LOGAN – In October 2023 a federal jury in Kansas City, Missouri found the National Association of Realtors (NAR) and some residential brokers liable for conspiring to artificially inflate commissions. The court fined NAR and other real estate organizations $1.78 billion in damages.

The NAR is a 115-year-old nationwide trade organization in the United States and it’s membership extends to countries outside of the U.S. They have roughly 1.5 million members.

Plaintiffs in the class action included sellers of more than 260,000 homes in Missouri, Kansas and Illinois between 2015 and 2022, who objected to the commissions they were obligated to pay buyers’ brokers.

The verdict came after a two-week trial, and the damages award can be tripled under U.S. antitrust law to more than $5.3 billion.

Sid Roderer, an associate broker at Achievement Reality, was at the Cache Valley Media Group Home and Garden Show last weekend armed with information if anyone had questions about the lawsuit.

“There is a lot of misinformation floating out there,” she said as she handed out a paper explaining the NAR settlement and what is happening with real estate commissions.

She said real estate commissions are market driven and it will affect real estate agents, it may change commissions between listing agents and the buyer’s agents.

“There are a lot of misconception about this legal action and it should not affect buyers no matter how you turn the money,” Roderer said. “To make a long story short, buyers and sellers should not be affected.”

She said real estate commissions are market driven and it will affect the real estate agents, it may change commissions between listing agents and the buyer’s agents.

“The commission will be split in half and the responsibility will be shifted to the buyer,” she said. “We can’t advertise our commissions anymore and it won’t be as transparent for us.”

Jason Holmes, the principal broker at Achievement Realty, gave a rundown of the NAR settlement with a unique Utah perspective. He said each state has their own licensing laws for conducting real estate services.

“We pay annual member dues to NAR and in exchange receive training, industry insights, market and economic trends, and education” Holmes said. “We are also allowed to advertise with the trademark ‘R’ for REALTOR.”

NAR is a leading proponent eliminating discrimination in the real estate industry and promoting private property rights.

“Each state also has their own trade organization with similar goals, ethics, and lobbying effort. In Utah, we have UAR, or Utah Association of Realtors,” Holmes said. “Each state also has several localized associations. Our local board is called Cache Valley Association of Realtors, and serves the Cache Valley market including the Preston area of Idaho and over into Rich County in Utah.”

Realtors pay dues into the local, state, and NAR boards. Real estate agents are typically all self-employed and have to belong to a brokerage in order to conduct real estate services.

“There has never been any effort to create a standardized commission rate. In fact, it’s against our NAR Code of Ethics,” he said. “The real estate commission rate is unique to each local brokerage and the clients they serve.”

The biggest change from the lawsuit is the settlement which will affect the Multiple Listing Service (MLS) boards. MLS is used by agents as a tool to let people know what they are listing.

“The largest MLS in Utah is called Utahrealestate.com,” Holmes said. “As of right now, we are allowed to advertise the Buyer Agent Commissions (BAC) on our listings.”

Commission can be set as low as $0 and have no set limit. Going forward, this BAC will not be allowed to be advertised on MLS sites.

”I believe most Realtors will do a good job educating sellers about this process and I foresee the sellers still willing to pay the BAC,” the broker said. “It’s unfortunate sellers and agents won’t be allowed to advertise the BAC on the MLS so agent-to-agent communication will become more crucial than ever.”

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