Houston Chronicle by R.A. Schuetz June 3, 2019
For the average Houston home, priced at $310,700, real estate agent commissions cost $18,600. If the same deal had closed in London, the homeseller would have only paid agents about $3,700.
The reasons for the difference are at the center of a class-action suit that could dramatically change the way homes are bought and sold in the United States.
The case, brought by a Minnesota homeowner, seeks to strike down the standard practice of agents splitting commissions. If successful, the suit would potentially save individual home sellers thousands of dollars in commissions, but it would also cut the earnings of real estate agents across the country — including some 37,000 in the Houston area — and put more pressure on traditional brokerages, already contending with a host of discount and online competitors.
If defeated or dismissed, as the National Association of Realtors has requested, it would mean business as usual for years to come and, perhaps, pose a stumbling block for startup companies seeking to shake up the real estate business through the use of technology.
The case, brought by lead plaintiff Christopher Moehrl, argues that if not for rules put in place by the National Association of Realtors and used by local groups including the Houston Association of Realtors, commissions in the U.S. would be similar to those in the U.K., where sellers only pay the agent who lists the home, not the agent who helps the buyer make the purchase.
In the U.K., the average listing agent fee has been falling steadily since 2011, according to a survey by the homeseller website The Advisory, sinking to a mere 1.18 percent in 2018.
NAR, which is being sued along with Austin-based Keller Williams Realty, Re/Max Holdings, Homeservices of America and Realogy Holdings (owner of Century 21, Coldwell Banker, Sotheby’s International Realty and other household-name brokerages), argued the complaint characterized its rules incorrectly.
On Wednesday, a Federal Judge in Illinois allowed Moehrl to file an amended complaint by June 14. Now both sides are retrenching, the Department of Justice has opened its own investigation and the property data company CoreLogic has been dragged into the fray.
“The claims are devoid of accuracy,†said Mantill Williams, vice president of public relations at the National Association of Realtors. “They withdrew their complaint and are going to regroup to try to salvage what we see as a baseless claim.â€
Expanded inquiry
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https://www.houstonchronicle.com/business/article/Class-action-case-could-upend-residential-real-13914722.php
