A recent class-action lawsuit has the potential to change the way real estate agents are compensated nationwide. The case, which alleges that policies of the National Association of Realtors (NAR) and major real estate franchisors violate the Sherman Antitrust Act by inflating seller costs, was based on the opinions of two experts: NYU Economist Professor Nicholas Eckermans and Harvard Law Professor Einer Elhauge. If the motion for class certification is successful, it could result in millions of homeowners being reimbursed for billions of dollars in commissions paid to buyer’s agents between 2015 and 2020.
The lawsuit raises an important question: who will pay the price if buyer agent commissions are eliminated and how will that impact buyers and sellers? It is true that commissions are negotiable and sellers agree to pay them upfront. However, this lawsuit suggests that sellers are being forced to pay for the buyer agent as well. It is understandable why sellers are upset. Adding an extra 2.5%-3% to buyers would make homeownership even more unattainable.
My opinion is that this class-action suit has the potential to have a significant impact on the real estate industry. It is concerning that the judge has agreed to move forward with this as a class-action lawsuit. Although sellers deserve to get reimbursed for the extra costs, it is uncertain how much will actually change. Buyers may still struggle to save for a down payment, closing costs, and the possibility of paying above asking, even if buyer’s agent commissions are eliminated. It will be interesting to see how this case plays out and how it will affect buyers and sellers in the future.