- US Justice Department may intervene against real estate commission-sharing system;
- current system requires sellers to pay a high percentage of sale proceeds as broker fees.
- National Association of Realtors (NAR), is the largest trade organization and requires sellers to agree to fees when listing property for sale with them.
- Two class action lawsuits brought against NAR and four major brokerages settled, with RE/MAX and Anywhere Real Estate having to pay over $138.5 million combined in settlement payments.
- DOJ’s possible dismantlement of commission structures could put many real estate agents out of work.
Selling Sunset stars will gather for an all-hands meeting to discuss antitrust policy in response to reports that the US Justice Department could take legal action against their commission-sharing system. In this system, sellers are expected to pay a high percentage of their sale as broker fees; this could total thousands in broker fees alone. In order to list their home on various platforms offered by National Association of Realtors (NAR), which is the nation’s leading trade group in real estate sales and listing, sellers must agree to these fees in order to list it with them. Reacting to this current system, two class-action suits have been filed, leading to RE/MAX and Anywhere Real Estate being ordered to pay out $138.5 million as settlement funds for these suits were distributed among both firms. While Redfin CEO Glenn Kelman cautions that dismantling commission structures could leave half of real estate agents out of work.
Current real estate trends show a flourishing real estate industry, with sellers paying substantial broker fees for every sale they complete. This can become quite costly given rising housing costs; for a $500,000 house, broker fees alone could amount to approximately $30,000. The National Association of Realtors (NAR), representing over 1.5 million agents, exerts immense control over this system. Such is its influence that they even trademarked the word “Realtor,” restricting usage only among paying members of NAR. NAR maintains that complaints regarding its current commission structure are unwarranted and that it works to buyers’ advantage; specifically first-time homebuyers from minority and low-income groups. However, recent settlement of class action suits against NAR and four large brokerages demonstrate there may be issues with our current system. While RE/MAX and Anywhere Real Estate must make significant payments under the agreement reached with RE/MAX and Anywhere Real Estate respectively for this settlement to proceed as scheduled, ultimately it lies with the United States Justice Department to implement necessary changes.
The US Justice Department’s possible legal intervention raises serious concerns for the future of real estate industry. If the commission structure were dismantled, this could have serious repercussions that leave many agents out of work and caused by Selling Sunset stars to meet and discuss this topic at an all-hands meeting addressing it. Any results and subsequent actions taken from these discussions or by the US Justice Department will have an effectful ripple through all facets of industry as a whole; stakeholders in real estate industry will monitor these developments closely as we await further news of developments.