In Tampa, Florida, recent developments in an antitrust court case in Missouri, alongside similar litigations, are poised to bring significant alterations to the conventional 6% commission structure paid to real estate brokers, as well as determining who bears this financial burden.
Callen Jones, a real estate agent with Jones Home Team Inclusive Real Estate in Florida, notes the discernible impact of the Missouri verdict on the local real estate landscape.
Jones, who has printed thousands of pages of real estate documents throughout their career, emphasizes the contractual intricacies involved.
The Florida real estate contract delineates terms and conditions for property transfer between a buyer and seller, covering details like the property address and acceptable loan types.
Typically, real estate agents charge 5-6% of the sale price, with the entire commission paid by the seller. Jones points out that a portion of this percentage goes to the agent bringing the buyer.
The landmark lawsuit has the potential to reshape the dynamics of commission payments. The jury’s decision favored over 500,000 home sellers who were either unaware or disagreed that part of their paid commission was directed to the buyer’s broker. The judgment amounted to a substantial $1.8 billion.
Jones emphasizes the transformative impact, with copycat lawsuits emerging, leading to uncertainty about future developments.
The alteration in MLS compensation has shifted perceptions. Sellers now feel they have more choices, but on the flip side, buyer’s agents can no longer guarantee commission payment by the seller.
Jones highlights the implications for veteran and first-home buyers, particularly those utilizing VA loans, as these loans prohibit commission payments. With rising home prices, some buyers may struggle to afford down payments, closing costs, and now commissions, potentially working without compensation.
In this evolving landscape, realtors stand to lose guaranteed compensation, a development that could significantly disrupt the real estate industry. Meanwhile, the National Association of Realtors plans to appeal the ruling, setting the stage for potential legal and industry-wide transformations.
Key Points to Consider:
– A recent antitrust court case in Missouri, and comparable lawsuits, might result in modifications to the standard 6% commission paid to real estate brokers and determine the party responsible for this fee.
– In October 2023, a Kansas City jury ruled that real estate commission rates were artificially inflated. Allegations pointed towards the National Association of Realtors, HomeServices of America, and Keller Williams Realty conspiring to maintain these inflated rates.
– From October onwards, the compensation offered to a buyer agent in the Multiple Listing Service (MLS) will no longer have a minimum value of $1.00; instead, it is now set at $0.
– Historically, sellers bear the commission fee, which is then divided between their broker and the buyer’s broker.
