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The Ongoing Battle Over Real Estate Commissions
A $1.7 billion lawsuit against the National Association of Realtors (NAR) and major real estate brands like Realogy, Keller Williams, RE/MAX, and HomeServices of America was making headlines last year. The lawsuit alleged that the longstanding practice of sellers paying the buyer’s agent commission inflated real estate commissions nationwide to the tune of $60 billion.
However, this past May, a federal court dismissed the class action lawsuit, finding the claims to be frivolous. This follows a separate antitrust investigation into NAR’s rules around commissions by the Department of Justice under the Trump administration. That investigation resulted in a settlement agreement with NAR to increase price transparency, which the Biden administration later withdrew from in 2021, signaling they may still pursue future antitrust litigation.
So where does this leave real estate agents and the industry as a whole? The bottom line is that regardless of the legal outcomes, the reputation of realtors has taken a big hit through this prolonged battle over commissions.
If the initial verdict requiring NAR to pay $1.7 billion had been upheld, realtors would be portrayed as scamming clients for years. Now that it’s dismissed, realtors still look bad as though they got off on a technicality. It’s a lose-lose scenario.
This is why now, more than ever, real estate professionals nationwide need to focus on improving public perception. Agents should be loudly singing the praises of the value they bring to transactions and communities. Don’t wait for NAR to lead a PR counter-offensive. This effort needs to be grassroots, with each agent sharing positive messaging about their role.
And with the DOJ potentially still planning antitrust actions, realtors need to make their voices heard to elected officials during this election year. Explain why the commission structure is reasonable and how it serves clients well.
The industry is weathering a storm right now. But strategic messaging and political engagement can help ensure realtors come out the other side with their reputations and livelihoods intact. What are your thoughts? I welcome perspectives from all agents as we chart the path forward.
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