I originally wrote this Dec 13, 2023:

I want to address a verdict and shocking award that was issued on October 31st by a Kansas City jury, claiming that NAR (our National Association of Realtors) and several large, national real estate brokers are keeping real estate commissions too high by influencing sellers to pay buyer’s brokers too much. And then levying a $1.78 billion award to the plaintiffs, which were made up of a large number of Missouri homesellers. There will be appeals and ongoing litigation before the dust settles on this verdict.

When this lawsuit was discussed in our industry the past year, we understood it was to simply push buyers to pay their own broker instead of sellers, and thereby let the buyers set the fee rates. Although buyers will not like having to pay more money at closing, and some not able to, it is understandable from a sellers viewpoint. But what happens when sellers do not pay the buyer’s side? The buyer has to, if the buyer wants representation, and overwhelmingly they do, especially the last 4 years of negotiating an extremely difficult housing market. And when the buyer pays their broker, which is very rare right now, they want to offer that much less on the sale price. It ends up being a wash to the seller. Sellers can pay agent fees to both sides, or only pay half but receive a reduced price. Where is the savings?

It is possible that commissions will be reduced between buyers and their brokers, that is the argument. Unlikely in the short term, as buyer’s agents are working harder than seller’s agents right now. In time they could reduce, just as commission percentages overall have been dropping the last 10 years. I used to charge 7% to sell a house, now I charge much less than that. Home prices have risen faster than inflation, and that difference is reflected in lower commission percentages. Let the market set the rates between Realtors and clients. But to go backwards in time and claim that the sellers have paid too much to the buyer's broker and deserve money back, is just crazy. Homes have been selling for record sale prices the last several years, assisted by Realtor’s guidance on staging, prepping, marketing, and creating higher demand, all designed to attract the highest and best offers. Paying the buyer’s broker an attractive fee has been an integral part of that package, to get the widest number of agents working hard to sell that home. Pay agents less or nothing, get less showings, and expect lower offers. If anything, the buyers should be complaining that we as agents are working to sell the homes for too much, as housing affordability has become a much bigger issue. Please tell me why sellers should get compensated.

Homesellers always had, and still have, many options of selling their home with high numbers of competing brokers with different commission structures, including discount Realtors and the option of selling without an agent at all, called For Sale By Owner (FSBO), where sellers themselves choose what they wish, if anything, to pay the buyer’s broker. Overwhelmingly, most FSBOs choose to pay a similar amount to buyer brokers that seller’s agents do. Some paid more, some paid none. The result? There are fewer FSBOs today than ever in the past, and fewer discount Realtors too. Realtors matter. Good ones get the job done and do it well. With high levels of competition in real estate sales, effective agents and brokers thrive, but most leave the business in less than 5 years. The median pay for STL agents is under $40,000/ year. Average pay before business expenses is $40,000 - 60,000. Broker/ owners are higher, mainly due to experience levels. That is fairly modest income today.

If this award for damages is allowed to stand, what industry is immune from a class action lawsuit claiming consumers were overcharged and deserve money back? There was no fraud found. All fees charged were in writing and agreed to upfront between Realtors and sellers, including splits between brokers, and then confirmed at the closing table. If sellers paid less, they would have received less. It’s as simple as that.