Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
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Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#2Does anyone know what this actually means for real estate brokerage fees?
There are few markets which have supported 3-5% brokerage fees (even i-banking is <100bps at scale now) so I'm curious where the fees will settle.
Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#3Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#4Does anyone know what this actually means for real estate brokerage fees? There are few markets which have supported 3-5% brokerage fees (even i-banking is <100bps at scale now) so I'm curious where the fees will settle.
This could change the process to this: 1) Seller gives a portion of their home price to their Agent as a commission (let's say 3%). The seller only paid 3% in commissions. 2) The Buyer negotiated a commission with their Agent (let's say $10,000). Which the buyer pays out-of-pocket, or has paid out of their financing for the home.
This allows the Seller's Agent to maintain their duty to maximizing the value of their client's home by reducing the commission the seller pays. While also ensuring the Seller's Agent doesn't bend to the Buyer's Agent's wishes for a higher commission to secure a deal. This also allows the Buyer's Agent to maintain their duty to their client by negotiating their commission up-front, regardless of the price of the property. They could negotiate a percentage with their client, but that percentage is the Buyer's responsibility, not the seller. It gives the Buyer more power in the commission paid to their Agent.
TLDR: Seller's had more power in pricing and commission payments to Agent's on both sides of the transaction, skewing home values higher to offset their (commonly) 6% commission payments. This segments the Seller's commission to just their Agent, and the Buyer's commission to just the buyer.
Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#5Commission based on home value is a joke. Realtors should earn a flat-rate.
Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#6Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#7There's not much to the article.
> KANSAS CITY, Mo.—A federal jury on Tuesday found the National Association of Realtors and large residential brokerages liable for about $1.8 billion in damages after determining they conspired to keep commissions for home sales artificially high.
> The verdict comes in the first of two major antitrust lawsuits that target decades-old industry practices and seek to drive down commissions and change the way agents are compensated. The two-week trial involved claims by home sellers in several Midwestern states. The jury issued its verdict after just hours of deliberations.
> Under antitrust rules, the presiding judge could triple the damages verdict, which would total more than $5 billion. The plaintiffs also have asked the judge to order changes to how the industry operates.
> For several years NAR has been fending off accusations by U.S. antitrust officials and private litigants that it has conspired to keep home-sale costs high in the face of major technological upheavals. This verdict is by far the group’s biggest setback yet.
> An NAR spokesman said, “This matter is not close to being final as we will appeal the jury’s verdict.”
I would love for there to be some sort of competition injected into real estate commissions. I've bought and sold twice now and you get the same rate from everyone (within 1%) regardless of what they end up doing.
Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#8Commission based on home value is a joke. Realtors should earn a flat-rate.
You can. It's just a bit of a racket (hence, conspiracy judgment) and nobody will work with you if you only offer a flat rate. Since MLS is mostly limited to Realtors in most markets, you're basically locked out from posting there.
There's ways around it, and flat fee brokers that exist, but you hamper your sales ability. Not an issue when its a sellers market, but can be rough in a buyers market.
Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#9Does anyone know what this actually means for real estate brokerage fees? There are few markets which have supported 3-5% brokerage fees (even i-banking is <100bps at scale now) so I'm curious where the fees will settle.
Nothing yet. I'd imagine it will go through appeals for a few years before anything actually happens, and U.S. antitrust enforcement has not exactly been a powerful force for the last few decades.
Re: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
#10Commission based on home value is a joke. Realtors should earn a flat-rate.
I agree - especially for the last few years, when in order to sell a house all you had to do was put in on the market - and then get 10-15-20 offers at or above listing price - no agent deserves a 6% commission for simply getting something listed on zillow or MLS where in recent years, the houses just sold themselves.