KANSAS CITY, Mo. — A federal jury's decision in a Kansas City, Missouri, courtroom could make drastic changes to the home buying process across the country.
https://www.kshb.com/jury-awards-home-sellers-1-8b-after-brokers-inflated-commissions
Some say it’s a victory for people selling their houses while others say the verdict could be at the expense of buyers and their agents.
“Not only are you paying 3% to an agent working to sell your house, but 3% for the buyer’s agent too,” said Michael Ketchmark, an attorney representing 500,000 home sellers across Missouri, Kansas and Illinois in a class action lawsuit. “We were able to prove during the trial that that’s because of a rigged system who got together to conspire to fix the prices and its cost Missourians, Kansans and residents of Illinois over $1.7 billion in 2015-222.”
The home sellers in Missouri, Kansas and Illinois brought the federal lawsuit against the National Association of Realtors and several large brokerages.
The suit alleged the realtor's group conspired with brokerages to inflate commissions paid to agents.
The federal jury sided with the sellers and awarded them nearly $1.8 billion.
If the verdict is upheld, sellers likely won't be required to pay the commission of the buyer's agents.
“We’re at a point where we have to pivot and that's what were doing,” said Shawnna Murrell with Murrell Homes Real Estate Group.
Murrell Homes Real Estate Group on Main Street in KCMO has served more than 250 families.
Today in the office, Shawnna Murrell said there’s concern about what this ruling means for them and the other 13,000 real estate agents in the metro area.
“The concern will fall on those agents because that income could change drastically," Murrell said. "Where they are used to getting a certain percentage now could be half of that,” Murrell said.
They say the ruling also could hinder some home buyers, especially if sellers ask buyers to pick up their commission agents' costs.
“It could increase what they need to bring to the closing table and for first-time home buyers that can be a challenge. It also can be a challenge for low-income buyers as well,” she said. “My concern is that some buyers are low-income families. They may have limited funds. It could be a challenge for buyers.”
She says it’s important for people to understand the value of agents.
“What could change is if the buyer broker commission is now taken from what the buyer needs to bring to the closing table then that is an amount that is now added,” she said. “When you look at the grand scheme of things, the commissions have always been negotiable, always been negotiable, it’s nothing new. They need to understand the commissions they choose to pay out to the buyer brokerage is literally a marketing incentive, it's nothing more than that.”
One of the Kansas City homeowners represented in the lawsuit, Jerod Breit, said the standard of paying the commission didn’t sit right with him
“It feels great to be a part of something that can change the system,” said Breit.
He and attorney Ketchmark filed a nationwide lawsuit to do the same thing.
They estimate it’ll save homeowners nationwide more than $50 billion a year.
“These real estate agents are awesome people, are great at what they do," Ketchmark said. "Maybe they won’t be able to make 3% for not doing as much work on the buyer's side, but they can make more money on the sell side. Commissions ought to be 1-2%, the free market should be like that. When I graduated from law school, we used to have travel agents and we paid travel agents 10% of a ticket. You don’t do that anymore because that’s the internet working for you.”
