Clarifying Lawsuits

Three Things to Know About the Real Estate Class-Action Commissions Lawsuits

What Are The Lawsuits About?

While all of these cases have different key players, they all seek to change the longstanding practice of homesellers paying commissions for both the buyer and listing agents through the proceeds of the sale.

The plaintiffs believe that current rules in place have helped agents maintain a stable fee base of around 5% of the sellling price, split between the seller and buyer agents. They contend that the fees have risen too much through home appreciation at a time when technology improvements have made it easier for homebuyers to search for a home.

Defendents in these court cases, particularly the National Association of Realtors, contend that the current system, which has been in place since the 1990’s, provides transparency and market driven price options for home buyers and sellers. They believe that if the current system were to go away and home buyers would need to pay for their agents up front, it would create chaos that would hurt buyers and sellers.

What is the Impact if the Industry Loses?

If the plaintiffs prevail, the effects on the industry would be widespread. Agent compensation will fundamentally change. Potential homebuyers may have to negotiate and pay commissions to their agents upfront. MLS could have to alter the way they do business and the defendents may have to pay out a massive amount in damages. As a class action lawsuit, thousands of home sellers who paid a commission to the specified companies from 2015-2020 as well as current and future sellers engaged with those entities could be compensated if the plaintiffs win.

When will these Cases be Decided?

No matter how the trial verdicts go, they are likely to be appealed. So unless there are nationwide settlements with all the parties, it’ll take years before this is sorted out.