In a case that could have wide-reaching implications, a federal jury in Missouri awarded home sellers billions of dollars in damages after they sued the National Association of Realtors and large brokerages over commission policies.
The damages in the case, Burnett v. NAR et al., could reach up to $5 billion. The plaintiffs in the case argued that the NAR's rules hurt competition and violated anti-trust laws by inflating the cost of buying a home.
Under NAR guidance, someone selling a home typically pays roughly a 6% commission — split somewhat evenly between the seller's real estate agent plus the buyer's agent. The jury's verdict on Tuesday sided with the thousands of Midwest homeowners who said that practice of sellers paying commission for buyer's agents was unfair, dealing a blow to the NAR and other defendants, including Keller Williams and Minneapolis-based HomeServices of America. All of those organizations sent statements to KARE 11 following the verdict, expressing their disappointment in the decision.
They all plan to appeal as well.
Darryl Frost, a spokesperson for Keller Williams, said "the court did not allow them to hear crucial evidence that cooperative compensation is permitted under Missouri law. This is not the end." Meanwhile, HomeServices of America said "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. It could also force homebuyers to forgo professional help during what is likely the most complex and consequential financial transaction they'll make in their lifetime."
In a message to members on Tuesday, NAR President Tracy Kasper said "We will appeal the liability finding because we stand by the fact that NAR rules serve the best interests of consumers, support market-driven pricing and advance business competition. We remain optimistic we will ultimately prevail."
It is not yet clear what impact this decision will have on the real estate market as a whole. Other litigation, including one involving a Minnesota plaintiff, is also ongoing.
Zach Olson, a realtor at DRG in Minneapolis, said the jury's decision may simply lead to more transparency between real estate agents, sellers and buyers.
"I feel like a lot of this could have been combated," Olson said, "if agents could just sit down with our clients and explain how we get paid, and who is paying us."
As the NAR noted in its official statement to members, these commissions are negotiable.
"As a seller, the best thing you can do is find local experts, sit down with them, and see how they come up with that number. So, if they're just saying, oh, I want six percent, and you say, I want five, figure out that differential," Olson said. "The reason we charge that is photos, marketing, helping with staging, doing a lot of the little things. Whereas if you're a capable seller and you can do a lot of those, maybe we can get rid of some of those deliverables and cut down that commission a little bit."
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