The lawyers who brought down Big Tobacco take aim 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.
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 RDFN, +3.36% , will be paid less than a buyer’s agent.
“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.
In response to a request for comment, NAR said, “The complaint is baseless and contains an abundance of false claims. The U.S. Courts have routinely found that Multiple Listing Services are pro-competitive and benefit consumers by creating great efficiencies in the home-buying and selling process. NAR looks forward to obtaining a similar precedent regarding this filing.”
Small declined to elaborate on what had prompted the investigation in the first place. It’s worth noting, however, that the suit was filed roughly four months after the expiration of a Department of Justice consent decree against the National Association of Realtors. That settlement was struck in 2008 after the federal government spent several years unsuccessfully trying to rein in what it called anti-competitive behavior from NAR, which felt under attack from internet upstarts.
What’s more likely, he thinks, is that the American system will come to resemble real estate markets in Australia or England, where sellers and buyers each pay their own broker – or don’t. After all, buyers are usually “cash-strapped,” Hahn noted: saving every nickel for a down payment, closing costs and moving expenses.
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