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Re/Max recently paid $55M to settle commission lawsuits. This opens the door for more lawsuits targeting real estate brands. By settling, Re/Max admits wrongdoing and invites copycat cases.
Meanwhile, the National Association of Realtors (NAR) is wisely fighting these suits. NAR recognizes the value of cooperative compensation offered by listing brokers to buyer brokers. This time-tested practice incentivizes buyer agents and creates a robust real estate market.
Settlements benefit opportunistic trial lawyers far more than individual plaintiffs. Of the $55M, plaintiffs will collect mere pennies while attorneys pocket millions.
Reduced commissions could also make it harder for sellers to find qualified agents. Low fees lead to part-time agents with less training and availability. Full-service professional representation has value beyond the commission rate.
Comparable service industries like law and auction houses charge far higher commissions without lawsuits. Attorneys often collect 33% to 40% contingencies. Christie’s charges 25% auction commissions. Real estate fees are reasonable by comparison.
By settling, brands encourage more lawsuits and deteriorate the real estate business. Industry leaders should learn from NAR and vigorously defend the proven value Realtors provide. Standing on principle is better than quick settlements.
