Finance

A recent decision by the Ninth Circuit Court of Appeals has significant implications for home equity sharing products, particularly those offered by Unison. The court reversed a lower court's dismissal, indicating that Unison's agreements may indeed fall under the classification of reverse mortgages, thereby subjecting them to specific statutory requirements. This ruling underscores the increasing scrutiny on financial arrangements that allow homeowners to access their equity, pushing the boundaries between traditional lending products and innovative sharing models. The legal landscape for such financial instruments is clearly evolving, with consumer protection at its forefront.

The legal proceedings initiated by Charles Boyd Olson and Janine Olson against Unison challenged the nature of their home equity sharing agreement. The Olsons argued that despite Unison's claims of offering a product without 'debt,' 'loan,' or 'interest,' the agreement effectively functioned as a reverse mortgage. The appeals panel concurred, noting that the arrangement constituted a 'consumer credit obligation' under Washington state law, which governs reverse mortgages. This interpretation directly contradicts Unison's defense that the agreement involved no repayment obligation from the consumer, emphasizing that even contingent obligations could qualify as such.

In 2024, Unison's legal representative, Jeremy Creelan, contended that a 'credit obligation' fundamentally differs from a loan, asserting that the consumer incurs no repayment duty. This distinction, he argued, offers substantial benefits to consumers. However, the three-judge panel viewed the situation differently. They stated that the entire framework of the agreement was designed to place Unison in a similar position to a nonrecourse obligation, granting it the right to a significant portion of the home's equity. The court found that the homeowners held a 'very real set of contingent obligations to make future payments,' despite the necessity for Unison to elect receiving payment.

Furthermore, the appeals court acknowledged the Olsons' contention that Unison's marketing practices, which described the arrangement as free from 'debt,' 'loan,' or 'interest,' could be misleading to the public. This finding suggests a potential violation of the Washington Consumer Protection Act. The case dates back to 2019 when the Olsons and Seattle resident Maggie Colin entered into similar agreements with Unison, under the belief that these products were not loans. Their experiences highlighted the challenges faced when attempting to sell or refinance their properties, realizing the significant financial implications imposed by these agreements.

The current legal development signals a critical moment for companies operating in the home equity sharing space. It mandates a reevaluation of how these products are structured, marketed, and regulated to ensure transparency and consumer protection. The court's decision may pave the way for stricter oversight and clearer definitions, ultimately benefiting consumers by providing greater clarity on the long-term financial commitments involved in such agreements.

A year after the National Association of Realtors' (NAR) settlement agreement, which was anticipated to drastically reduce real estate agent commissions, the housing market has shown remarkable resilience, defying earlier projections of widespread decline. Contrary to predictions of massive commission cuts and even falling home prices, current data suggests a much more stable environment. This unexpected steadiness in commission rates has provided a sense of relief for many brokerages, which had braced for a period of significant financial strain. The findings from various consulting firms and real estate entities paint a picture of an industry adapting without the severe disruption that many analysts had foretold, highlighting the robust nature of agent services and their perceived value.

Before September 30, 2024, the average real estate agent commission stood at 2.65%, as reported by RealTrends Consulting. Since the implementation of the business practice changes, this figure has seen a marginal uptick to 2.71%, representing a nominal increase of 0.06 percentage points. This trend is corroborated by Redfin's May 2025 data, which indicated a rise in agent commissions for properties sold under $500,000, moving from 2.42% in Q3 2024 to 4.49% in Q1 2025. Similarly, Anywhere Real Estate reported consistent commission rates. Their Q2 2025 earnings show Anywhere Brands, their franchise division, at an average commission of 2.41%, a slight dip from 2.42% a year prior. Anywhere Advisors, the firm's brokerage arm, even saw a minor increase from 2.36% in Q2 2024 to 2.38%.

During Anywhere's Q1 2025 earnings call, CEO Ryan Schneider noted that the actual changes to agent commission rates were less pronounced than initial forecasts used for their 2025 budget. Schneider emphasized the success of their agents and franchisees in navigating these shifts and consistently demonstrating their value to consumers. In the Greater Boston area, Linda O’Koniewski, broker-owner of Leading Edge Real Estate, observed "insignificant" changes to her firm’s commissions, with listing commissions slightly up by 0.02% and buyer-side commissions down by 0.03%. She concluded that the settlement has not led to the overall lower commissions many had anticipated.

Analysts who predicted a substantial drop in agent commission rates following the settlement have been proven incorrect. While industry critics hoped for a significant decrease, brokerages are relieved by the stable outcome. An analysis by AccountTECH in June 2024 warned that 79% of brokerages would become unprofitable if commissions fell to 2%, and 60% would be unprofitable at 2.5%. However, AccountTECH's May 2025 EBITDA Margin Index, released in July 2025, actually showed an increase to 3.4962%, surpassing the rate from a year ago before the new practices were enacted. Rick Haase, president of United Real Estate, echoed these sentiments, stating that the financial impact on his company has been "negligible" despite investing millions in agent training. He affirmed that agents, by effectively communicating their value, have successfully justified their fees to clients.

James Dwiggins, co-CEO of NextHome, views the increased negotiation between agents and clients as a positive development, arguing that agents are now compensated based on their demonstrated worth. O’Koniewski has noticed a similar pattern, where top-performing agents who are skilled negotiators maintain their pre-settlement rates, while newer or less assertive agents may earn slightly less. Although there were isolated instances in the early days where buyer's agents went unpaid due to a lack of signed representation agreements, O’Koniewski clarified these were exceptions, as agents quickly learned to secure proper documentation. Ultimately, the feared drastic decline in agent commissions has not materialized, showcasing the adaptability and inherent value of real estate professionals.