I recently came across an interesting article posted by the Property Records Industry Association (PRIA).
The gist of the article is that a federal jury ruled the National Association of Realtors (NAR) and several large brokerages conspired to artificially inflate real estate agent commissions. “Under a NAR rule, a home seller is required to pay commissions to the agent representing the buyer, which sellers claimed forced them to pay excessive fees to the agents. The home sellers said the brokerages collaborated with NAR to enforce what is called the ‘cooperative compensation rule.’ “
NAR and the brokerages were ordered to pay damages of nearly $1.8 billion and could increase to more than $5 billion.
Chicago-based NAR is the largest professional organization in the United States with more than 1.5 million members and over $1 billion in assets. They own the trademark to the word “Realtor,” making a real estate agent’s ability to buy and sell homes contingent upon the payment of membership dues in much of the country. Members pay dues to the organization to call themselves Realtors and assure home sellers and home buyers that they are aligned with the organization’s strict policies on ethics and home transactions.
Under this latest ruling sellers would no longer be required to pay their buyers’ agents, and agents would be free to set their own commission rates. “For example, a home seller with a $1 million home can now pay as much as $60,000 in agent commissions — $30,000 to their agent and $30,000 to the buyers’ agent.”
The decision has the potential to change the entire structure of the real estate industry in the United States and lower the cost of moving homes by reducing commissions. “How the ruling plays out remains to be seen, but it’s clear that the verdict — and the size of the damages — point to a shift in the way agent commissions are now paid. Redfin, which earlier this month exited the National Association of Realtors, said that the decision will prompt home buyers and home sellers to now question the standard practice of setting commissions between 5 and 6 percent.”
“Traditional brokers will undoubtedly now train their agents to welcome conversations about fees,” said Glenn Kelman, Redfin’s chief executive, in a statement following the verdict. “But it’s also possible that buyers will become the ones who decide how much to pay a buyer’s agent.”
We will certainly keep a close eye to see how this may affect the rate of recording volumes or any other considerations for our government customers.
The complete article can be found here: Home Sellers Win $1.8 Billion After Jury Finds Conspiracy Among Realtors - The New York Times (nytimes.com).
About the Author: Troy Burke
With 30 years of experience providing clients with stellar service and strategic solutions for growth and development, Troy is committed to ensuring his customers receive the highest quality solution, training and support with every implementation. He frequently speaks on the topic of redaction and is actively involved with National Association of Court Management, Property Records Industry Association and several other government organizations.