The United States’ residential housing market’s broker commission system is facing unprecedented antitrust investigations by the Justice Department and two private class-action lawsuits. These legal actions are putting the influential National Association of Realtors (NAR), the industry’s powerful lobbying group, at risk.
Federal antitrust enforcers, after a prolonged investigation, are close to deciding whether they will file their own case. The primary target of the Justice Department’s scrutiny is the commission-sharing system in real estate. This system typically requires home sellers to allocate 5% to 6% of the sale price, with it being divided between their agent and the buyer’s agent, reported Yahoo.
This unique US practice has been upheld by NAR’s control over multiple listing services, essential tools that compile property information available for sale in specific regions. NAR mandates that sellers offer compensation to the buyer’s representative, a requirement that critics argue artificially inflates home prices.
Two separate antitrust class-action lawsuits are set to challenge this practice. The first lawsuit, beginning in Missouri this Monday, has the potential to result in up to $4 billion in damages. Meanwhile, plaintiffs in a trial scheduled for early next year in Illinois are seeking damages as high as $40 billion.
Michael Ketchmark, the lead attorney representing the plaintiffs in the Missouri case, has labeled the commission-sharing structure as “collusion.” He stated, “The day of accountability is coming.”
The future of the commission system in the US residential housing market is at stake as these legal proceedings unfold. The decisions made by the Justice Department and the outcomes of the class-action lawsuits will have far-reaching implications for the industry and its practices, closely watched by professionals and consumers alike.
Source: Finance Yahoo