I kind of grasp the concept that people aren’t forced to pay commissions, but that’s really it. I don’t understand how/why this is so great.
[Link](https://www.nytimes.com/2024/03/15/realestate/national-association-realtors-commission-settlement.html)
In: Economics
According to the article, the National Association of Realtors *strongly encourages* its members to follow “best business practices”:
– Charge a 6% commission
– The seller’s agent gives part of the commission to the buyer’s agent
– Only do business with people who respect the Association’s rules
This causes a few problems:
– If an individual real estate agent (say, Henry’s Homes) tries to charge a lower price to attract business, Henry will have a very difficult time. He’s disrespecting the Association’s rules. If you hire Henry to sell your home, the Association members — most of the other real estate agents in town — will discourage the buyers they represent from buying your home.
– As a buyer, you hire an agent to show you affordable houses, and negotiate aggressively to convince the seller to give you a lower price.
– The fee means your agent gets paid more if you buy a more expensive house, and/or if he negotiates badly and fails to convince the seller to give you a lower price. Will he really do the job you hired him for properly, if he gets paid more for messing it up so you pay a higher price?
Basically, this is a court ruling that the Association is running an illegal price fixing conspiracy. It will have to get rid of those rules, and pay an enormous fine.
The Association says the court is making a mistake, its rules are perfectly legal, and a higher court should fix the mistake, cancel the fine, and let it keep its rules as they are.
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