Realtor commission lawsuits mean changes for sellers, not just buyers

Mary Anne Bryan is just about ready to sell the 3-bedroom brick Colonial where she raised her daughter in the Beverly neighborhood of Chicago. Bryan spent a decade working as a real estate agent, and she’s keenly aware of the recent changes in an industry that she always thought could use some innovation, thanks to lawsuits over buyer’s agent commissions.
Bryan expects to handle some of the work of selling her own home. Saving what would likely be a roughly 2.5% commission to a listing agent would keep thousands of dollars in her pocket. But there are still some big unknowns.
Most importantly, how will she know if a potential buyer is actually prepared to make an offer? On the flip side, if that buyer is working with a real estate agent, how much will that person expect to be paid?
“How do you know if buyers that aren’t represented are pre-approved?” she said. “What’s the process for that and how do you make sure you do it without discriminating against people? Even with all the knowledge I have, I’m scared that I might say or do something wrong.”
In 2023, a Missouri jury ruled that the National Association of Realtors and some large real estate brokerages had conspired to keep commissions artificially high. As a result of that case, new rules took effect in August that changed the way commissions are set and communicated.
Buy that dream house: See the best mortgage lenders
Most media and industry attention has focused on what the practice changes meant for buyers, but any homeowner contemplating selling faces a whole new world as well. Together with Americans’ increasing comfort around transacting even hefty purchases online, and the knowledge that sellers have the upper hand in one of the tightest real estate markets in history, a For Sale By Owner (FSBO) has never looked more tempting.
“The FSBO market has changed significantly since the offer of compensation requirement was removed from the MLS (Multiple Listing Service),” said Victor Lund, managing partner of WAV Group, a real estate industry consultancy. “It’s game on.”
The offer of compensation requirement that changed starting in August was the commission paid to the real estate agent representing a buyer. In the American housing market, that amount has long been paid by the seller. Plaintiffs in the lawsuits settled in 2023 argued that it didn’t make sense for people on one side of a deal to pay for representation for the party on the other side.
What’s more, the old system often meant that a buyer’s agent might be paid more than the person representing the seller, since any seller looking to save money could ask his agent to accept less. In contrast, buyers rarely thought about the transaction.
In fact, while buyer’s agents often argue that their commission “was always negotiable,” industry observers counter that many buyers had no idea how their agent would be paid, let alone how much. Also, if any seller tried to offer less money to a buyer’s agent than was normal in a particular market, many buyers’ brokers would steer their clients away from those properties.
As the new rules went into effect, taking that offer of compensation for the buyer’s broker out of the listing, industry participants expected that the process of buying would become more complicated. But as Bryan’s situation suggests, sellers may face just as many unknowns.
Ena Koellish sees the new terrain as an opportunity.
With her husband, Koellish started The K Group Real Estate, in Radcliff, Kentucky, two years ago. Koellish says she was motivated by the opportunity to educate consumers on their options in what’s likely to be one of the biggest steps in their lives. But the more she read about the commission lawsuits, the more surprised she became.
“It just boggled my mind to learn how much unethical behavior there’s been in this industry,” Koellish said. While not every agent behaves unethically, she emphasized, there’s inertia in the way things have traditionally been done in real estate that makes transactions opaque and hard to understand for many consumers.
Now, Koellish makes videos that she posts online, explaining the process of selling to anyone who may be considering it. She thinks homeowners should still be able to order a “package” of all the services offered by a listing agent – but should also have the option to pay individually for selected services, an “a la carte menu,” for a fee, if they take on some of the selling tasks themselves.
“My husband says we are getting in (to the industry) at a good time,” Koellish told USA TODAY. “We are learning the good habits and the correct processes. And we are going to, you know, work ethically.”
Mortgage lenders:Who are the best?
There have always been a handful of agents offering limited seller services for a small fee, Lund noted, and for many savvy homeowners, particularly ones with professional real estate experience or those who’ve been through the process several times already, working with such a service may make sense.
But he cautions would-be sellers to be careful about assuming they can go it completely alone. “If you’ve ever done anything as simple as selling an item on Facebook, you understand the process is hard. It’s painful. And that’s for a couch,” he said. “Real estate agents offer a legitimate service.”  
Fed cut and mortgage rates:Lock in a mortgage rate after the Fed cuts? This might be your last chance
In most cases, it’s what Lund calls “the background stuff” – knowing where to list a home, for example – that’s easy for professionals, but hard, or even inaccessible, to amateurs. Most sellers need at least a “coach,” he said.
Some veterans of the industry see the same possibility Koellish does, on a bigger scale. Brad Rice, who has founded several mortgage and real estate companies, recently started Homepie, an online marketplace that aims to connect buyers and sellers, with services to facilitate the transaction on both sides. Homepie is currently available in California and Florida, with ambitions to expand.
Mary Anne Bryan can’t help but worry that many people will try to FSBO without really understanding the implications.
“The biggest concern I have is that most people only do this a few times in their lifetime,” she said. “I think the profession of a realtor is important and they deserve to earn what they deserve to earn.”
Still, she concluded, there are opportunities for the system to be more efficient. “It might just be that a la carte services is the way to go,” she says.