![](https://privateequityweekly.com/wp-content/uploads/2024/02/iStock-665992320-1024x576.jpg)
The time has come – the time to take charge. This summer, July 30-August 1, 2024, experience the complete reinvention of the most important event in real estate at Inman Connect in Las Vegas. Join your peers and the best in the industry to shape the future. learn more.
A week after the U.S. Department of Justice backed an outright ban on home sellers offering commissions to buyers’ agents, the National Association of Realtors said the change would harm consumers.
For decades, listing and buyer’s agents shared commissions, a system reinforced by the NAR rule, which requires listing agents to provide buyer’s agents with blanket, unilateral compensation for any transactions involving real estate agents affiliated with them. Submit listing information in the multiple listing service. The rule, known as the cooperative indemnification rule or participation rule, is the subject of a growing number of antitrust lawsuits across the country.
Thursday. On February 15, the Department of Justice submitted a Statement of Interests In a case challenging a similar NAR rule (known as Nosalek). In the legal filing, the federal agency rejected the rule changes in the proposed settlement and instead called for “an injunction prohibiting sellers from offering commissions to buyer’s brokers,” thereby promoting competition and innovation among buyer’s brokers as buyers would have You have the right to negotiate directly with your own agent.
The move would “decouple” commissions – a change that the Consumer Federation of America has been pushing for at the consumer watchdog since May 2022.
The DOJ stressed that the change would not necessarily force buyers to pay commissions out of pocket, as buyers can include in their home purchase offer a requirement that the seller pay the buyer’s agent out of the proceeds of the home sale.
“As a result, the current practice of including commissions into the price the seller is willing to accept is likely to continue,” the Justice Department filing said.
![](https://assets.inman.com/wp-content/uploads/2023/11/Nykia-Wright-Photo-150x150.jpeg)
Nikia Wright
The day after the DOJ filing, NAR released a public statement from interim CEO Nykia Wright denouncing “outside comments” “intended to tell our story for us” but making no mention of the DOJ or its termination of commission sharing. appeal.
On Thursday, Inman asked NAR what the consequences of the Justice Department’s proposal to decouple commissions would be, and whether they would be positive or negative for consumers and agents.
“The Statement of Interest confirms that the Department of Justice wants to regulate what sellers and their listing agents can do with their money and their homes,” NAR spokesperson Mantill Williams told Inman in a statement.
![](https://assets.inman.com/wp-content/uploads/2019/03/Mantill-Williams-150x150.jpg)
mantil williams
“Banning all reimbursements will harm consumer interests, including making it more costly for homebuyers to obtain competent representation and reducing access to fair housing.
“There are significant interests at stake for buyers and sellers across the country, and NAR will continue to work in and out of court to obtain the best possible outcome for America’s homeowners and the professionals who represent them.”
NAR did not elaborate further. The statement was also NAR’s response to the CFA, which praised the DOJ filing as “an important watershed moment in the past 80 years of efforts to introduce more price competition in agent and broker compensation.”
“This DOJ opinion effectively guarantees that buyers will finally be able to negotiate buyer’s agent commissions that are currently determined through industry collusion,” CFA senior fellow Stephen Brobeck said in a report. statement.
![](https://assets.inman.com/wp-content/uploads/2022/07/SBrobeck_Official_Photo_Large07.09.15-225x300-1-150x150.jpg)
Steve Brobeck
“Agent compensation may also vary more based on factors such as agent experience and time in sales.”
The CFA warned that price manipulation could continue even within a decoupled system if agents refused to negotiate prices.
“Agents can tell buyer and seller clients that rates of 2.5-3.0% (5-6% total) are normal, and agents can refuse to negotiate those rates, as many listing agents currently do ( The CFA study found that about three-quarters),” Brobeck said.
Regardless, he doesn’t expect current commission rates to drop quickly or significantly.
“To ensure strong price competition, both buyers and sellers need to discuss and try to negotiate their agent’s compensation,” Brobeck said.
“Even then, rates are unlikely to drop immediately, but over time they could fall to an average of 3-4%, saving consumers an estimated $20-30 billion annually, depending on reimbursement types and fees. The rate difference is even greater.Agent.
“Inexperienced agents will no longer be able to charge the same rates as highly qualified agents with years of experience.”
![](https://assets.inman.com/wp-content/uploads/2024/01/Kevin-Sears-scaled-e1704912505628-150x150.jpeg)
Kevin Sears
Earlier this month, NAR President Kevin Sears told hundreds of agents that the Justice Department was going to be a “bigger issue” for brokers and agents and that it would be a A multibillion-dollar verdict in the Antitrust Commission case known as Sitzer/Burnett, which found that NAR and major real estate franchisors conspired to inflate broker commissions.
Sears warned agents, “The way we do business is going to change. Whether we accept it and adapt to it, or we’re forced to swallow it, it’s going to change.”
![](https://assets.inman.com/wp-content/uploads/2023/10/bough_2-1-150x150.jpg)
Judge Stephen Baugh
The most likely path to the Justice Department’s proposal coming to fruition most quickly may be for the judge in the Sitzer/Burnett case to issue a final ruling this spring, which could include an injunction. Judge Stephen R. Bough is currently weighing motions by NAR and other defendants to set aside the jury verdict or bar it for a new trial.
Send an email to Andrea V. Brambila.