After the Sitzer-Burnett decision, it was changed to Real estate commission structures are inevitable A note from Keefe, Bruyette & Woods said the National Association of Realtors must be the facilitator, not the individual franchisee resolving legal proceedings.
Remax and Anywhere both announced that they have received preliminary court approval for settlements in three cases, including the Sitzer/Burnett case that will proceed to trial against the remaining defendants. More and Nosalek.
“I am pleased that the court has preliminarily approved Anywhere’s nationwide settlement,” Anywhere CEO and President Ryan Schneider said in a press release. “Our efforts to resolve these claims eliminate Anywhere’s future uncertainty and legal expenses. Franchisees and Affiliated agents, together we are committed to taking the next step forward for home buyers and sellers.”
Anywhere protocol includes $83.5 million in monetary relief. Remax will Pay $55 million. NAR and the remaining defendants in the Sitzer/Burnett lawsuit, Keller Williams and HomeServices of America Jury ordered to pay $1.78 billion.
“We are pleased with the court’s decision to preliminarily approve the settlement agreement,” Remax President and CEO Nick Bailey said in a press release. “This development marks progress in our ongoing efforts and commitment to resolution – and is a positive step.” Bringing these cases closer to the finish line.”
Analysts said the agreements and Redfin’s decision to withdraw from the NAR over the issue won’t push the real estate industry to adopt new compensation models; that can only be pushed by the trade group.
“However, regardless of these settlements or any future settlements with other brokerages, we believe significant changes to the industry’s commission structure are inevitable, with NAR being the primary change agent, rather than individual brokerages,” said KBW’s Ryan Tomasello. “We believe these changes will ultimately take effect through a court-ordered injunction, a settlement agreement with NAR, or direct intervention by the Department of Justice or the Federal Trade Commission.”
BTIG analyst Soham Bhonsie added that the Minnesota court’s preliminary approval is good for both Anywhere and Remax, as it allows the companies and their agents to focus on serving customers.
“While there remains the risk of DOJ involvement as this involves copycat lawsuits in other states, our understanding is that Anywhere and Remax are now protected nationwide,” Bhonsie wrote.
For mortgage loan originators, Trade groups have previously warned of “unintended consequences” Any changes to the commission structure that may affect loan eligibility.
Meanwhile, a survey by Clever Real Estate, which connects consumers and agents, revealed there is confusion among buyers and sellers about who is responsible for paying buyer’s agent commissions.
The company notes on its website that seller commissions are 1.5%, but adds that “buyer agent commissions (typically 2.5% to 3%) still apply.”
Clever found that 42% of sellers didn’t realize they were paying borrowers agent commissions, which is a major point of contention in legal cases. Overall, 62% of Americans believe buyers pay agent commissions. Among non-homeowners, 66% believe buyers pay their own agent commissions.
More than half of sellers surveyed (55%) said they are not obligated to pay buyer’s agent commissions.
“This misconception may be why 65% of Americans mistakenly believe buyers can save money by not working with an agent,” a Clever press release states.