Will the Antitrust Settlement Change Real Estate?
The national agency settlement could complicate buying a home, but it probably won't lower the cost. TCB executive editor Adam Platt explains The Antitrust Settlement, which resulted in a settlement between realty firms and plaintiffs in a group of regional lawsuits, has been predicted to significantly impact the way Americans buy homes. The suits involved the common practice of sellers agents paying a portion of the commission, often a split of three percent each, without disclosure to buyers and sellers. A court in Missouri agreed, leading to copycat suits affecting most major realty companies in Minnesota. The settlement will require the elimination of a data field on the Multiple Listing Service (MLS) listing for each home that discloses to a buyer’s agent what the offered commission is on the sale. However, Josh McFall, CEO of Minnesota Realtors, argues that the settlement will create more work for buyers’ agents and increase complexity in the home buying process. He also suggests that the potential for agents to make more money under the settlement, but acknowledges that the current system is outdated and that there is no immediate threat to this.
公開済み : 10ヶ月前 沿って の Finance
You’ve perhaps read a lot about the settlement between realty firms and plaintiffs in a group of regional lawsuits. Breathless media coverage has forecast changes in home prices, a shakeout in the realty industry, and nothing less than a total realignment of the way Americans buy homes. Almost none of that appears to be true.
The suits involved the common practice of sellers agents paying a buyer’s agent a portion of the commission, often a split of three percent each (though that’s by no means always the case). The suit alleged that without disclosure to buyers and sellers, this constituted an anticompetitive business practice. A court in Missouri agreed, and the floodgates opened. Although the lawsuits were originally filed in Kansas City and Chicago and had limited reach, they were followed by copycat suits affecting most major realty companies, including those in Minnesota.
A series of settlements followed, including with the owners of Edina Realty locally and the National Association of Realtors (NAR), which will change the agent commission process. It’s the impact of those changes that’s in question. Minnesota law already requires more disclosure than many states do. Buyers sign a “representation agreement,” which discloses how the buyer’s agent is being compensated.
What’s changing is going to add complexity to the home buying process and add layers of work for every agent. Whether it will bring down the cost of buying and selling a home is anyone’s guess, but there’s no logical through line to that, says Josh McFall, CEO of Minnesota Realtors, a trade association representing 22,000 Realtors in the state. “All we know for sure is it’s going to have an impact on the entire industry,” he says.
The settlement will require the elimination of a data field on the Multiple Listing Service (MLS) listing for each home that discloses to a buyer’s agent what the offered commission is on the sale. It’s deemed a form of steering that could cause agents not to show a home to a buyer. Though commission arrangements were always negotiable between agents and buyers and sellers, that negotiation will now be obligatory, at every transaction, and selling agents will need to find other ways of informing buyers’ agents of the commission structure before they view a home.
The media supposition that the settlement will lower buyer’s agent commissions is specious, says McFall. “The settlement creates more work for buyers’ agents, and no one works for free.”
McFall says the settlement may compel some buyers’ agents to explore alternate business models, such as fixed-price commissions, or tiered services where they do more or less for different prices. He thinks there’s actually the potential for agents to make more money under the settlement. “But that’s at the price of predictability. [The settlement] has taken away the clear understanding of the terms of the transaction. Now it’s all private agreements,” McFall says. He believes many realty firms will develop commission policies that apply to their agents.
He doesn’t see any of the more optimistic consumer predictions coming to pass. “We don’t see commissions falling, nor do we see home prices being affected.” He suggests the prospect of agents suddenly competing on cost is rooted in a fallacy. “Agents could always compete on price, always negotiate commissions with buyers,” McFall says. It just isn’t all that common, because buyers are more focused on service and early access in a market where it’s hard to find homes and many sell above list price.
TCB contacted several local agents about their expectations of the changes and each declined to comment, referring us to management or trade association spokespeople.
McFall says the commission data will come off the MLS in early fall. “Then the old way will be gone,” he says. “Our system was the envy of the world, and I’m not sure this improves it, but Realtors are the most creative entrepreneurs out there,” and he sees no short-term threat to that.
トピック: Lawsuits, Real Estate, Antitrust