There will be ‘more lawsuits’, predicts market leader

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In this episode of Real Estate Insiders UnfilteredCollabra CEO Russ Cofano – whose industry credentials include CEO of the state association, 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 co-op compensation and the CCP touches on while warning of a leadership void and the likelihood of further lawsuits.

“What this whole thing has created is a bull’s eye for the real estate industry, and more lawsuits will follow,” Cofano predicted. “We clearly haven’t seen the Justice Department’s last shoe drop yet,” he added — a prescient move in light of the DOJ’s recent declaration of interest in the NAR settlement, which was filed after the podcast was included. During the hearing on the NAR and HomeServices settlement on November 26, the DOJ also hinted at future investigations.

Agents are not equipped to adapt: In the post-settlement era, Cofano believes agents will find it “more difficult to perform their duties to their clients,” especially when it comes to commissions. “We’re already seeing agents thinking, for example, that they can change buyer agency agreements or buyer representation agreements to increase commissions. Well, you can’t do that.”

Agents are struggling, Cofano says, because they don’t get the support they need: Over the past two decades, brokerage firms have “run 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 “low-oversight, high-body count models” that have contributed “to a glut of agents in this industry.”

And NAR, he added, is no longer positioned to fill what he calls a leadership gap. “That used to be the case, but I don’t think that is the case (anymore).”

Time to abandon cooperative compensation: “The sooner the sector can move away from cooperative compensation, the sooner we can feel good again,” Cofano said. “So cooperative compensation must disappear from our vocabulary.”

But CCP can remain: “Personally, I think part of the philosophy behind clear collaboration, which is getting all the listings in one marketplace, is good for the industry and good for the consumer,” Cofano said.

But he believes the CCP debate reflects a larger problem: “I think what we’re seeing today is a consequence of brokerage firms being sick, and these are economic factors at play.” And without strong brokerage organizations, Cofano said, the industry “could completely turn into something else.”