WSJ.com
A recent federal court decision has rocked the real estate industry, potentially costing the National Association of Realtors (NAR) and major brokerages nearly $1.8 billion in damages. The lawsuit, filed in 2019 on behalf of 500,000 Missouri home sellers, alleges that the defendants artificially inflated commissions paid to real estate agents, violating federal antitrust law.
If treble damages are awarded, the total could exceed $5 billion. The focus of these lawsuits is NAR's rule requiring home sellers to pay the buyer's agent's commission, in addition to their listing agent's fee. Plaintiffs argue this practice keeps commissions artificially high and stifles competition.
While the NAR defends its policies, the outcome of these lawsuits could reshape industry practices and commission structures. The current process has buyer agent’s commissions added to the sale price of the house, inflating the sale price. According to Stephen Brobeck, senior fellow at the Consumer Federation of America, “If sellers no longer had to pay the buyer agents, there wouldn’t be that inflation and buyers could negotiate the commission down and they would end up paying less money.”