Jan 17, 2024 - Real Estate

Change brewing for Phoenix real estate agent commissions

Illustration of a set of keys with a percent sign keychain

Illustration: Sarah Grillo/Axios

Valley real estate agents are going to have to sing for their supper after a federal jury found in October that 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.

The latest: A recent Arizona home seller earlier this month filed a similar class-action lawsuit against the state's biggest Realtor associations and residential brokerages, the Arizona Republic reported.

  • The seller alleges the groups "compel home sellers to pay inflated commissions to the homebuyer's broker, even though the buyer's broker does not represent the seller."
  • The suit also accuses agents, who aren't getting a commission, of steering buyers to homes with sellers who will pay a commission.

What they're saying: "The National Association of Realtors maintains, and we agree, that the practice of cooperative compensation makes efficient, transparent and accessible marketplaces possible," the Arizona Association of Realtors, one of the defendants, said in a statement to the Republic.

How it works: Sellers typically pay 5% to 6% of the home sale price, and that money is split between the buyer's and seller's agent.

Zoom in: Axios polled more than a dozen U.S. brokers, and regardless of any potential fee structure changes, real estate professionals say they'll have to be clear about what value they bring to the table and how much that expertise costs.

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 last week asked the court to reject the verdict or grant a new trial, Reuters reported.

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