In other housing news….a landmark billion dollar lawsuit against realtors
https://archive.ph/20231031185602/https://www.bloomberg.com/news/articles/2023-10-31/zillow-plunges-as-verdict-on-commissions-batters-real-estate
I am proud of Kansas City on this one. After a 3 hour jury trial, the guilty verdict was announced, in a case against home sellers in Missouri, focused on a conspiracy that kept commission/buyer agent fees “inflated”. Home sellers were upset that they had to pay a buyer agent commission, the buyer should be paying that themselves. Why is the home SELLER punished with coughing up 3% of their home sale? Sellers alleged that the National Association of Relators, and others, participated in anti-competitive practices, by forcing them into a system where they pay a commission that is split between buyer and seller agents. The National Association of Realtors was super confident they were going to win this case, and their heads were spinning when the jury released the guilty verdict against them, to the tune of $1.78 BILLION dollars. The two companies at the top of this suit were Keller Williams and Berkshire Hathaway’s HomeServices of America.
The attorney’s representing the plaintiffs have already declared their intention to go nationwide with a class action lawsuit.
I can say this much. I have sold 2 homes and bought 3. The first home I sold my realtor was absolutely fantastic. However, the slime ball who “sold” my second house (I use sold in quotes because he didn’t do ANYTHING to sell my house, my husband actually sold it when a realtor stopped by asking if we were selling, she brought her clients over 2 days later and they put an offer down) that slime ball is what gives realtors a bad name. He is a money commission chasing Jack wagon. He had zero of my best interests in mind and even suggested I let the new owners move stuff in prior to closing in the interest of the deal not falling through. He just wanted his commission check. Without a doubt he would pull any shenanigan possible to make an extra buck. Tale of two opposite experiences.
Of further interest, this week I found out that the builder who owns numerous subdivisions in the metro area cratered the prices on their spec homes to sell them as quick as they could. That will look great on a comps analysis for anyone selling a house. The housing market is just as corrupt as pharma, just pedaling a different product.
I agree that realtors are scum. If you even just barely think a house is nice, but not what you want, they try to force you to buy it. No morals.
Jennifer, I'm afraid I have to disagree with your assessments. A home seller has choices. They can sell "by owner," and many companies get a home listed in the local MLS for a fee, but they offer no service beyond that. A home seller is free to negotiate with a realtor for the total commission. The commission is not fixed. The listing agent decides how much of the commission to share with a buyer's agent. Rarely does a listing agent have enough contacts to bring the buyer to a home they have listed, so an incentivized buyer's agent is necessary. A buyer's agent will likely not take buyers to a property that offers no or low commission. Why would they? Buyers can make an offer on a home without a buyer's agent, but most buyers want representation. A listing agent cannot represent the seller and the buyer simultaneously, as most realty companies have eliminated "dual agency" because it is legally precarious. On paper, the seller pays the commission for the buyer's agent, but in reality, the buyer pays for it. Home prices reflect the existing business model, and therefore, listing prices are higher to compensate for the buyer's agent commission. So, the buyer pays for it in the end.
No one forces a person to sign a listing contract with a realtor. Despite the competitive challenges to the traditional business model, a 6% commission for conventional real estate companies is still the norm, with people negotiating this amount depending on the market conditions. In most states, the listing contract has a blank for the commission. Even though there are perhaps too many poor/sleazy realtors out there, and this bothers many people, the verdict you celebrate will not likely survive appeal. It certainly shouldn't if justice is the goal because there is no evidence of collusion, and abundant competitive options exist for home sellers.
This article deviates from the logical, rational and informative articles I have come to know you for.