How Denver real estate agent commissions could change
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Illustration: Sarah Grillo/Axios
Denver real estate agents might have to sing for their supper after a federal jury found the National Association of Realtors (NAR) colluded to inflate real estate commissions last October.
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, and that money is split between the buyer's and seller's agent.
- These fees are often baked into the sale price of the home, which drives the price up, Axios' Jacob Knutson reports.
Zoom in: Aside from additional communication with her buyers and sellers, agent Kelly Moye expects minimal change to her work.
- Local laws already require Colorado agents to disclose their fees, so "compensation is very clear here," Denver agent David Schlichter says.
- Commissions have always been negotiable, he adds. And with a saturated agent pool in Denver, buyers and sellers have their pick of agents at various price points.
- "Discount brokers have been and continue to be a part of the marketplace, and the quality differences from agent to agent can be very significant," Schlichter says.
The intrigue: Some consumers are already forgoing agents. Axios Denver reader Mark Morehouse bought and sold homes in Fort Collins without real estate agents back in 2015.
- He found a house on Zillow, and "wrote a letter to the owner explaining we were a family in the neighborhood and wanted to stay there, but needed a bigger house."
- He hired a lawyer to draw up the contract, and sold his house without an agent.
- Morehouse estimates he saved around $45,000 not using a buying or selling agent.
- "We used the money we saved to remodel the basement and patio of the house we purchased," he said.
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.