How a Verdict on Real Estate Commissions Could Flip the Housing Market

Real estate broker commissions are in the crosshairs after a federal jury on Tuesday sided with home sellers in a class-action lawsuit, ruling that the National Association of Realtors and residential brokerages colluded to keep fees artificially high.

The rule, referred to in the verdict as the Cooperative Compensation Rule, requires sellers to make a blanket offer of compensation to buyers’ agents to list their homes on the Multiple Listing Service, or MLS. Many Multiple Listings Services are operated by local National Association of Realtors chapters.

The jurors ruled that the home sellers would have paid less for brokerage services if the rule wasn’t in place. The National Association of Realtors said the rule “ensures both buyers and sellers are well represented and that the buyer broker knows what they will be paid before they commence work” in a statement after the verdict.

Analysts say the verdict could weaken the MLS system. Agents may no longer use MLS if they are no longer guaranteed compensation by using it, analysts at KBW wrote. That could benefit consumers because it “could reduce the barriers to entry for alternative solutions available to homebuyers, home sellers, and real estate agents,” they wrote, adding that such an outcome could increase innovation in housing transactions.The judge Stephen R. Bough in the case needs to issue his final order.

The lawsuit isn’t the only one taking aim at broker fees. A similar class-action suit, Moehrl v. National Association of Realtors, is in the Northern District of Illinois court. Its next status hearing is scheduled for the end of this month. KBW analysts wrote in early October that they expect the trial will occur in the first half of 2024.

Federal jury verdict on broker fees rocks real estate industryIt could change how Americans purchase homes, or specifically, how they compensate brokers. Read more ⮕

Why this verdict could upend the real-estate industry’s commission structureAarthi Swaminathan is a MarketWatch personal finance reporter. Read more ⮕

Aldermen support March referendum on real estate transfer tax, sending ordinance to full City CouncilThe Rules committee approved the revamped “Bring Chicago Home” measure that offers a tiered tax rate on all property sales, which advocates say would generate much-needed revenue for the city’s homeless population but opponents warn would harm small-to-midsize property owners — including landlords who may raise rents. Read more ⮕

Jury Strikes Blow to Real Estate Agent CommissionsA Missouri jury found that the rules surrounding the payment of buyers’ agent commissions were anticompetitive. Read more ⮕

Why Zillow, Redfin and other real-estate stocks tanked after a jury rulingRecent ruling could hurt the buyer-agent business and alter fee conventions, analysts say Read more ⮕

Jury holds real estate agents liable for $1.8 billion in damages in antitrust lawsuitZachary Halaschak is an economics reporter at the Washington Examiner. Before moving to Washington, he worked in Alaska, covering politics, government, and crime for the Ketchikan Daily News. While there, Zach won the Alaska Press Club’s second-place award for best reporting on crime or courts for his coverage of a local surgeon’s alleged murder. Read more ⮕