{"id":43289,"date":"2023-11-07T02:22:28","date_gmt":"2023-11-07T02:22:28","guid":{"rendered":"https:\/\/prosfunds.com\/business\/lawsuits-are-shaking-the-nars-grip-on-americas-real-estate-fees\/"},"modified":"2023-11-07T02:22:29","modified_gmt":"2023-11-07T02:22:29","slug":"lawsuits-are-shaking-the-nars-grip-on-americas-real-estate-fees","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=43289","title":{"rendered":"Lawsuits are shaking the NAR\u2019s grip on America\u2019s real estate fees"},"content":{"rendered":"
\n

\n Editor\u2019s Note: A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free,\u00a0<\/em>here<\/em>.\n<\/p>\n

\n It\u2019s easy to forget how much we used to rely on real, physical paper and, like,\u00a0other people<\/em>\u00a0to buy basic things. It wasn\u2019t all that long ago that you\u2019d call a travel agent to book a flight. Maybe you\u2019d pick up the telephone (a landline, even) and ask your broker to buy some stocks, rather than simply tapping a few buttons on an app.\n <\/p>\n

\n And yet buying a home remains firmly, painfully undisrupted by technology. For now.\n <\/p>\n

\n A verdict in a Missouri court last week may\u00a0finally<\/em>\u00a0help pry the door open on real estate\u2019s arcane, expensive infrastructure,\u00a0my colleague Anna Bahney writes.<\/strong>\n <\/p>\n

\n ICYMI:<\/strong>\u00a0The National Association of Realtors, a massive trade and lobbying group, along with two brokerage firms, Homeservices of America and Keller Williams Realty, were ordered to pay $1.8 billion in damages to a group of 500,000 home sellers who argued that the groups had conspired to keep commissions artificially high.\n <\/p>\n

\n A couple of days later, the NAR\u2019s chief executive, Bob Goldberg,\u00a0stepped down.\n <\/p>\n

\n The plaintiffs\u2019 main beef:<\/strong>\u00a0An NAR rule that requires sellers to agree to pay a commission to both the buyer\u2019s and seller\u2019s agents before their home can be listed on a database called the Multiple Listing Service, or MLS. (Basically, if you don\u2019t get your listing on the MLS, you seriously limit the number of people who\u2019ll see it.)\n <\/p>\n

\n Usually, when you put your house on the market you and your broker will agree on a set commission \u2014 usually 5%-6% of the sale price \u2014 to be paid to both your agent and the buyer\u2019s agent.\n <\/p>\n

\n But the sellers argued that in a competitive market, the buyers should pay their own agent\u2019s commission, and negotiate that fee separately. Which makes sense, because buyers are the ones receiving the service from their agent.\n <\/p>\n

\n The NAR and the other defendants argued in court that their commissions are always negotiable, and that the commission-sharing arrangement saves buyers, who are already weighed down with expenses like a downpayment, closing costs, inspections and appraisals, to avoid the added expense of having to pay an agent as well.\n <\/p>\n

\n Still, consumer advocates celebrated the verdict. Because even though the NAR says fees are negotiable, the industry has made 5%-6% commissions so standard that most people wouldn\u2019t question it.\n <\/p>\n

\n Some background<\/strong>\n <\/p>\n

\n It\u2019s hard to overstate just how powerful the NAR is. The term \u201cRealtor\u201d (note the capital R) for example, is trademarked by the NAR, and if you\u2019re not a dues-paying member, you\u2019re just a real-estate agent. With about 1.5 million members, it\u2019s the largest trade group in America.\n <\/p>\n

\n That power pays. According\u00a0to Bloomberg,<\/strong>\u00a0Realtor commissions are high by global standards. Let\u2019s say you have a median-priced home listed at $431,000. A US standard 6% commission will net the Realtor nearly $26,000.\n <\/p>\n

\n In the UK and Australia, total commissions are about 2%.\n <\/p>\n

\n What now?<\/strong>\n <\/p>\n

\n If you\u2019re selling your home, you\u2019re probably still on the hook for that 5%-6% payout.\n <\/p>\n

\n But the Missouri case is just one of several fronts on which the commission rule is being attacked. Other plaintiffs have sued the NAR, and the Department of Justice is also scrutinizing the system to see whether it violates antitrust law. The outcome of\u00a0that<\/em>\u00a0investigation could have huge implications if the feds try to ban commission-sharing agreements altogether.\n <\/p>\n

\n And because commission rates tend to be baked into a home\u2019s price, changing the commission structure could help take the heat off home prices.\n <\/p>\n

\n The NAR vowed to appeal last week\u2019s ruling.\n <\/p>\n

\n Enjoying Nightcap?\u00a0<\/em>Sign up<\/em>\u00a0and you\u2019ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights \u2014 we believe in a four-day work week around here.)<\/em>\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Editor\u2019s Note: A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free,\u00a0here. It\u2019s easy to forget how much we used to rely on real, physical paper and, like,\u00a0other people\u00a0to buy basic things. It wasn\u2019t all that long ago that you\u2019d call a travel agent […]<\/p>\n","protected":false},"author":1,"featured_media":43290,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-43289","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"yoast_head":"\nLawsuits are shaking the NAR\u2019s grip on America\u2019s real estate fees | Prosfunds<\/title>\n<meta name=\"description\" content=\"Editor\u2019s Note: A version of this story appeared in CNN Business\u2019 Nightcap newsletter. 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