The National Association of Realtors appeared to hit rock bottom in October when a Kansas City jury delivered a $1.8 billion verdict, finding that the industry kept home-sales fees artificially high. But the existential threat to the powerful trade group was about to get worse, the Wall Street Journal reported. Copycat lawsuits have been filed around the nation. Dozens of real-estate brokerages are now defendants. Federal regulators are scrutinizing the industry more closely than they have in years. Brokerage executives are pressuring NAR to settle the legal claims nationwide, worried that more large verdicts could push residential firms and local real-estate associations into bankruptcy. They complain that NAR failed to convey the gravity of the threat. “There has been consistently an arrogant attitude of the senior officers” of the association, said Dave Liniger, chairman of brokerage franchiser Re/Max Holdings. “It just seemed to me that it was just like a solid wall of, ‘It’s our way, and we’re going to keep it that way, and we don’t care.’” Re/Max was also a defendant in the Kansas City lawsuit, but it settled before the trial. A NAR spokeswoman said the organization has always been committed to working with the industry to improve its policies and resolve the legal threats. The Missouri jury found that the powerful trade organization and two brokerages had conspired to keep fees paid to buyers’ agents high. Long before that fiasco, some real-estate executives had urged NAR to change the decades-old commission structure, but the organization refused. The industry now appears headed for significant changes in how buyers’ agents are paid, a system that NAR has fought for decades to protect. One possibility is that sellers would no longer decide upfront how much buyers’ agents get paid, giving buyers more power to negotiate. More buyers might opt to buy homes without using agents at all, which could save them money on commissions but might put less sophisticated buyers at a disadvantage.
