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Few people have been watching the real estate industry’s big stories as closely this year as James Dwiggins.

Dwiggins serves as the CEO of NextHome, a franchisor that operates a flexible spending model. But if you’re a regular reader of Inman, you may also know Dwiggins for his insights into issues such as the many commission lawsuits. For instance in both August and October Dwiggins was among the experts who weighed in on the Sitzer | Burnett commission lawsuit and predicted that the defendants wouldn’t win. In November, days after the defendants didn’t win, Dwiggins offered even more analysis on what might happen next and how the industry could or should respond.

Later this month, Dwiggins will appear on stage at Inman Connect New York. In the lead-up to that event, Inman chatted with him about what he believes lies ahead for an industry facing its latest existential moment. Dwiggins didn’t pull any punches during the conversation, arguing among other things that the National Association of Realtors needs a major overhaul, that the industry should settle the many commission lawsuits, and sellers should be free to offer whatever kind of compensation to buyers they want.

What follows is a conversation with Dwiggins lightly edited for length and clarity conducted prior to the resignation of NAR President Tracy Kasper earlier this week.

Inman: There’s a lot on everyone’s mind, but when you’re onstage at Connect what are some of the things you’d like to discuss?

James Dwiggins: I think obviously what’s on top of everybody’s minds is certainly the lawsuits. Who’s going to get named next? How do you deal with it? Is there going to be a national settlement? Buyer representation, what is that going to look like in the future? Are there going to be other types of models that come to the market? What’s the role of an MLS in the future?

[The National Association of Realtors] is also a big topic. It has a serious lack of leadership right now. Everybody knows that. What is NAR’s role gonna look like? Does it rebuild itself?

So how do you think NAR navigates the upcoming year? Does it rebuild and regain trust, or do you see it occupying some totally different role than it has historically?

Well, I hope NAR rebuilds itself. It needs an overhaul, it needs an entire restructure. There are too many board members, it can’t be governed the way it is today.

But I also think it’s incredibly important that NAR rebuilds itself. I think that our industry is incredibly naive to think that this industry would look the same as it is today without any of NAR’s advocacy, the amount of politicking and lobbying that they do to make sure that real estate agents have a place in this process to protect consumers. Many don’t understand the things that NAR lobbies for, or squashes from politicians who write stupid bills all the time. People don’t see these things because NAR is not good at articulating its value at all, which is something they have to fix.

So my answer is, I hope they rebuild. And I think that there needs to be a strong look in the mirror about what NAR’s role needs to be in the future. It needs a complete restructure and overhaul from the top down.

It has been a rough year for NAR with both the commission suits and the harassment scandal. But there have been a few recent changes. Bob Goldberg’s out. So is Kenny Purcell. Do you see these changes as a step in the right direction? Are they enough?

My take is that it’s not enough. I think there’s too much of the old guard, sort of having their feet in the sand, going, “I’m not going to change.” And that has to change.

I’ve talked to a lot of executive leadership at NAR and there’s too much KoolAid there. That’s not meant to say that I think the people there are bad people or don’t have the right interest in mind. But I absolutely think that NAR needs to do more. And a lot of the decision comes down to who their CEO is, who’s going to be the captain of the whole thing. My take is they need to change the entire process of the way NAR works.

I think there needs to be a much stronger separation between the membership dictating the way NAR operates versus the corporate staff and structure of NAR. NAR needs to act more along the lines of other organizations that have a very specific purpose and can have a lot more autonomy on what they’re doing. To what degree I don’t know, we’ll have to figure some of that stuff out. But if it’s just replace the CEO and keep the same structure in place, I think NAR has a very bleak future.

The general attitude in the brokerage community is that change needs to occur. They’re not wanting to deal with getting sued for things that they may not have been involved in. I mean, a lot of these [commission lawsuits] are bullshit. The people being sued had nothing to do with any of these governance policies. We all know that. So I would say that NAR needs to start listening to the large brokerage community a hell of a lot more than they are. And if they do that, I think NAR lives to fight another day and becomes better structured.

I think NAR has an incredibly big opportunity to unite the industry by creating a national settlement for all of these cases. But an appeal does absolutely nothing because it will take three to five years or longer to go through the process and all of these copycat lawsuits will bankrupt tons of companies before the appeal ever gets done.

What might a settlement look like? 

So NAR comes to the table and says, “Look, we’re going to do one national settlement. There’s only so much money in that pot. Y’all can either jump into one national class or go.”

What would it look like? Let’s hypothetically say NAR uses an assessment. It has to figure out what kind of attrition rate it would have in membership. But let’s say they do a dues assessment and let’s say they come up with $2 billion. I’m just making up a number. And they assess that against a million Realtors, who all pay $500 a year over the course of four years or so. So it’s something like that. That’s an idea.

But the brokers just don’t have [the money]. That’s the funny part about all these cases, they’re suing everybody. RE/MAX had $96 million in the bank and they’re one of the largest real estate companies in the United States. All the rest of them are smaller, they don’t have that kind of cash lying around. So the plaintiffs need NAR to do a settlement because they need the agents to be part of the settlement. How is the broker going to cough up the money?

So my take is we need to stop looking backwards. We need to look forward. Appeal isn’t realistic anymore.

I think the biggest question now is how do we structure the industry going forward. And I think that looks something like this. I think the DOJ has already signaled and FTC has already signaled that if the civil cases don’t go the way they want, they’re going to come in and effect change.

So what we need to be thinking about is a multi-part part strategy. Number one is we need to be at the table with the DOJ and FTC, advocating for one specific thing, which is allowing a seller to offer a credit or anything that they want to a buyer in the MLS. To a buy down on your loan, to $5,000 credit, to fixing the deck. These are things that happen in every auction site on the planet today. It’s an ability for the seller to offer any type of thing they want. And part of it could be that I’m willing to pay the buyers’ agents. They can do it or not, but that’s a seller’s choice.

And then — and I know NAR is doing this already — but they need to work on a way to allow financing of a buyer’s agent’s comp into the loan.

It’s not complicated. And I don’t have any fear of this. If the seller has the ability to decide what they want to do, if the seller wants to offer an incentive to the buyer’s agent, that’s their right. It’s called American capitalism. I can do whatever the hell I want to do. So if the seller wants to say, I’m going to offer some type of compensation to the buyer’s agent, they should do that. The purchase contract could be written so that the seller pays the buyer agent’s fee. Now it’s a negotiation piece.

Then it’s a conversation between the sellers’ agent and the seller and the buyer’s agent and the buyer. Yeah, that world is a fair world, and is what I think the DOJ will be open to. And the industry gets better. We grow up, we’re more professional. There’s fewer agents, there’s fewer brokerages with fewer associations or MLSs. But I still think the agent is at the center of the transaction. That’s the vision of where I think the industry goes in three to five years.

Email Jim Dalrymple II

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