Kansas City, Missouri – The National Association of Realtors (NAR) and other industry players have been found guilty by a Missouri jury of colluding to maintain high brokerage commissions. The jury awarded $1.785 billion in damages in this case, which is one of two lawsuits concerning brokerage commission practices. The Justice Department is also investigating a commission-sharing system that typically requires home sellers to pay a 5% to 6% cut of the sale to both their agent and the buyer’s agent.
The lawsuit, filed in Kansas City, Missouri, targeted the Realtors association along with Keller Williams and Berkshire Hathaway’s HomeServices of America. Keller Williams has expressed its intention to explore all options, including avenues of appeal, and argues that it followed the law regarding cooperative compensation.
This legal battle sheds light on a real estate commission structure unique to the US. The NAR controls many of the country’s multiple listing services, which are essential tools that aggregate properties available for sale in a given region. To utilize this system, NAR requires sellers to offer compensation to the buyer’s representative, a practice that critics argue inflates home prices.
In an upcoming Illinois trial, plaintiffs are seeking up to $40 billion in damages. The DOJ began investigating residential real estate during the Trump administration, and NAR agreed to settlement measures, including increased price transparency. However, the Biden administration withdrew from this agreement, stating its intention to pursue future antitrust claims against the group. A federal judge has ruled that the DOJ is still bound by the settlement, though the department is currently appealing that decision.
Following the news of the verdict, shares of real estate sales companies experienced a decline. Zillow Group fell by 6% to $35.87, while Compass Inc. and Redfin Corp. also saw their share prices drop.
In summary, the National Association of Realtors and other industry players have been found guilty by a Missouri jury of colluding to maintain high brokerage commissions. The overall impact of this verdict on the real estate industry remains to be seen.