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Anti-trust case rocks real estate industry
A federal jury ordered the National Association of Realtors, along with several large brokers, to pay damages, finding them liable for artificially boosting commissions paid to agents.
MINNEAPOLIS (FOX 9) - The real estate industry has operated in the same way for decades, but a recent court ruling could cause a big shakeup.
Last week, a federal jury ordered the National Association of Realtors, along with several large brokers, to pay nearly $1.8 billion in damages, finding them liable for artificially boosting commissions paid to agents.
The lawsuit challenged the way commissions are paid, which is typically 5-6% of the purchase price paid by the seller to their agent. A portion of that is shared with the buyer's agent. Critics say that the system makes negotiation of the sales charge almost impossible.
Greg Lawrence started Home Avenue more than 30 years ago, and charges a $3,495 flat rate fee instead of a percentage commission. He believes this court ruling could permanently change the entire industry.
"They argue that if the buyer compensates the agent directly, the buyer would be more likely to negotiate the fee. So now, the buyer would have more control and the sellers would pay their agent directly and the buyer would pay their agent directly...which makes a lot of sense," said Lawrence.
He adds that people should feel free to negotiate the traditional 5-6% because it is not set in stone like many people think it is.
The National Association of Realtors is appealing the jury's verdict.