Page 7 - Stuart Exposure - July '23

In Your Community from page 6
Treasure Coast Real Estate
Report
Class Action Lawsuits May Disrupt Real Estate
Commissions And Tank The Real Estate Market
By Jim Weix
It has been a longstanding tradition that a Realtor, acting
as a buyer’s agent, when helping a buyer to purchase a home
is paid a commission by the listing real estate firm. In other
words, the seller pays the whole commission.
In fact, offering compensation to the buyer’s agent is
required if the home is to be placed into the Multiple Listing
Service.
However, not all sellers were happy with that
arrangement and filed a class action lawsuit. The defendants
include the National Association of Realtors (NAR), several
reAl estAte
large real estate firms, and
numerous Multiple Listing
Services for conspiring to
require home sellers to pay
the broker representing the
buyer of their homes, and to
pay at an inflated amount, in
violation of federal antitrust
law. The plaintiffs allege
that defendants’ conspiracy
has centered around NAR’s
adoption and implementation
of a mandatory rule that requires all brokers to make a
blanket, nonnegotiable offer of buyer broker compensation
(the “Buyer Broker Commission Rule”) when listing a
property on an MLS.
According to the plaintiffs, total broker compensation
in the United States is typically 5 to 6 percent of the home
See answer in this paper.
Stuart Exposure, Page 7
sales price, with approximately half of that amount—and
increasingly more than half—paid to the buyer broker. The
defendants’ conspiracy has kept buyer broker commissions
in the 2.5 to 3.0 percent range for many years despite
the diminishing role of buyer brokers due to buyers
independently identifying homes through online services
and retaining buyer brokers only after they have found the
home they wish to buy.
When I first read about this lawsuit, I figured it would
just go away. It seems too ridiculous to gain traction. I was
wrong and it is moving forward.
Now before any buyers or sellers start cheering, there
are some issues if the lawsuit is successful. I’ll skip the big
issues, but I do see a few problems.
If the buyer’s agent doesn’t get paid by the listing firm,
who pays the buyer’s agent? I guess the buyer would have
to. So in addition to a down payment, closing costs, and
additional expenses, the buyer will now have to pay their
agent’s commission. Here I thought that higher mortgage
rates were the primary reason real estate sales would tank.
The plaintiffs argue that most buyers find their homes
on sites like Zillow and Redfin, and just need the buyer’s
agent to open the door. What most buyers don’t realize is
that these sites charge the Buyer’s agent up to 35 percent of
the commission for the so-called lead. What happens to these
sites that buyers like to use if there is little or no income?
I don’t know how this will all end, but it has the makings
of a real circus. You can read more at:
https://www.cohenmilstein.com/case-study/moehrl-v-
national-association-realtors-et-al.
Feel free to call me if you would like to discuss your
options. I can be reached at (772) 341-2941 or jimweix@
jimweix.com.
Jim Weix is a broker associate with The Keyes Company.
Jim has 25 years of experience selling real estate full-time.
If you have questions or want the services of an experienced
expert, you can reach Jim at (772) 341-2941 or jimweix@
jimweix.com.
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