Real estate agent commissions: What the NAR verdict could mean for Long Island

Long Island’s real estate industry began grappling Wednesday with the implications of a groundbreaking jury verdict in Missouri this week that found the National Association of Realtors, Keller Williams Realty and HomeServices of America conspired to inflate broker commissions paid by home sellers.

An eight-person jury in U.S. District Court in Kansas City issued the verdict Tuesday and awarded the plaintiffs in the case, a group of about 260,000 home sellers in Missouri, Kansas and Illinois, monetary damages of about $1.78 billion. The federal judge overseeing the case could triple those damages under U.S. antitrust law.

In addition, the plaintiffs’ attorneys in the case filed a separate antitrust lawsuit Tuesday in U.S. District Court in Kansas City against the NAR, plus Compass, Douglas Elliman, eXp World Holdings, Howard Hanna Real Estate Services, Redfin, United Real Estate and Weichert Realtors, which each have real estate agents on Long Island.

Here’s what the case means for Long Island:

The Sherman Antitrust Act prohibits anyone from using their market power in conspiracies to unreasonably restrain trade, said Ronald J. Colombo, professor of law and associate dean at Hofstra's Maurice A. Deane School of Law. While the federal case is in a different jurisdiction than Long Island, the verdict raises questions for local real estate agents, he said. 

“That’s the question on Long Island: Is the industry norm that strong that this case could go forward here?”

It wrote to members Tuesday that there is nothing they need to do differently because of the verdict, according to guidance posted on its website. It did note that the verdict strengthens the need for written buyer representation agreements that formalize an agent’s relationship with a homebuyer. The NAR also stressed that commissions are negotiable between agents and clients.

The plaintiffs’ attorneys in the Missouri case suggest commissions to buyers’ agents should be paid by the buyers. That would add a closing cost for homebuyers. Some buyers might opt to avoid using agents, forgoing their help in searching and touring homes, making offers and negotiating with sellers.

By Jonathan LaMantia

jonathan.lamantia@newsday.com@jonlamantia

Jonathan LaMantia covers residential real estate and other business news on Long Island. He previously covered the business of health care for Crain's New York Business.