How Chicago real estate agent commissions could change
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Chicago real estate agents may have to sing for their supper after a federal jury last October found the National Association of Realtors (NAR) colluded to inflate real estate commissions.
Why it matters: The case is putting a microscope on how agents get paid — and their value.
Catch up fast: Plaintiffs argued that NAR — and some of the largest brokerages in the country — conspired to keep commission rates high and that the system prevents sellers or buyers from negotiating those fees down, Axios' Emily Peck reports.
How it works: Sellers typically pay 5-6% of the home sale price to the buyer's and seller's agents, who split it.
- These fees are often baked into the sale price of the home, which drives the price up, Axios' Jacob Knutson writes.
Zoom in: If the verdict stands, it could mean higher costs for homebuyers, particularly first-timers, according to Debbie Pawlowicz, owner of a West-suburban brokerage.
- Shoppers who are already struggling to save for a down payment might then find it harder to afford to hire a professional, Chicago broker Matt Silver tells Axios.
Between the lines: Some people, like Lake Bluff homeowner Leslie Tarman, already buy or sell houses without a real estate agent. Tarman says she used a website that helps owners sell their homes.
- Yes, but: Buying her current house without an agent — working with inspectors, the title company and the bank — was more difficult, Tarman tells Axios.
- Also, many financial experts still recommend hiring an attorney. Illinois state law requires that a lawyer review the paperwork.
Of note: NAR is under pressure for more than just the commissions — they're also facing sexual harassment suits.
What's next: This case is far from over, but change is already brewing. Glenn Kelman, the CEO of Redfin, expects sellers will have more negotiating power over fees.
- NAR plans to appeal the verdict, Mantill Williams, NAR's VP of communications, told Axios in a statement.
- Another trial is expected to take place later this year.
What we're watching: Whether the field shrinks after a mostly stagnant year in real estate, and as commissions come into question.
- Fewer than one in every 1,000 Illinois workers are real estate sales agents, according to the U.S. Bureau of Labor Statistics.