December 13, 2023 In Uncategorized

There could be significant changes in the way Real Estate transactions are conductions based upon a Missouri Lawsuit.

The National Association of Realtors (NAR) is facing escalating legal challenges. A fresh class-action lawsuit filed in South Carolina accuses NAR and Keller Williams Realty of colluding to inflate agent commissions, impacting home sellers in the state since November 2019. This lawsuit, seeking to represent all affected home sellers, comes after a significant Missouri ruling where NAR and major brokerages, including HomeServices of America (a Berkshire Hathaway subsidiary) and Keller Williams Realty, were found guilty of similar practices.

In the Missouri case, a federal court awarded $1.8 billion in damages, potentially tripling to over $5.3 billion for breaching U.S. antitrust law, as reported by Reuters. These lawsuits, both in Missouri and South Carolina, center on real estate broker commissions, usually 5-6% of a property’s sale price in the U.S., split between the buyer’s and seller’s agents.

Central to the allegations are NAR policies, particularly one that suggests hiding the total broker commission from prospective buyers. Plaintiffs argue these practices unfairly distort competition and burden homebuyers with higher costs. The South Carolina lawsuit emphasizes how these rules obscure who pays the buyer broker’s compensation and potentially limit negotiation options for buyers.

The U.S. Department of Justice has also highlighted misleading practices by realtors, suggesting their services are free while they could charge up to 3% of the home’s purchase price. In an era of high house prices and mortgage rates, these fees significantly impact homebuyers. For example, a $500,000 home sale could mean a $15,000 fee for the buyer’s agent.

In response to the Missouri ruling, the accused real estate groups, including Re/Max and Anywhere Real Estate, who settled for millions without admitting liability, plan to appeal, a process that could extend over several years. NAR’s president and incoming interim CEO have expressed their intent to defend NAR’s policies, claiming they benefit consumers and promote competition. However, plaintiff attorneys continue to challenge these practices, recently initiating a lawsuit against other real estate giants like Douglas Elliman and Redfin for alleged antitrust violations.

If you have questions or have been contacted by a Minnesota Department of Commerce regulator relating to your Real Estate License, call Fabian Hoffner at 612-206-3777 or email him from the contacts page.