A lawsuit against the National Association of Realtors and the four most prominent real estate broker franchises could change an industry-accepted compensation construct. The lawsuit argues that NAR’s rules and practices governing commission sharing on multiple listings services violate the Sherman Antitrust Act by inflating home seller costs. One of the biggest bombshells set to hit the real estate market is a lawsuit that alleges that the National Association of Realtors (NAR) violated the Sherman Antitrust Act. This could have significant long-term implications for the real estate industry. The lawsuit claims that NAR has been conspiring to inflate the costs of home sellers and buyers by forcing them to pay a commission to the buyer agent. If successful, this lawsuit could radically change the real estate industry and what is paid to agents by both parties. It could also have a significant impact on the MLS data that is available to real estate licensees and consumers.
Labor shortages could also impact other sectors, including education, health care, hospitality, and entertainment. Lower employment levels in these industries could reduce demand for real estate. The NAR Lawsuit also could create opportunities for new entrants in the housing industry that the NAR does not regulate. These companies would compete for more with traditional agents, increasing efficiency and reducing the cost of selling a home. In addition, NAR rules that require sellers to offer buyer brokers a commission to list a home on the MLS inflate seller costs. This practice, referred to as “tying,” fixes brokerage prices and stifles competition for commissions.
Lower Home Prices
As the housing market begins to cool down, there is a growing trend of buyer’s remorse. This can be a thorny issue for the real estate industry, especially for the agents involved in homebuying transactions. The question is, will realtors become extinct? The National Association of Realtors (NAR) recently got slammed with a class action lawsuit that alleges NAR and four major franchisors have violated antitrust laws by requiring home sellers to pay buyer brokers. If successful, this lawsuit could radically change the real estate commission structure in the United States. It is a significant threat to the industry and could have long-term implications for home prices.
Higher Home Prices
If the lawsuit is successful, it could significantly reshape the real estate industry as buyers would no longer be forced to pay a commission to their agent. This could save them thousands of dollars, but it’s also possible that this could result in a significant loss of revenue for sellers. Currently, the National Association of Realtors (NAR) requires brokers to make a non-negotiable buyer-broker commission offer when they list homes on multiple listing services affiliated with NAR. The homebuyers in this suit allege that this policy harms competition among buyer brokers and results in inflated commissions for both sides of the transaction. It violates the Sherman Antitrust Act, which prohibits activities that restrict interstate commerce and competition.
Higher Mortgage Rates
When interest rates rise, homeowners and potential home buyers must pay more on their mortgages. As a result, the housing market slows down. If the economy is increasing, this will lessen the impact of higher mortgage rates. However, rising mortgage rates could significantly affect property value and housing prices if the economy needs to grow faster. Home-buying costs can account for more than 30% of a typical family’s income. High rates can cause more people to lose their homes because they cannot afford to pay their monthly mortgage payments.