A corner of Warren Buffett’s business empire is being lassoed into the percolating controversy on real estate commissions.
Reuters reported that Everest Consulting Group LP, an affiliate of Buffett’s Berkshire Hathaway (NYSE:BRK.A) and Anywhere Real Estate (NYSE:HOUS) subsidiaries Sotheby’s and Coldwell Banker are the targets of an antitrust class action filed last week by home sellers in Pittsburgh federal court. The sellers alleged the brokerages overcharged them on commissions because sellers are expected pay to a buyer’s agent as part of a residential home sale.
This is the latest lawsuit that challenges the longstanding real estate commission protocol. In October, a federal court in Kansas City awarded the plaintiffs of a class action lawsuit nearly $1.8 billion in damages for alleged commission overcharging. The National Association of Realtors were among the parties found liable in the Kansas City case, although the trade group is not cited in the Pittsburgh lawsuit.
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This is idiotic – the sellers sign a listing contract that says the listing Company may split it’s commission with a Co-operating Broker !! The Sellers are NOT stupid people -they understand what they signed !!
Agreed! The Sellers SIGN the Listing Agreemet with their Brokerage = it is not a secret! The co-operation split, specific dollar amount, or ZERO is specifically stated below Listing Broker’s fee. Been an Associated Broker
over 35 years in 2 states. Paperwork may look slightly different but has the same info that Seller signs in agreement!
Absolutely! It is all disclosed in the listing contract with Coldwell Banker!!
A good agent will explain to their sellers where the commissions go so they can adjust their asking price to reflect this cost.
I thought of the buyer’s agent split as posting a bounty .
In my professional opinion, I do not know how these lawsuits gained any traction. At the time of signing the listing contract, the contract details the total commission to be paid and the portion that will will be paid to the selling office (the agent representing the buyer). The seller initials the page which details the commission and executes the contract in it’s entirety, ultimately. Any portion of the commission is always negotiable whether it is paid to the listing office or the selling office.
Lawyers taking 35-40% of the proceeds because agents ARE GIVING AWAY HALF THE COMMISSION. Sounds about right in this world right now. Im sure the govt will also want a piece soon.
The good news is I suspect this will end up at the Supreme Court before it’s settled. When buyers are struggling to find the $$ for closing costs etc how are they going to find the money to pay their broker? This is AMAZING!!
I’d like to understand how buyers, who are going fha or usda are suppose to pay a commission. Basically these programs will fall by the wayside and not allowing people who don’t have 20% to pit down unable to buy a home.
And how much do you think the average salesperson’s worth is to a transaction? App 80% fail in 5 years, the education requirement is minimal, and the vast majority have no professional designation as the hope for a quick buck exceeds the desire to be fully competent and actually add value to the customer’s experience. That said I know and work with some outstanding real estate professionals. They are a very small minority of licensee’s and will continue to do well regardless of market or legal challenges. .
These were issues that should have been addressed years ago when buyer representation became the buzz. Buyers are receiving a service that they provide no consideration for. and please don’t say it’s in the price of the home. Many listing brokers are so blind to it that they’ve begun to request that the buyer’s agent submit their bill directly to their seller! How obnoxious and arrogant is that?
IMO, these suits are to Break the NAR Lobbying strength so the banks can enter the real estate market and con trol more than they already do.
Now, we have two cases in TX. In 2009, when I got my license, I already said: buyer pays buyer agent, seller pays seller agent (listing agent). so buyer agent will work hard for buyer because seller doesn’t know how well buyer agent works for the buyers. I totally agreed Ronald on Dec. 17. 2023
The only industry where one party is expected to pay an opposing party to negotiate against the paying party. Never made sense to me.
It’s the lawyers who should be fined for steering the sellers toward crazy lawsuits!
All terms are clearly identified on the listing agreement that the sellers initial/sign.
I don’t know why we don’t as agents pull the data off of all these free websites. They’re stealing our MLS data. If they don’t see a value in agents then we should take their data away. That’s all they want right? So why are we giving away our expensive MLS dues to these idiot websites like Zillow and redfin And God knows how many others
I have felt this way since Zillow was launched in 2006. And then we buy our leads back from them?!!!! We are the dummies here. And they have not a care for the integrity of the info they publish so they are bastardizing that as well. Try to get them to correct something…ugh!
There is an easy way to avoid all of this. Real estate commission splits have never made sense to me. Why does the listing broker have all the discretion to set the split in commissions with the buyer’s brokerage house? Why not just make it a standard practice that the commission earned on the sale of the property is split 50:50 between the seller’s broker and the buyer’s broker? Document this with all listings.
By giving the seller’s broker complete discretion the system is set up for discrimination against smaller brokers and their agents.