Buyer agent commissions hang in the balance during federal case beginning this week

by Patrick Regan

For the next three weeks, the eyes of the residential real estate world will be on a federal courthouse in Kansas City, Missouri, where a trial that could alter how buyer agents earn commissions is set to take place.

The Sitzer/Burnett case — one of two pending class-action lawsuits — seeks damages from The National Association of REALTORS®, HomeServices of America and Keller Williams. The lawsuit, originated by home sellers in Missouri, also wants to change how buyer agent commissions are paid, uncoupling them from seller agent commissions.

The primary allegation in the lawsuit is that buyer agent commissions have remained artificially high because they are tied to the seller agent commissions. 

Changes to the current commission setup could alter whether buyer commissions can be folded into a mortgage and, some fear, could require buyers to pay agent commissions in advance, potentially persuading more buyers to skip working with an agent or buying a home at all.

“For the next three weeks, we will be presenting our case to the jury. We’ll expect a jury verdict the week of Nov. 6,” NAR Chief Legal Officer Katie Johnson said in a podcast posted to NAR’s website Monday.

“The class-action attorneys in these cases, they do not understand how Realtors and local MLS marketplaces work, period. And they also don’t understand or appreciate how they serve the best interests of buyers and sellers alike,” Johnson said. “These class-action attorneys are mischaracterizing our rules and do not understand how the rules themselves and the practice of cooperation between real estate professionals have contributed to this efficient, pro-consumer model that we have and have had for 100 years for transacting real estate in America.”

Johnson urged Realtors to make clear their value to consumers “early and often” and explain the services Realtors provide and how compensation works. She also recommended agents use buyer representation agreements, where commission details can be discussed and explained. 

Jury selection in the case began Monday and opening statements are expected Tuesday. No matter what the jury decides, it could take years for the appeals process to work itself out, delaying any potential changes to agent commissions.

Anywhere Real Estate and RE/MAX were previously defendants in the lawsuit but settled for $138.5 million and agreed to make changes to buyer agent commission arrangements. A judge still would need to approve that settlement before it is finalized.

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