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After a $1.8 billion verdict, the clock is ticking on the 6% real estate commission

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Summary

The National Association of Realtors, the largest professional organization in America and a significant lobbying group for the real estate industry, was recently found liable for $1.8 billion in damages for conspiring to keep commissions artificially high. This verdict is the largest setback that the NAR has faced yet, and they have vowed to appeal the verdict. The cornerstone of the plaintiff’s argument is that NAR has been forcing homesellers to pay an inflated commission that is then split between their agent and the buyer’s agent. If changes come about, home prices could drop and buyers may have to pay for their own buyer's agent, which could make the market less inclusive.

Q&As

What is the verdict that the National Association of Realtors (NAR) and two brokerage firms were found liable for?
The verdict that the National Association of Realtors (NAR) and two brokerage firms were found liable for is $1.8 billion in damages.

How much did two other firms settle for in the lawsuit brought by home sellers?
The two other firms settled for a combined $140 million in the lawsuit brought by home sellers.

What is the cornerstone of the plaintiff's argument in the case?
The cornerstone of the plaintiff's argument in the case is that NAR is forcing homesellers to pay an inflated commission that is then split between their agent and the buyer’s agent.

What long-term impact could the verdict have?
The long-term impact of the verdict may be that the pairing of buyer’s agent commission and seller’s agent commission will eventually be separated.

What unintended consequences could arise if changes come about due to the verdict?
Unintended consequences that could arise if changes come about due to the verdict include buyers not knowing the steps to buy a home and having to pay for a buyer's agent, which could make the market less inclusive.

AI Comments

👍 The verdict handed down in Missouri court is a significant setback for the National Association of Realtors and a victory for consumer rights. The changes in business practices that have resulted from this case could result in lower home prices for buyers in the future.

👎 The National Association of Realtors was found liable for a huge amount of damages, yet they have vowed to appeal the verdict and the issue won't be resolved for years. It is a shame that the real estate industry has been able to maintain such high commissions for so long.

AI Discussion

Me: It's about how the National Association of Realtors and two brokerage firms were found liable for $1.8 billion in damages for conspiring to keep commissions artificially high. This could potentially affect the way homes are bought and sold in the future, and could lead to home prices dropping.

Friend: Wow, that's a lot of money! Do we know what the implications of the verdict will be?

Me: Well, the NAR and the brokerages have vowed to appeal the verdict, so it might be a while before it's resolved. But there's speculation that it could lead to the buyer's and seller's agent commissions being separated, and potentially result in lower home prices. There are also concerns that if buyers have to pay for their own agent, they may not be able to afford it and may not be able to buy a home.

Action items

Research the National Association of Realtors and the current lawsuits against them to stay informed on the issue.
Reach out to your local real estate agents to learn more about their commission structure and how it could be impacted by the verdict.
Consider the potential implications of the verdict on the housing market and how it could affect buyers and sellers.

Technical terms

Real Estate Commission: A fee paid to a real estate agent for their services in helping to buy or sell a home.
National Association of Realtors (NAR): The largest professional organization in America and a significant lobbying group for the real estate industry.
Multiple Listing Service (MLS): A database of properties for sale that is accessible to real estate agents.
Injunction: A court order that requires a person or business to do or not do something.
Conspiracy: An agreement between two or more people to commit an illegal act.
Sexual Harassment: Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.
Redfin: An internet real estate company.
Keefe, Bruyette & Woods: An investment banking firm.