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. headtopics.com
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. headtopics.com