The broker commission system at the heart of the US housing market is under attack from multiple directions. The Justice Department is scrutinizing how most real estate agents are paid, and plaintiffs’ attorneys in class action lawsuits are accusing the industry’s powerful trade group, the National Association of Realtors, and several big residential brokerages of colluding to keep commissions high. On Oct. 31, a Missouri jury in one of those suits sided with the plaintiffs in a verdict that could result in multibillion-dollar damages. If more litigation follows that path, it could fundamentally alter the way buyers and sellers compensate their agents.
The seller typically agrees to pay a 5% to 6% commission on a sale of their property. Once a sale is completed, the seller’s agent splits the commission with the buyer’s agent. This system is largely unique to the US, and it’s tied to the Realtors’ association’s control of many of the country’s multiple listing services, which aggregate properties available for sale in a region.
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