This week home sellers won $1.8 billion in damages in a lawsuit against the National Association of Realtors (N.A.R.) and several large brokerages. The case made the national news because it could impact how commissions are handled going forward.
N.A.R., Keller Williams, Anywhere (formerly, Realogy), Re/Max and HomeServices of America, had been on trial in Kansas City in an antitrust suit brought by nearly half a million Missouri home sellers. A federal jury ruled on Tuesday that the National Association of Realtors and these brokerages conspired to artificially inflate the commissions paid to real estate agents.
There are two points to note in this case. The first is that under a N.A.R. rule, a home seller is required to pay commissions to the agent representing the buyer as it is spelled out in the listing MLS. This, sellers claimed, forced them to pay excessive fees to the agents. The home sellers said the brokerages collaborated with N.A.R. to enforce what is called the “cooperative compensation rule.” This is the standard in California too so it will be interesting to see if it changes. The suit did not force N.A.R. to change its rules.
The second point is that the above brokerages were insisting that the total commission had to be 5 percent to 6 percent (with that split between the listing and buyer's agents.) They didn't mention that all commissions are negotiable. A big no, no. This is something I discuss with each and every client when I take a listing - to not do so is unethical in my opinion and clearly the court thinks it is illegal.
N.A.R. issued a statement saying, "We will appeal the liability finding because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing and advance business competition. We remain optimistic we will ultimately prevail. In the interim, we will ask the court to reduce the damages awarded by the jury." Stay tuned because we haven't heard the end of this.
I am an independent broker/owner of my own brokerage so have no role in these suits but I am a member of the National Association of Realtors.