Using a travel agent to buy a plane ticket or a stockbroker to trade equities seem like relics of the past. And yet, every day, people across America hire a real estate agent to help them sell a home. It’s one of the few industries that has been able to largely avoid the disruption that has helped consumers cut costs in the Internet age.
And that is largely because of the power of the National Association of Realtors, the largest professional organization in America and a significant lobbying group for the real estate industry.
But the verdict handed down in a Missouri court on Tuesday that found NAR and two brokerage firms, Homeservices of America and Keller Williams Realty, were liable for $1.8 billion in damages for conspiring to keep commissions artificially high, may mark the beginning of the end of how homes are bought and sold.
Two other firms initially named in the suits brought by home sellers – Re/Max and Anywhere Real estate, formerly known as Realogy, which is the parent company of Coldwell Banker, Century 21, Sotheby’s International Realty and Corcoran — settled out of court for a combined $140 million. As a term of the settlement, they each announced a commitment to make changes in their business practices — including not requiring agents to be members of NAR.
NAR and the brokerages have vowed to appeal the verdict, which means real estate commissions aren’t going anywhere immediately.
NAR has been fighting off US antitrust officials and litigation for years regarding anti-competitive practices and this verdict is the association’s biggest setback yet.
This verdict is just from one of several lawsuits currently filed against NAR, which is also facing scrutiny from the US Department of Justice.
NAR has already faced a difficult year, setting aside the verdict and the troubled housing market.
In August, the NAR president, a member agent named Kenny Parcell, resigned amid sexual harassment allegations. Last month Redfin, an internet real estate company, left the association.