The standard 6% real estate commission rate, which is typically paid by home sellers, could face changes due to recent antitrust lawsuits and court rulings. Home buyers and sellers might soon have the opportunity to negotiate commission rates not only with their agents but also with the party responsible for the commission payment.
In New York City, this practice is already in place with real estate commission structures set to change on January 1st. However, many believe that the internet will eventually eliminate the 6% commission rate, with commission fees often making up thousands of dollars from the seller's earnings.
The National Association of Realtors (NAR) has been influential in maintaining the 6% commission rate, as the commission is built into the listing fee in multiple listing service (MLS) databases. Agents also argue that the commission rate is fair due to providing access to MLS listings, which are not publicly available.
Antitrust lawsuits, such as the recent court ruling in Kansas City against a real estate brokerage firm for over $1.8 billion, may drastically alter the standard 6% commission rate and the party responsible for paying it. The outcome of these cases is expected to change how commissions are handled in home sales, possibly lowering the burden on home sellers.
Despite ongoing lawsuits, commissions have remained unchanged since August 2024, with some studies indicating that average commissions may have increased for lower-priced homes. Experts suggest that the intention to reduce or eliminate buyer's agent fees has not been fully achieved, with sellers still paying commissions in a repackaged manner.
It remains to be seen if these antitrust actions will result in lower commission rates for home sellers, but the ongoing changes may signal a shift in the traditional real estate commission structure.
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Factors Leading to the 6% Real Estate Commission Standard
The traditional 6% real estate commission rate has been a standard in the United States for decades. This rate breaks down between the seller and their agent (usually 3%) and the buyer's agent (also 3%). This commission structure is built into the listing fees in multiple listing service (MLS) databases and is considered the fair market price for the services provided by real estate agents.
Recent Antitrust Lawsuits and Potential Changes
Recent antitrust lawsuits have alleged that the National Association of Realtors (NAR) and other brokerages have enforced rules that require home sellers to pay commissions to the broker or agent representing the home buyer. These allegations have led to inflation in total commissions paid by sellers, resulting in high fees for home buyers and sellers.
Key Points from Recent Developments:
- Settlements and Allegations:
- A settlement totaling $208.5 million has been reached with NAR, RE/MAX, and Keller Williams.
- Court Rulings and Ongoing Cases:
- A class-action lawsuit (Batton) has been ongoing since 2021, with Judge LaShonda Hunt mostly siding with defendants regarding new claims. However, the case continues with discussions on adding new named plaintiffs.
- Homie Technologies has pushed back against an argument to dismiss its case, alleging antitrust violations by NAR and other brokerages.
- Impact on Commission Rates:
- Despite these recent developments, commissions have largely remained unchanged since August 2024, with some studies indicating that average commissions might have increased for lower-priced homes.
Potential Changes
As a result of the ongoing antitrust lawsuits, there is a possibility that the traditional 6% commission structure may change. The lawsuits aim to reduce anticompetitive practices and potentially lower the burden on home sellers by making commission structures more flexible and competitive. If successful, this could result in a fairer market for both home buyers and sellers.
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