Buddy, Can You Spare Realtor A Dime?

The way we pay agents to buy or sell our homes may change dramatically thanks to historic verdict against Nat’l Assn of Realtors. Mere tweaks or radical restructuring to realtor fees in offing? What? Realtors will have to work for their 6%?

The WSJ coverage of the $1.8 billion-dollar federal jury verdict in Missouri resulted from allegations that the NAR & large brokerages “conspired to keep costs artificially high.” Btw, the judge has the power to TRIPLE the damages to more than $5B (as well as impose other "remedies") under antitrust rules. Of course, the NAR vowed to appeal the outcome. Will more people now be able to buy homes without using agents, the WSJ wonders? One real estate industry analyst predicted the lawsuits could lead to a 30% reduction in the $100B Americans pay in realtor commissions each year. If so, that might “push well over half of the almost 1.6 million agents out of the industry.”

Nothing’s changed as yet, the WSJ notes, for homes currently on the market, although new commission policies could come in a variety of ways. For instance: “The federal trial judge might require changes to how the brokerages operate, or real-estate brokerages or multiple-listing services could institute new practices on their own due to concerns about potential liability” from more such lawsuits down the road.” Some scenarios for potential changes include: Buyers & sellers might now be able to negotiate paying less for their own agents and even on an hourly basis for work actually performed -- in most cases now, seller “pays” for all agents in the deal on a split-fee basis, although those commissions are “baked” into the sales price. A fixed or flat fee far below the 5-6% of the consummated sales price typically charged in the past (& regardless of whether it’s a $100K or $1M home or whether the home is sold in an hour or a year) may be another viable alternative. Meanwhile, much larger suits against NAR & brokerages, involving 20 markets from Philly to Miami, could go to trial next year.

Davd Soul