A class action lawsuit in Chicago may come to nothing, but seems to portend an institutional shift in the way houses are bought and sold that could be on the horizon. As Amazon disrupted all of retail and Uber almost ended the taxi business, real estate could be in for a big change as companies eat around the edges of tradition and lawsuits challenge commission structures.
The case is called Moerhl vs. National Association of Realtors and claims the current way real estate transactions are governed violates federal antitrust laws, commission levels for agents hard-baked into the system by Multiple Listing Services that eliminate negotiations for the percentage paid for some parties.
“The buyers don’t have the chance to negotiate their own commissions, and they’re saying that in many cases the commission might be lower,” says Natalie Campisi, mortgage and real estate reporter for Bankrate.com. She offers as an example a house selling for $300,000 with a 6% commission rate “vs. a house that’s listed at $300,000 and agents’ fees of 3%. The buyer’s agent is going to have more incentive to show that higher commissioned house to their clients,” she explains.
But that all may just be details in a much larger picture that indicates a major change coming to real estate transactions as technology drives emerging businesses including Zillow and Redfin to democratize MLS listings and the industry to look for new models of buying and selling homes. Companies like Open Door are digitizing the process and traditional real estate companies are reexamining how best to serve their clients, both those buying and those selling. Now in its emerging stages, Andrew Collins, CEO of Bungalow, a rental app, says another digital age disruption is likely to happen within the next decade.