Jury awards $1.8 billion (billion with a "b") against REALTORs and NAR. This could mean their bankruptcy

General Inspection Topics Legislation, Licensing, Ethics & Legal Issues
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The purchase and sale agreement defines the compensation for both agents and is negotiable. Agents do sign and are included in a PSA.

So, if a seller offers more commission than the agreement between the buyer and the buyer’s agent, the PSA can reflect a new commission split at a lower percentage (which may sweeten the offer for the seller). Conversely, the buyer may submit a PSA that pays a larger commission to the BA. Or no commission at all.

In the end, it will all be negotiated, and net to seller is the defining factor.

(For the record, the commission may go higher during a buyer’s market. I have seen listings at 7%- 8%, with as much as 5% going to the buyer’s agent. The sellers not only agreed to this but eagerly encouraged it in order to sell. Not allowing agents to advertise this increased split is a disservice to the seller. When new home sales evaporated in Atlanta years ago, builders were offering crazy incentives to buyer agents)

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Where I live and work, few homes have listing/broker fees more than 5%, you can get 4.5% if you whine enough.

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Just when the Realtors can recover from their wounds…

Court clears path for reopening antitrust probe of Realtors group

A federal appeals panel reversed a lower-court decision that the Justice Department was barred from restarting its investigation into the National Association of Realtors.

Check out this story on detroitnews.com: https://www.detroitnews.com/story/business/2024/04/05/court-clears-path-for-reopening-antitrust-probe-of-realtors-group/73219471007/

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Here are a couple similar links that are free:

https://www.politico.com/news/2024/04/05/appeals-court-doj-antitrust-realtors-probe-00150778

https://www.msn.com/en-us/money/companies/court-clears-path-for-reopening-antitrust-probe-of-realtors-group/ar-BB1l8Ex5

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I guess it’s not time to put away the popcorn quite yet… this show ain’t over :sweat_smile:

Quote from the articles above:

The Justice Department said it was committed to “fighting to lower the cost of buying and selling a home.”

“Real estate commissions in the United States greatly exceed those in any other developed economy, and this decision restores the antitrust division’s ability to investigate potentially unlawful conduct by NAR that may be contributing to this problem,” Assistant Attorney General for Antitrust Jonathan Kanter said in a statement.

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No Paywall:

Critics contend the arrangement pays buyers’ agents far more than the value of their services. Such agents have played a smaller role in transactions in recent years with the rise of platforms such as Zillow that let users search for homes on their own.

Looks more & more like the end of the ‘Buyers Agent’ as we know it, as sellers have gained the upper hand by limiting commissions. It’s also a win-win for government efforts to reign in housing costs. I predict that tomorrow’s listing agent will need a bigger car to shuttle the buyers around in as the sellers demand the listing agent perform the contract.

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This certainly isn’t a good sign for the NAR.

Realtors association must face US Justice Dept. probe, US appeals court says

Realtors association must face US Justice Dept. probe, US appeals court says | Reuters

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The Colorado Department of Regulatory Agencies just issued a commentary on this ruling;

Commission Settlements and Colorado Licensees
The Division has received a lot of inquiries about the proposed settlement
agreement between the National Association of Realtors (“NAR”) and plaintiffs
Rhonda Burnett, Jerod Breit, Jeremy Keel, Hollee Ellis, Francis Harvey, Christopher Moehrl, Michael Cole, Steve Darnell, Jack Ramey, Daniel Umpa, Jane Ruh, Don Gibson, Lauren Criss, and John Meiners, and the impacts that the proposed agreement will have on broker compensation in Colorado.
As an initial matter, it is important to note that the settlement terms are only
applicable to members of NAR and the Realtor MLSs. Colorado has approximately 51,000 licensed real estate brokers, but not all of our brokers are Realtors. To put it simply, the proposed settlement agreement is not binding on the Colorado Real Estate Commission, the Division of Real Estate, or Colorado’s licensed real estate brokers who are not Realtors. Furthermore, the terms of the proposed agreement do not necessitate any changes to real estate broker licensing law or Commission rules and regulations.
Although the proposed settlement is only binding on those brokers who are
members of NAR and the Realtor MLSs, it may still have some impact on the way real estate is practiced in Colorado. In order to understand this potential impact, it is helpful to review the requirements set by state law and regulations. Colorado law offers two types of brokerage relationships in which a broker may perform licensed duties on someone else’s behalf: single agency, which requires that a broker enter into a contract with a consumer to perform their licensed duties, and transaction brokerage. Pursuant to Commission Rule 6.14.C, Brokers representing a seller or landlord as a transaction broker are required to have a written agreement with a consumer to perform their licensed duties. In contrast, a broker representing a buyer as a transaction broker is not required to have a written agreement to perform
licensed duties. Despite not being required to do so, brokers who represent buyers as transaction brokers may want to consider requiring a written agreement (i.e. an Exclusive Right to Buy Contract) when working with a buyer to ensure that the buyer understands who will be responsible for compensating the broker for the licensed duties that are performed. Brokers working with buyers need to have a candid discussion with the buyer about who is ultimately responsible for paying for the buyer’s broker’s services (i.e. if the seller is unwilling to pay a cooperating commission, either the buyer will be paying the commission or the broker will not be compensated). The Commission-approved listing contracts address broker compensation and are therefore a useful tool to document the agreement made regarding compensation. Brokers should be aware that, with the current Commission approved Exclusive Right to Buy Listing Contract, if a broker checks the wrong box under compensation and a cooperating commission is not offered, the broker will effectively be working for no compensation.
One of the terms of the proposed settlement requires that Realtor MLS
participants enter into a written agreement with a buyer before the buyer tours any homes. However, Colorado law does not require that a brokerage relationship be established before a broker can show property to a buyer (this is assuming that the broker will not be eliciting confidential information). Colorado law also does not require that a compensation agreement be in place before a broker shows a buyer property.
In general, real estate brokers can anticipate some changes regarding the
practice of providing cooperating commissions. Colorado law does not require the seller, or the seller’s broker, to offer a cooperating commission to compensate the broker representing the buyer, but it also does not prohibit it.
Despite it being common practice prior to the proposed settlement, a
broker representing a buyer should not assume that the seller, or the seller’s
broker, will automatically be paying a cooperating commission to the buyer’s
broker. The Division anticipates that the payment of a cooperating commission
will become a regular point of negotiation between the buyer and seller in a sales transaction. Any language inserted into the sales contract that addresses the payment of broker commissions must be at the direction of either the seller or the buyer, otherwise the broker inserting the language is likely in violation of Commission Rule 7.4.
Lastly, it is a violation of the Brokerage Relationship Act for a broker to
prioritize the payment of a commission over the fulfillment of the broker’s duties to their client. Refusing to show a property to a client or submit an offer on the client’s behalf because the broker is uncertain whether a cooperating commission will be paid, or the broker disagrees with the amount of cooperating commission offered, is unacceptable under Colorado law and may be grounds for license discipline.

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I just spoke to Buyers Agent I’ve known for the past 5 years, and she told me she is transitioning over to become a Sellers Agent and that she thinks there is a high probability that buyer agents may soon be a thing of the past.

Time will tell if she’s right or not.

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I think all agents prefer to be the listing agent. If their Seller is serious about selling and has a reasonable expectation on price, with favorable market conditions, their commission is almost money-in-the-bank. Buyers agents often have do deal with scared, fickle, and unqualified buyers that make it more frustrating trying to earn a commission. The new NAR rules make it even more frustrating… now buyer’s agents need to negotiate a commission upfront with a buyer’s agreement or run the risk of working for zero commission.

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Sucks to be a buyer’s agent. Now it sucks more :wink:

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Although the market in my area is extremely slow, there hasn’t been any significant change in the commission structure except additional paperwork regarding contracts and disclosures.

The sellers were always paying the commission fee to their listing brokers, who in turn, split their fee with a Buyers agent that brought them the sale. That will continue, but will be in negotiated in a separate agreement, but included in the sales contract. The major change is that the MLS doesn’t allow split fees to be “advertised” on the MLS listing now. A buyers’ agent has to call a LA to verify a brokers split and present that stipulation with the offer.

Buyers agents here, have to disclose that to their clients with the disclosure that Sellers may reject the commission split. On the flip side, LA’s can list for half the normal commission, do twice the work they have to, with less than 75% viewing that BA’s bring in.

The only thing that’s going to change is the paper work between all parties in a transaction.

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Who actually sold the home? The listing agent or the agent that brought the buyer? :thinking:

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That’s not the way I understand it Tom, The seller has to agree, in writing, to pay the BAs fees, and if the seller chooses not to, which IMO most if not all will choose not to, then the buyer is the one who will be paying their agent to find them a house, no more 6% cut in half for each agent, so buyers will soon be able to hire an agent and negotiate their fee, or bypass the BA altogether and use a RE Attorney to draw up the contract. Download your contract online and pay the attorney’s office $100.00 for the use of the document, fill it out, get the sellers to agree, and boom, you’ve got a legit contract.

We’ll be finding out for sure here in a couple of months.

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Both. :wink:

That’s why they currently split (In most cases) the 6% fee 50/50.

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As it may stand today Kevin. The prior contract was between only the LA and the seller. How the commission was split afterwards, between the LA Broker and the BA Broker, was between them and had nothing to do with what the seller had to say. And as I stated, LA disclosures on how commissions are splits are to be distributed, are being included in the LA’s listing agreement. If sellers don’t like it, go FSBO or other alternatives.

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What you wrote I think is where opinions vary.

Per the current arrangement, the seller is agreeing to pay their agent 6%. Their agent will keep the whole 6% if they sell it themselves. Therefore, the agents believe their service is worth 6%.

But, they are willing to give up part of their 6% to another agent, if they help out and bring a buyer.

This ruling does not change the fact that listing agent’s think their service is worth 6%, and therefore, they will still want to charge sellers that 6%. The only difference with the proposed arrangement, is that they are no longer allowed to advertise how much of their 6% they are willing to give to a different agent who helps them out by bringing a buyer.

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Bingo!

I guess my wife with more than 20 years as an RE agent keeps me posted on all the classes and updates on whats going on with this shit debacle, but hey, I’m always willing to hear the HI’s “expert” opinions… Gives good insight worth reviewing.

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