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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA Kansas City jury unanimously found Tuesday that the National Association of Realtors and other real estate organizations conspired to artificially inflate home sale commissions, ordering the organizations to pay $1.8 billion in damages to a half-million Missouri home sellers.
“We spent 4½ years uncovering the evidence of this conspiracy,” lead plaintiff attorney Michael Ketchmark told The Washington Post. “When the jury saw the evidence and heard the testimony . . . they agreed this is wrong and illegal.”
The case has been winding through federal courts since 2019, when a group of home sellers alleged in a lawsuit that the National Association of Realtors, along with real estate firms Keller Williams Realty and HomeServices of America, conspired to keep commissions artificially high. The plaintiffs pointed to a NAR rule that required sellers to make a nonnegotiable commission offer before listing a home on the widely used property database, the Multiple Listing Service, or MLS. That commission hovers around 5% to 6% of the home sale price and is paid by the home seller both to the sellers agent and the buyers agent.
The rule has stifled competition and has resulted in higher prices, the plaintiffs alleged. They argued that if the rule were not in place, buyers would pay commissions to their own agents and buyers agents would have to compete by offering lower rates.
Two other brokerages, Re/Max and Anywhere Real Estate Inc., settled with plaintiffs earlier this year, agreeing to pay $55 million and $83.5 million, respectively, and to no longer require agents to belong to NAR.
Mantill Williams, a spokesman for NAR, said the association will appeal the verdict, adding that “this matter is not close to being final.”
“We stand by the fact that NAR’s guidance for local MLS broker marketplaces ensures consumers get comprehensive, equitable, transparent and reliable home information and that brokerages of any size, service or pricing model get a fair shot at competing,” Williams said.
HomeServices, whose parent is Warren Buffett’s Berkshire Hathaway, said in a statement that the company will also appeal the verdict. “Today’s decision means that buyers will face even more obstacles in an already challenging real estate market and sellers will have a harder time realizing the value of their homes,” the company said in a statement.
Keller Williams spokesman Darryl Frost said the company is “disappointed that before the jury decided this case, the court did not allow them to hear crucial evidence that cooperative compensation is permitted under Missouri law.”
The jury verdict caused Zillow Group Inc. and other real estate stocks to plunge.
Shares of Zillow were down 6.4% to $35.70 at 3:12 p.m. New York time. They earlier fell as much as 11%, the largest intraday decline since May 2022, after industry publications reported on the verdict. Brokerage shares also sank, with Compass Inc. falling 5.7%. Redfin Corp. dropped 5.4%.
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Real estate sales commissions are a rip off. I did FSBO on my house, found a buyer and got my realtor neighbor to close the deal for 1% commission – NOT 6%.
+1
Sold my last two rentals without a realtor and had no issues…not sure why everyone thinks this transaction is so difficult?
Legal paperwork make it confusing.
Really depends on the house/area/price point/market conditions… I’m not a realtor but own several properties and there is use for them in a lot of cases.
In real estate, everything is negotiable. That includes sales commissions. Realtors are not employees of the brokerages where they hang their professional licenses. Thus they can reduce their commission, which many do. The result to the client is, however, likely to be fewer services provided in the sales process (such as marketing and negotiating). Good agents are more likely to sell a property faster and at a higher price than a for-sale-be-owner (FSBO) with fewer issues arising at closing.
Overrated car salesmen.
Brokers bring almost zero value to a transaction and the MLS is a monopoly