Times have Changed By Jim Palmer Jr.

A recent class action lawsuit is now settled and ratified by the court concerning an accusation against the National Association of Realtors® and some prominent real estate franchises.  Basically, the controversial lawsuit accused NAR of price fixing.  The suit accused respondents of requiring Realtor® owned MLS’s (Multiple Listing Services) to keep commissions at a certain level and even though the accusation is patently false, the parties agreed to settle. 

Not all MLS’s are Realtor® owned, and those MLS’s are not bound to this settlement.  Spokane Realtors® organization (formerly known as the Spokane Association of Realtors®) is so named because they require all brokers to belong to the NAR in order to subscribe to their services.  All of the brokers subscribing to that local MLS therefore are subject to the requirements of the settlement. 

There has never been any requirement by NAR or SR to fix commissions in a certain range.  Commissions have always been negotiable.  Sellers have never been forced to pay a buyer’ brokers commission, but it has always made sense to do so because most buyers typically don’t have the money to pay a broker.

One of the requirements of the settlement is that, (starting on August 17, 2024) MLS’s can no longer publish the commission amount that a seller will pay to a buyer’s broker.  The authors of the settlement evidently thought that by keeping that a secret it will prompt more negotiation between brokers and clients and between sellers and buyers on the topic of commission.  Does that new practice benefit consumers?  We shall see.
Instead of benefitting consumers it may make the whole buying process more cumbersome.  It remains to be seen if consumers will get any benefit out that settlement forced business practice.

What it means is that a buyer’s broker will have to check each and every listing by calling the listing broker to see if that seller has incentivized buyers by offering a buyers side commission.  Washington State Agency Law was recently modified to require buyer’s brokers to have a written agreement before offering broker services to any buyer.  So, buyers will have to commit to pay a broker their fee before they ever know if a seller will agree to pay all or a portion of that compensation.  Buyers will have to be more committed than they ever have been in the past. 

Will that ultimately mean lower real estate prices because of lower negotiated commissions?  That outcome seems possible, but doubtful.