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Federal court verdict could mean lower realtor fees when selling homes
A federal court jury's decision this week could mean lower realtor commissions when you sell a home. Some home sellers may be owed money back.
HOUSTON - A federal court jury's decision this week could mean lower realtor commissions when you sell a home. Some home sellers may be owed money back.
It ruled the National Association of Realtors and several large brokerages conspired to inflate realtor commissions.
Proponents say it could cut the costs of selling a home by creating competition among realtors. But the NAR says the current system gives consumers broad access to an efficient real estate market.
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A federal jury's decision in Kansas City, Missouri could shake up the way we all buy and sell homes.
It ruled the National Association of Realtors, HomeServices of America, and Keller Williams colluded to inflate commissions that home sellers pay to realtors. It ordered them to pay $1.78 billion in damages to hundreds of thousands of home sellers in Missouri, Kansas, and Illinois.
Currently, under the NAR's Cooperative Commission Rule, a home seller must pay commission to both the selling and buyer's agents, usually totaling 5% to 6% of the sales price. Then the seller's agent gives half to the buyer's agent.
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We asked real estate expert Tricia Turner with Tricia Turner Group to explain.
"As a listing brokerage firm, it is a fee that I charge to you as the seller for my services. That means my marketing fees, the fees I'm going to pay for my agents to help get your home sold," explained Turner.
File photo. A For Sale sign seen outside a house. (Photo by Artur Widak/NurPhoto via Getty Images)
Under this verdict, sellers would not be required to pay the buyer's agents, and agents could set their own rates.
Proponents believe more competition between agents could result in lower fees for consumers. On a $400,000 home, a seller's $24,000 in fees could be halved, for example, to $12,000.
But Turner disagrees.
"It really won't. Again, I've been doing this for over 20 years and our main focus within my company is, it was ingrained in me from the time I got my license, that your job is to get the sellers the most amount of money for the in the least amount of time with the least stress," said Turner.
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The National Association of Realtors sent us a statement, reading:
"NAR rules prioritize consumers, support market-driven pricing and promote business competition. This matter is not close to being final as we will appeal the jury’s verdict. In the interim, we will ask the court to reduce the damages awarded by the jury. 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. We will continue to focus on our mission to advocate for homeownership and always put consumer interests first. It will likely be several years before this case is finally resolved."
NAR says it plans to appeal, which could take years.
The plaintiffs' attorneys said they were not available to comment.
Anywhere Realty and Re/Max were also defendants but settled for total of $139 million in damages.
The judge must still issue a final judgment in this case. The case is already triggering similar lawsuits in other states. And the U.S. Department of Justice is also expected to take another look at this issue.