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  • Will Lawsuits End 6% Commissions? Probably Not, 1 Law Professor Says

Will Lawsuits End 6% Commissions? Probably Not, 1 Law Professor Says


A provision in NAR’s settlement barring listing agents from offering buyer agents compensation is “largely symbolic,” USC professor Jordan Barry said Friday at a University of Minnesota conference.

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A law professor from the University of Southern California on Friday argued that the recent commission lawsuit settlement from the National Association of Realtors is unlikely to bring about significant change — though he also indicated a desire to see more drastic changes.

Jordan Barry

Jordan Barry was the first speaker during a virtual conference Friday afternoon that dove into the implications of the March 15 settlement. In the settlement, NAR agreed to pay $418 million in damages and make a variety of reforms. Friday’s conference was titled “will the NAR settlement end 6 percent real estate commissions?”

Barry began his comments with a blunt answer to that question: “Probably not much.”

Barry’s reasoning was that the provision in the settlement that bars listing agents from offering compensation to buyers’ agents is “largely symbolic.” That provision requires court approval to become final.

“I don’t think it’s going to do much,” he said before displaying quotes from NAR President Kevin Sears and The Real Brokerage President Sharran Srivatsaa saying that listing agents can and will still end up offering commissions to buyers’ agents.

“In the internet age there are other ways to get this information out,” he added, referring to offers of compensation.

Barry went on to argue that agents have a financial incentive to steer clients to properties where sellers are offering larger commissions, and that trying to enforce anti-steering rules would likely be ineffective. Instead, he argued that the market needs more “pressures” that will create a “more competitive market.”

“A better idea seems like changing the market structure,” he said.

Barry went on to suggest that in order to create a more competitive market and avoid commission-based steer, there needs to be a “disconnect” between what sellers are offering and what buyers’ agents are earning. During his remarks, he explored different ways to do this, but noted that one possible option would be “explicit decoupling.” Barry noted that the U.S. Department of Justice has indicated a preference for this option in filings for the ongoing Nosalek commission suit.

The University of Minnesota’s law school hosted the conference in Minneapolis, and it was available both for in-person attendees as well as online. Across several hours, the event included sessions with legal experts, real estate industry leaders and journalists.

Journalist Anna Bahney spoke at the event following Barry. Bahney was one of two reporters who on March 15 wrote a story that proclaimed the “6 percent commission on buying or selling a home is gone.”

During her comments Friday, Bahney doubled down and defended that line, saying that while it was panned by industry members, consumers “liked” it. Her defense also came just moments after Barry had contradicted the CNN thesis, saying that in fact the settlement is not likely to bring about major change. Bahney, a reporter, additionally offered proactive solutions for consumers, suggesting they shop around and opt out of paying high commissions.

“You have to shop around,” she said. “You talk to agents until you find one that will take what you’re willing to pay.”

The comments come against a backdrop of intense debate over commissions, agent pay and an ever-increasing number of commission-focused lawsuits. The issue blew up in October, when a jury decided NAR and major franchisors had conspired to keep consumer costs high.

Numerous major real estate companies have been named as defendants in the various cases, many also filing their own settlements, including RE/MAX, Keller Williams and Anywhere, which has been involved in litigation since it went by its previous name, Reology.

Later in the event, one of the event’s organizers struggled to correctly pronounce the word “Realogy” while introducing another speaker.

Email Jim Dalrymple II





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