The Future. Last Tuesday, a judge ruled in favor of home-sellers who had sued the National Association of Realtors (NAR) for inflating agents’ commissions. The decision could make buying and selling a home much easier for consumers — and much less lucrative for agents.
Bring down the house
Burnett et al. v. NAR et al. has big implications for the real estate industry.
- The NAR will have to pay roughly $5.3 billion in damages for using privileged information to help realtors drive up commissions.
- Sellers used to have to post a commission when listing their property for sale — usually between 2.5% and 3.5% of the list price — which the buyer would pay and both agents would split equally.
- Now, that might change. Buyers and sellers may be able to pay their agents separately, leading to more price transparency and leverage for consumers, who could save $20 to $30 billion annually from the change.
The NAR is appealing the verdict.
This is a reckoning for the real estate industry. The verdict drove major real estate firms’ stock prices way down and led to a spike in lawsuits filed against the NAR and other companies. And realtors — of whom there’s already a surplus — may change careers as some buyers forgo agents altogether.
But at least they’re not struggling to keep a roof over their heads.