Class action suits, DOJ effort that changed realtors' fees appear to be saving consumers thousands

An important sea change has taken place in the United States' $136 trillion real estate market. It stands to impact nearly everyone buying or selling a home. And it’s due to a game-changing lawsuit against the National Association of Realtors. Consumers face new rules designed for their benefit. But the overhauled system and the fallout are still being figured out.

Jared Breit helped spark the real estate revolution. He joined a class action lawsuit challenging the longstanding fee structure of the entire U.S. real estate system.

“When I sold my home in St. Louis, which was a huge part of this case, I just remember saying, 'Why am I paying someone who I've never met before 3%?'” Breit recalls in an interview with "Full Measure with Sharyl Attkisson." 

"No one from the buyer's side ever did anything for me. Sure, they brought a person to look at my house, but that's the point of real estate. I was confused. It's the first time I sold a home and I really wondered, where's the fairness in paying 3% and 3%?"

Historically, people selling their home typically paid about 3% of the sales price to their real estate agent, and another 3% to the buyer’s agent. The giant lawsuit filed by Breit and other consumers claimed that sellers having to pay the buyer’s agent led to cozy deals between the supposedly competing agents, prioritizing their own shared profits over clients. The lawsuit also took on murky contracts and hidden fees. 

The National Association of Realtors, and major companies under which real estate agents work, were found guilty of antitrust violations and settled for a half billion dollars. After the Department of Justice weighed in, the realtors’ group agreed to overhaul its rules, making agents pay more competitive. They must now usually disclose compensation upfront in writing, clearly stating it’s negotiable. 

"So now, because of the competition and the negotiation, there's some up upfront paperwork that, that you're agreeing to a certain price, a certain commission, and that's our opportunity to negotiate these commissions,” says Breit. "And that's where you have to have an upfront conversation with your real estate agent and say, 'What are you giving me?’”

The National Association of Realtors declined our interview request. But the group said last year on its website "the settlement makes clear that NAR continues to deny any wrongdoing in connection with the MLS cooperative compensation model rule."

According to one analysis (RISMedia), since the lawsuit settled late last year, average total real estate agent's commissions have dropped from 5.64% to 4.96%, saving consumers nearly $3,000 ($2,870) on a typical home. 

After the landmark lawsuit, the state of Arizona has emerged as a testing ground for innovative commission models, such as hourly rates paid to real estate agents or flat-fee services, potentially serving as a test market for the rest of the nation.


Sindy Ready heads up the Arizona Association of Realtors. 

"Are you taking a position as to whether the changes are better or worse for the industry,” Full measure asked. 

"What I'm seeing is that it's different. So [the fee structure is] broken down now in the contract, which is not a bad thing,” Ready comments. “However, it is still confusing. It's confusing to the agents as well as confusing to the clients. And so the piece of the puzzle is for us all to just understand it's a change. I don't believe it's good or bad. I just believe that we are figuring out how to make it work for all our clients."

For more on this story, watch "Full Measure with Sharyl Attkisson” Sunday. Attkisson's most recent bestseller is "Follow the $cience: How Big Pharma Misleads, Obscures, and Prevails."