US$1.8 Billion Verdict on Home Commissions

November 9, 2023

The high level of real estate commissions paid by people buying a home in the United States could be reduced after a court in Missouri found the National Association of Realtors (NAR) and two brokerage companies liable for US$1.8 billion in damages.
 
Coming at a time when the moving industry needs any help that it can get to increase demand, CNN reported that the court found that NAR, Homeservices of America, and Keller Williams Realty, conspired to keep commissions artificially high. The judgement may end the historic practice in the country where the person selling a home agrees a commission fee (usually 6%) with a broker, that is then split with the agent representing the person buying the home. In this case, the plaintiffs in the case were able to successfully argue that NAR is forcing home sellers to pay an inflated commission and that commission sharing for access to a multiple home listing service was unfair.
 
Two other real estate companies including Anywhere Real Estate, the parent company of Cartus Relocation, settled out of court for US$140 million and agreed to make changes to their practices that included not requiring agents to be members of NAR.
 
The NAR and the brokerage companies at the centre of the lawsuit said that they will appeal the verdict and request the court to reduce the damages awarded by the jury. “The extent of injunctive relief decided by the court will strongly influence whether a price competitive system develops that lowers consumer costs and increases quality of services,” said Stephen Brobeck of the Consumer Federation of America. “We hope that the court will sever the ties between listing agent and buyer agent compensation, freeing sellers from the obligation and need to compensate buyer agents.”