The lawyers who took on Big Tobacco are aiming at Realtors and their 6% fee
A new class-action lawsuit takes aim at real estate agents and the tools they use to do business, and housing industry watchers say it could revolutionize the way Americans buy and sell the biggest asset they’ll ever own.
The suit was filed in Chicago on behalf of anyone who sold a home through one of 20 of the largest listing services in the country over the past five years. It charges that the mighty Washington-based lobby National Association of Realtors, as well as the four largest national real estate brokerages, and the Multiple Listing Services they use, have conspired to require anyone selling a home to pay the commission of the broker representing their buyer “at an inflated amount,” in violation of federal antitrust law.
Homeowners who are ready to sell their properties usually hire a real-estate agent to represent them by staging the home, photographing it, adding it to the MLS, marketing it, and showing it to prospective buyers. Sellers agree to pay that person a commission on the selling price of the home. That commission has traditionally been known as the “6%,” but it’s a little more complicated than that.
Sellers can really only negotiate with the agent they’ve hired, while agents representing buyers are generally assured of a standard 3% commission. That means that a seller’s agent who’s willing to negotiate, or one that works for a discount brokerage like Redfin , will be paid less than a buyer’s agent.
Buyers can choose to be represented by an agent, or to go without one – but in any case, all commission money for both sides of the deal is always paid by the seller, thanks to a 1996 NAR rule known as the “Buyer Broker Commission Rule.”
In order to list a property on one of the many regional databases known as Multiple Listing Services, agents must abide by the Buyer Broker Rule. Listing on the MLS is essential for making a sale, and most MLSs are controlled by local NAR associations.
“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” the lawsuit says. “Moreover, because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-negotiable offer to procure the buyer brokers’ cooperation by offering a high commission.”
As MarketWatch has previously reported, many housing observers call Realtors a “cartel” for the way they purposely steer clients to transactions in which traditional ways of doing business are observed.
https://www.marketwatch.com/story/bi...fee-2019-03-19
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Originally Posted by Dr. Strangelove
