From the Washington Post: Realtors’ settlement could dramatically change cost of housing sales

The interest group representing the real estate profession was sued by home sellers who argued that real estate commissions were artificially high.

An example of the use of the courts to change policy.

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The National Association of Realtors has agreed to settle litigation that accused the industry group of artificially inflating real estate commissions, setting up a reconfiguration of the housing market that could dramatically lower how much consumers pay in home transactions.

. . . Under the proposed deal, the group representing 1.5 million real estate agents would change rules that plaintiffs and consumer advocates say have helped inflate commissions for home sellers, who for decades have paid Realtors 5 to 6 percent of the sale price. The association also would pay $418 million over four years to settle several cases.

. . . “There’s no doubt in my mind that this is going to bring about tremendous savings to homeowners,” said Michael Ketchmark, a plaintiff attorney representing Missouri home sellers in one of the cases, adding that he was confident that agreement would fundamentally change the real estate market and help lower the cost of housing and home sales.

. . . The association’s century-old commissions structure provides that sellers’ and buyers’ agents split an amount that typically ranges between 5 and 6 percent of the home sale price. Home sellers in Illinois and Missouri alleged in a pair of class-action lawsuits that NAR’s rules inflate commissions by requiring sellers’ agents to make a compensation offer to list on the Multiple Listing Service, a home selling database.

In October, a Kansas City, Mo., jury found that NAR and major brokerages conspired to keep commissions artificially high and awarded a class of Missouri home sellers $1.8 billion in damages. Meanwhile, the case in Illinois had been moving toward a trial, focused on similar allegations. The agreement announced Friday, if approved by a judge, would resolve those cases and end the long-standing commissions structure, Ketchmark said.