How Twin Cities real estate agent commissions could change
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Illustration: Sarah Grillo/Axios
Twin Cities 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, which puts how agents get paid under a microscope, could give sellers more negotiating power in the future.
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: Mike Smith, who owns a Twin Cities brokerage, tells Axios he hopes the verdict will boost transparency between agents and clients.
- "Our duty, really the way we provide value to our clients, is to empower them to make good decisions," Smith says.
Yes, but: Local real estate agent Alec Roth doesn't expect sweeping changes to the current system anytime soon.
- "It is a conversation I do expect to have with clients, but in the end, I do not think the real estate world will be largely affected," Roth, with Edina Realty, tells Axios.
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.
- 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 Minnesota workers are real estate sales agents, according to the U.S. Bureau of Labor Statistics.