We may earn commissions if you use the recommended services on this site.  

Pushback Against Longstanding Rules on Agent Commissions in the Real Estate Industry

Latest Business News

Pushback Against Longstanding Rules on Agent Commissions in the Real Estate Industry

A series of court challenges is shaking up the real estate industry by challenging longstanding practices that determine agent commissions on home sales and who bears the cost. One notable case concluded with a federal jury ordering the National Association of Realtors (NAR) and major real estate brokerages to pay nearly $1.8 billion in damages for artificially inflating commissions paid to agents. The verdict accused the defendants of violating federal antitrust law by requiring home sellers to cover the commission for the buyer's agent. If treble damages are awarded, the defendants may have to pay over $5 billion. This ruling has prompted another class-action lawsuit against the NAR and several brokerage companies. The focus of these lawsuits is the NAR rule that requires home sellers to pay commissions for both their listing agent and the buyer's agent, potentially keeping commissions artificially high. Plaintiffs argue that removing this rule would introduce competition and lower commissions. The NAR defends the practice, stating that it benefits consumers by providing access to more buyers. The outcome of these legal battles could reshape how agent commissions are handled in the real estate industry.

Impact on New Businesses in the Real Estate Industry

The recent court challenges against the longstanding rules on agent commissions in the real estate industry could have significant implications for new businesses in this sector. The verdict against the National Association of Realtors (NAR) and several major brokerages, which resulted in a nearly $1.8 billion damages award for artificially inflating agent commissions, signals a potential shift in how commissions are handled.

Opportunity for Competitive Pricing

For new businesses, this could present an opportunity to introduce competitive pricing models. If the NAR rule requiring home sellers to pay both the listing and buyer's agent commissions is removed, it could lead to lower commissions and increased competition. This could potentially attract more clients to new businesses that are able to offer competitive rates.
Adapting to Changing Industry Practices
However, new businesses will also need to adapt to changing industry practices. The NAR argues that the current rule benefits consumers by providing access to more buyers. Therefore, new businesses will need to find ways to provide similar benefits while also offering competitive commission rates. In conclusion, while the outcome of these legal battles could present challenges, it also offers opportunities for new businesses to innovate and differentiate themselves in the real estate industry.
Story First Published at: https://financialpost.com/pmn/business-pmn/real-estate-industry-facing-pushback-to-longstanding-rules-setting-agent-commissions-on-home-sales
Brought to you by BusinessFormation.io
Know Your State's Registered Agent Requirements: What is a Registered Agent
Learn How To Create An LLC: What Is An LLC and How To Start an LLC Online
Business Formation Services: View Top 3 Online LLC Filing Companies

LLC Filing & Registered Agent Services

Compare Online LLC Filing Services Today

We work with the market leaders in business formation and registered agent services.

Getting started is simple and inexpensive. Form your business today & secure your brand name before someone beats you to it! Click below to view the Top 3 Best LLC and registered agent service providers.
View Top 3 Providers Now

Filing An LLC Can Be Complicated

Streamline Your LLC Filing Online for $39

Northwest Registered Agent is the best-rated service for first time filers.

Get professional LLC formation & registered agent services for only $39 + state filing fee. This offers includes your full LLC setup, plus a private business address, lifetime support, and more.

Trusted by Millions. Save 82% Today.