December 15

Watch and Win!


A federal judge recently determined that the National Association of Realtors and prominent brokerage firms colluded to maintain artificially inflated commissions. The potential consequences of this ruling remain uncertain, but real estate agents in Maine are concerned that it may adversely affect both their business and potential buyers.

Maine real estate agents are keeping a close watch on the potential consequences of a federal court case that may disrupt their income streams. They believe that this ruling could not only harm their own earnings but also negatively impact homebuyers.

In a recent ruling, a federal judge in Kansas City determined that the National Association of Realtors and prominent brokerage firms, such as Keller Williams and HomeServices of America (the parent company of Berkshire Hathaway), colluded to artificially inflate commissions. This collusion, in turn, suppressed competition and led to higher home prices.

The decision resulted in a $1.8 billion verdict for around 500,000 Missouri home sellers, with the possibility of additional funds in the future. The National Association of Realtors has refuted the accusations and expressed their intention to challenge the ruling.

The judge is still deliberating on the necessary alterations. The complete commission structure, whether bundled or coupled, may either be dismantled or remain intact, but with enhanced transparency regarding real estate commissions.

In the traditional model, agents representing sellers and buyers would typically split a commission, which usually ranges from 5% to 6% of the home sale price. For instance, in Maine where the median home price was $376,000 in November, the agents would divide an amount between $18,800 and $22,560. The specific split can vary, sometimes being an equal 50/50 division or another arrangement. It is important to note that the split is determined by the seller, and the fees for both agents are typically included in the list price.

However, this arrangement may create the misconception that sellers are solely responsible for paying the commission. Real estate agents argue that this is not the case, as higher fees for sellers ultimately translate to higher costs for buyers.

In 2019, a group of home sellers in Missouri took legal action against the trade organization and brokerages, alleging practices that violate antitrust laws. The court has now joined them in acknowledging these concerns.

These practices and policies encompass various aspects: preventing the disclosure of broker commissions to buyers when purchasing a home listed on the MLS, allowing agents to give the impression that their services are free, and enabling the filtering of MLS listings based on commission levels, effectively excluding homes with lower commissions.

To prevent collusion, agents are prohibited from discussing their commissions or fees with each other, although they can discuss splits.

Unlike the MLS, real estate websites like Zillow and Redfin display the likely percentage of the sale that the buyer’s agent will receive, but they do not disclose the commission for the seller’s agent. In York County, where a 60/40 split has been historically common, a majority of sampled listings included a 2% commission for the buyer’s agent, while homes in Cumberland and Androscoggin counties had a 2.5% commission.

The lawsuit claims that the secrecy surrounding commissions hinders buyers from comparing prices and agents from competing, resulting in lower commission rates. However, in Maine, there is more transparency as buyers and agents sign written agreements that specify the commission and payment terms. Additionally, Maine’s MLS does not allow agents to search by commission. Carmen McPhail, president of the Maine Association of Realtors, believes that Maine is ahead in terms of transparency. Without such agreements, other states are like the “Wild West,” according to McPhail. Vitalius, a real estate agent, believes that the market will resolve this issue and that lawsuits will not improve the system for buyers and sellers. In fact, it may have the opposite effect, according to him and other agents.

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