more money at the state level. And it's not tracked, and that's where they do almost all the damage.

Not the individual agents. I'm talking about the large brokerage firms and their association. Where they've legalized a lot of these really bad practices and the agents just don't know how bad it is.

CHAKRABARTI: Yeah. I'm also glad that you made the distinction between individual agents versus the large brokerage firms.

I think that's an important one to keep in mind. Now, once again, just returning to the statement that was made by the NAR. Now formally, a settlement is not an admission of guilt. That's how it works in the law. And NAR's interim CEO Nykia Wright, said that continuing to litigate would have hurt NAR members and their small businesses.

And that quote, "While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one fifth of the American economy." Robbie, now, we need to talk in detail about the changes that NAR agreed to make.

I'm seeing, first and foremost, there's some new MLS rules regarding offers of compensation on MLS. Tell me what that means.

BRAUN: Yeah, that's right. And maybe it's helpful to tell people exactly what an MLS is. So an MLS stands for Multiple Listing Service. There are several hundred of these all around the country.

Some are as small as a single city or county. Some cover vast areas that may include multiple states. And these are the platforms that the listings that you make, whenever you're trying to sell a home. These are the platforms that they are put on. And It's all, almost all homes that are for sale are put on these missed multiple listing services by listing brokers. And buyer-brokers have access to these and can see what's for sale on the market. And those multiple listing services also feed data to all of these other sites that U.S. consumers might see. For instance, Zillow gets nearly all of their data from these multiple listing services.

Same with Redfin. And so what this settlement does, and it does a number of things, but I'll just give a few different examples. It actually prohibits making blanket offers of cooperative compensation, or cooperative compensation offers to buyer-brokers from sellers or listing brokers altogether.

And that's simply no longer going to exist on any multiple listing services that are affiliated with the National Association of Realtors and agree to this settlement.

CHAKRABARTI: Robbie, can you just clarify again what cooperative compensation means?

BRAUN: Yeah, I'm happy to do it. So cooperative compensation is basically what we've been talking about during this entire conversation.

CHAKRABARTI: Okay, so that's what it's called. Okay.

BRAUN: Yeah, that's the practice of a seller or a listing broker offering or agreeing to pay. Cut the compensation of a buyer-broker or another representative working with a buyer.

CHAKRABARTI: I got it. Okay. So it is the standard practice, but it's just simply called cooperative compensation.

Got it. Okay. And then so now there cannot be those offers made on those MLS listings. But it doesn't prohibit realtors from speaking to each other.

BRAUN: That's true, but it does create a number of different requirements or limitations on their ability to do that. For instance, as I mentioned in response to your last question, most of the data that the real estate industry relies on come from these multiple listing services.

And this settlement actually prohibits not only making offers of cooperative compensation on the multiple listing service, it also prohibits using that data then to make offers of cooperative compensation even off of the MLS. So for instance, if you try to make an offer of cooperative compensation directly on Zillow, since Zillow relies on the data, Zillow either needs to shut that down or it's at risk of losing its access to the multiple listing data. And the settlement also includes a number of other restrictions.

So it requires listing brokers and buyer brokers to enter into written agreements with buyers and sellers that fully disclose exactly what those brokers are going to be paid in a transaction. And it requires them to make those disclosures at the earliest time possible, effectively, in the home buying and selling process, and it requires getting written consent from buyers and sellers to exactly what those brokers are getting paid.

CHAKRABARTI: Okay. But Doug, help me. I'd love to lean on your actual experience in real estate as a realtor. How would this functionally work in practice?

MILLER: The way it needs to work is sellers need to put their foot down. No longer should they ever be asked or should they be willing to offer money to somebody else's fiduciary.

They should not be offering money to that buyer agent ever again. What they should do, instead, is put the money in the pocket of the person that's going to use it and need it. That's the buyer. Let the buyer decide if they're going to hire a buyer-broker, how much they want to pay them, if they want to hire an attorney or an appraiser, or all three.

They'll be able to do it for far less money than what's being paid now. And so we need to encourage sellers to give the money to the buyers, never offer to the buyer agents again. A lot of these problems, the steering, these ridiculous bonuses that are paid, the pocket listings that happen, that's where the listing agents do these exclusive listings and they only market it within their own brokerage for the first two weeks.

Practices, all these really bad practices could just go away if all the seller were to do would be to pay the money to the buyer instead.

CHAKRABARTI: Doug, you just dropped a bomb on the entire way that real estate has been bought and sold in this country for a century. What would be left after that?

Who, which buyer would actually be like, "No, here's the $25,000 that you would have otherwise earned in 2.5%commission. It feels like it would just almost eliminate 50% of what realtors do, because they would not feel that they would be guaranteed any kind of payment for representing the buyers.

MILLER: And that's why part of the agreement requires that they have a buyer-broker contract signed. But buyers and sellers need to be very cautious about what they sign right now. Buyers need to make sure they can cancel a contract. They need to know exactly what that buyer-broker is going to do and they need to understand what amount of money is going to that buyer-broker. And that needs to be negotiated up front and that's what Robbie and Cohen Milstein negotiated with them.

CHAKRABARTI: Okay. So I want to just hear from a realtor, once again, to bring that voice into the conversation here is Brad Twiss, who is both an On Point listener and owns a real estate brokerage in Portland, Oregon.

BRAD TWISS: I will say that there's definitely some anxiety among my peers about the future income in the field.

I do think this will lead to a thinning in the industry.

CHAKRABARTI: Brad's not the only one. Many real estate analysts predict that the rules changes could mean local real estate agents have a reduced role in their respective markets. If that happens, could buyers and sellers potentially lose something, too?

ROBERTA BALDWIN: The average price differential between selling a house yourself or sale by owner is 25% to 30% less than you would if you brought on a realtor and sold it on the open market.

There are a lot of complications for deciding to go it yourself. And the biggest one is, how do you know what to offer, and how do you possibly maneuver in a market that is so out of control just in terms of prices?

CHAKRABARTI: Now this is Roberta Baldwin. She's a realtor in Northern New Jersey, and she's been in the business for almost 30 years.

The statistics she's referring to about the price delta, essentially, when using a realtor, it does come from the National Association of Realtors analysis, and they say the typical for sale by owner home sold for about $310,000 on average in the United States last year, compared to $405,000 for agent assisted home sales, of course, minus commission.

Roberta also says that while the realtor commissions may seem high, they also help account for the spending that's involved in their work.

BALDWIN: These best agents often foot the bill for staging. The average staging can be anywhere between, let's say, $2,500 and $7,000 or $8,000, as well as photos and videos and expensive promotions on real estate portals.

CHAKRABARTI: But perhaps the most irreplaceable aspect of an agent's job, Roberta says, is their knowledge of the local communities they serve.

BALDWIN: How are they going to know that they need to do an oil tank search? How are they going to know whether or not they should do an infared sewer check?

And I see this because there are a lot of communities around New Jersey and other places where many people still have underground oil tanks they don't even know about. Old fashioned sewer systems. There's a rigor to real estate. When we get a buyer who has gotten a contract on something, we give them a whole list of the things they need to do in a state where its buyer beware.

And if all of that goes to the wayside because they have no one to guide them, it's going to be fairly tragic.

CHAKRABARTI: That's Roberta Baldwin. She's a realtor in northern New Jersey. Doug, will you respond to that? Because, look --

MILLER: I would love to.

CHAKRABARTI: I'm, yeah, because I just want to bring in my own experience for a microsecond.

It took me a year and a half to find a place that I actually succeeded in purchasing. My realtor, my buyer's agent stuck with me through the whole thing, and he did indeed provide scads of local detailed knowledge, like Roberta's saying, that I don't think I otherwise would have even known to look for.

MILLER: Nobody is saying that we need to do away with buyer agents. What we're saying is that buyer agents need to be able to negotiate the terms of their contract. Buyers should be able to negotiate the terms of their contract with their own buyer agent. Now, you're dealing with a lot of talking points, that many of them are false.

That FSBO study, that for sale by owner study is fake. There is absolutely no way that they would have knowledge as to a $400,000 house, two identical houses sitting next to each other and that the market value of those properties, what they were. And they have no idea what the pool of buyers was at that particular time.

There's so many variables that, these are statistics that are so easy to alter, and they make no sense. In a transaction where you've got an arm's length transaction and a buyer and seller that are both knowledgeable. And I think that's where you're going with this. You're going to end up with the same price.

That's what it really comes down to. So could a for sale by owner person price their property correctly? Of course they could. They can use an appraiser. They can hire a realtor to do a comparative market analysis. Do they want to lose the convenience of marketing the house through a realtor?

Maybe not. And if they don't, they can hire a realtor, but now they're not forced to pay that buyer-broker anymore. So the staging and all those things that the listing broker does. That all stays. We're not talking about that portion of the commission. We're talking about the commission that goes to the buyer agent.

And the fact that buyer agents might now need to use different ways to access properties, maybe showing services. These listing contracts need to allow for maybe insured, bonded, pre-approved buyers to be able to access these houses under supervision. But maybe not with a realtor. There's so many new, innovative ideas that can break into this market now.

That's the idea. We want to inject competition into this industry.

CHAKRABARTI: On that note the Redfin CEO on the day that I think it was the settlement was announced said that business on Redfin jumped quite noticeably, several percent just on one day. Speaking of disruption.