PHILADELPHIA (KYW Newsradio) — The traditional six-percent commission we pay when selling a home could be a thing of the past, as part of an agreement to settle a series of class-action lawsuits over realtor fees and who pays them.
The National Association of Realtors says it reached a $418 million agreement to end litigation that alleged the NAR artificially inflated commissions for real estate agents, by requiring home sellers to pay fees to the buyers’ agent.
Robby Braun, a partner with Philadelphia-based Cohen Milstein Sellers & Toll, says that the requirement violated antitrust laws.
“What we alleged is effectively those 1.5 million members and the brokerages that those members worked for and ran, got together and set and maintained these rules for the purpose of and with the effect of inflating real estate broker commissions,” he said.
Braun says that led to “steering,” as he argues sellers were afraid to lower commissions because agents would steer buyers away from their homes.
The NAR also agreed to create a rule for agents and anyone working with homebuyers to establish written agreements. The rule changes will go into effect in mid-July.
Braun says they expect the settlement to bring significant changes to the real estate market and savings to both home sellers and buyers. Braun says the suit never argued buyers’ agents aren’t useful, but a study conducted by the NAR even found more people are finding properties through internet searches.
“We really see our lawsuit as providing an opportunity for buyers to save money either by deciding not to retain a buyer broker at all, or to retain one on a limited basis, and to negotiate the rates that are being paid,” he said.
NAR denies any wrongdoing but interim CEO Nykia Wright says continuing legislation would only have hurt their members.