Traditionally, real estate commissions work in a way that benefits all parties involved. In this scheme, home buyer commission fees are absorbed in the seller’s closing costs. However, last Friday, a federal court ruling threatening to rock the real estate world opened avenues for Missouri home sellers to sue buyer agents for commissions paid.
The fallout could have a severe and lasting impact on the real estate market as we know it.
The Background
The lawsuit kicked off in 2019 when two Missouri petitioners, Joshua Sitzer and Amy Winger, filed a motion against the National Association of Realtors. In it, they claimed the distribution of commissions between listing and buyer agents disrupted the Sherman Antitrust Act.
This suit would have homebuyers paying their buyer agent directly instead of having listing brokers pick up the tab from their closing costs. The lawsuit asserts the traditional system that pays the buyer agent a split from the proceeds of the sale inflates the costs to sellers.
In a shocking turn of events, Judge Stephen Bough ruled that this lawsuit could receive class-action certification. In layman’s terms, sellers who paid a broker commission for a residential real estate deal across four Missouri MLSs, going back to April 2014, can sue for their commission costs.
The suit names the National Association of Realtors, as well as Realogy, RE/MAX, Keller Williams, and HomeServices of America as defendants.
The fallout here could be catastrophic. Hundreds of thousands of sellers could seek reimbursement on commissions paid to buyer agents in the last eight years. This totals more than $1 billion in back commissions.
North Texas Agents React
Ashely Broadhurst, a real estate agent at JPAR, is surprised by these rulings.
“Especially now,” says Ashley, “Buyer agents are doing so much more of the legwork. I don’t see how it’s fair to revoke commissions when they’re typically the ones who make the sales happen.”
This news also shocked Darian Clark, a Realtor with Coldwell Banker Apex.
“All I can say is wow. That’s crazy,” says Darian. “Thank God, I don’t do real estate in Missouri. You know, I’ve heard of similar legislation being introduced nationwide but I don’t see why you’d want to do this. These days, the buyer agent must have a lot more skill. Take them out of the equation and you’re really in trouble.”
What do you think about this lawsuit and commission splits?
