Why the landmark settlement that changed how Realtors get paid may not be fully settled

DOJ Raises Concerns Over Real Estate Settlement #

The US Department of Justice raised doubts about a new settlement designed to reform the way real estate brokers are compensated. This development has left many in the real estate industry uneasy about navigating commission negotiations without falling afoul of the law. The settlement, valued at $418 million, binds over 1.4 million Realtors to new practices, aiming to overhaul a market that critics argued pressured home sellers into covering substantial commissions shared between buyers’ and sellers’ agents.

Initially announced in March and effective by mid-August, the settlement introduced comprehensive changes, notably prohibiting the inclusion of agents’ compensation in multiple listing services—a centralized database used by Realtors. Compensation details can still be shared through other means, however.

Additionally, it mandates that buyers’ agents discuss compensation upfront. Prospective homebuyers must sign written agreements with their agents before property tours, clarifying the responsibility for Realtor fees if the seller does not cover them. This change stems from lawsuits asserting that home sellers shouldn’t cover buyer agent fees.

Days before a judge’s approval, the DOJ highlighted antitrust concerns regarding the requirement for buyer-broker agreements. It suggested removing this requirement or specifying that the settlement doesn’t shield Realtors from future antitrust lawsuits. Despite these recommendations, a Missouri judge approved the settlement without modifications.

The real estate community is adjusting to the changes. The period is marked by frustration, as agents anticipate potential legal challenges, fearing that existing rules may not shield them from further scrutiny. Transitioning to the new rules has been fraught with misunderstanding and tension, particularly concerning buyer agreements and commission transparency.

Agents have reported an increase in confusion, especially in negotiations around buyer agreements. While some homebuyers willingly agree to these new terms, disputes arise primarily among agents, with some threatening not to show properties without prior disclosure of commission details.

Realtors expressed concerns about their compliance with the new rules leading to further antitrust litigation, despite adhering to the guidelines. There’s unease about more regulatory changes potentially arising from the DOJ’s stance, fueling a pervasive feeling of uncertainty in the industry. Some professionals are even considering dissociation from their trade organization, questioning the benefits amid increasing regulatory demands.