DLNews Real Estate:

A jury verdict this week could profoundly transform how homes are bought and sold across America. It found that the National Association of Realtors conspired with two brokerage firms - HomeServices of America and Keller Williams Realty - to artificially inflate real estate agent commissions, leading to higher costs for buyers and sellers. Although this ruling won't immediately alter how houses are sold, it will increase chances for innovative business models that reduce or even do away with commission altogether, potentially dramatically cutting costs for all parties involved.

On Tuesday, a Missouri court issued a $1.8 billion verdict that may mark the beginning of the end for an outdated commission structure in US housing markets for decades. Homeowners selling their properties typically pay their agent 6% of the sales price to list and separately pay the buyer's broker 3%; this standard model has long been accepted within America's real estate industry and provides lucrative business for brokerages that own multiple listing services (MLSs) used by real estate agents to aggregate properties available for sale locally.

But the legal battle over commissions has yet to come to an end. The National Association of REALTORS has pledged to appeal the verdict, while two defendants in this case - HomeServices and Keller Williams - have already filed motions challenging it. Furthermore, NAR faces another national class-action suit with similar issues scheduled before trial early next year in Illinois.

Additionally, plaintiffs in a Missouri case seek to have damages tripled as per antitrust law; Michael Ketchmark of CBS MoneyWatch noted that NAR and brokerage firms have for too long held onto commissions with their tight grip on commissions.

The jury decision will likely result in the National Association of Realtors and many of its member brokerages reviewing their compensation structures to account for changes to the industry while potentially prompting more consumer advocates and new startups to explore alternative means of helping consumers find and purchase homes.

A federal court ruling in favor of the plaintiffs would likely force NAR and other defendants to change their compensation models, giving homebuyers more chance to negotiate flat fees with listing agents. This move would mark a dramatic departure from the current system, which requires homeowners to pay their agents a fixed 6% of the sales price regardless of whether they sell at record-high or bargain basement prices. The change could save home sellers thousands of dollars while impacting NAR's $100 billion annual pool of revenue and strengthening claims that its standard commission structure violates antitrust laws and hurts consumers.