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The issues that were brought to light through these lawsuits focused on the exploits of inflating their agent service commissions as well as hiding potentially lower commissions from the buyers. Buyers were previously unable to negotiate agent commission, something that has been historically practiced since the 1990's.
Prior to the lawsuit, a 5 to 6% "cooperative compensation" commission would've been paid by the seller to the agent working with both the seller and buyer of a certain property, which can translate to tens of thousands of additional dollars needed to be payed when forgoing property sales.
With this settlement, it is predicted that, with the individuals being able to negotiate lower commissions with agents, a decrease in house prices as a result, but with the case being settled very recently, the future implications are still unknown.
https://www.vox.com/money/24106230/nar-realtors-settlement-real-estate-house-prices
10 comments:
I'm happy to hear that this association is fighting to lower housing costs. Affordable housing is so important for social mobility and alleviating poverty. I also support providing relief from commission costs to lower these prices. From your description, it seems these costs are rent-seeking, as we learned about in microeconomics. The commission doesn't seem to add any true value to the housing, and yet it drives up costs. Limiting these costs to promote affordable housing seems like a beneficial change.
I agree with what Carole said, I think we will see a lot of positives come out of the settlement such as again lower house prices. It seems like the NAR had a monopoly on the process of selling houses as "Almost 9 in 10 home sales are handled by real estate agents affiliated with NAR". In fact, the lawsuits argued that the structure harms competition and leads to higher prices, sounds familiar to monopolies. This will have an impact on house Realtors though as they get roughly 6% of the house sale but I definitely see more good coming out of the settlement than bad.
https://www.cbsnews.com/news/realtor-commission-settlement-nar-national-association-realtors/
If there is going to be a raise of affordable housing it only means that it will benefit many people. I think that the association fightig to lower the housing costs sees the damage and impact it has had on the low-income class. The prices for houses has increased
substantually over the last few years making it nearly impossible to find affordable housing options. This has also caused tons of people to become homeless because as we learned in class inflation and wages don't raise together, making it difficult for poeple to keep up with bills and more.
If there is going to be a raise of affordable housing it only means that it will benefit many people. I think that the association fightig to lower the housing costs sees the damage and impact it has had on the low-income class. The prices for houses has increased
substantually over the last few years making it nearly impossible to find affordable housing options. This has also caused tons of people to become homeless because as we learned in class inflation and wages don't raise together, making it difficult for poeple to keep up with bills and more.
I agree with Carole; affordable housing is important, so I am glad that the National Association of Realtors is fighting to lower housing costs. The settlement will not only help those affected but also set a precedent for more equitable practices moving forward. This is a positive development for consumers even though it is uncertain what house prices may be. This is a step towards fairer practices in real estate, and I am interested to see how this will continue to play out.
The NAR definitely has monopolistic tendencies, and considering the housing-price crisis in the U.S. at the moment, I see this settlement as a win. Affordable housing, as Carole corroborates, is imperative to the functioning of our society, as it is now viewed as one of the top concerns of the younger generations. Gen Z especially, entering adulthood and attempting to find housing, is especially affected by the inflation of housing prices, and I see the settlement against the NRA as a needed step towards making maintaining a livelihood more manageable for the younger generations.
I am glad that the price of housing is expected to go down, as it has been increasingly difficult for people to find affordable housing options. Additionally, hopefully this lawsuit will decrease the monopolistic tendencies of the NAR, and will help promote more competition within the housing market.
One interesting fact I discovered about the National Association of Realtors is that they are the second highest spender on lobbying in the United States, giving more than 4 million dollars to candidates who support real estate interests each year. As this blog post emphasizes, the National Association of Realtors appears to engage in anti-competitive and sometimes even shady actions to ensure realtors make a greater profit. I think it is quite possible that the reason these inflated commissions had to be fought in court in the first place, rather than being outlawed by new legislation, is because the NAR has been able to influence many legislators with campaign contributions and lobbying. I think this example shows why it is so important for the judiciary branch to be isolated from politics, as it ensures justice can occur even when politics may lead the other two branches astray.
I personally think that the NAR settling the anti trust lawsuits for $418 million is significant in real estate. it is highlighting issues of the inflated agent commissions and the lack of transparency. The buyers are unable to negotiate the commissions has been a problem for a long time but this settlement could lead to lower commissions and potentially lower housing prices. I also think that this could lead to fairness in the industry but we will have to see what happens and if their is a true impact.
Building off Carole's points earlier: access to affordable housing is essential, and I applaud the National Association of Realtors for their efforts to bring down housing expenses. In addition to offering individuals impacted instant relief, the settlement establishes a significant precedent for more fair business practices in the real estate sector. Although there is still uncertainty regarding the future of property prices, this is a great development for consumers.
From a different angle, it's crucial to think about the possible effects on real estate brokers and the larger dynamics of the market. Although attempts to cut housing expenses are praiseworthy, commission-based real estate brokers may encounter financial difficulties if lower costs result in lower income. It is crucial to strike a balance between the requirement for cheap housing and agents' just compensation.
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