We have been following several national Court rulings concerning compensation paid to buyer’s real estate agents. A significant Federal Court ruling involved the National Association of Realtors, owner of the powerful “Realtor” trademark. The case found that a seller should not be required to pay the buyer’s agent’s commission as a condition to having the property listed on Multiple Listing Service (“MLS”). Similar cases in other jurisdictions have followed. Of course, a seller could avoid this situation altogether by not even having a seller’s agent.
It had been customary practice for the seller to list her property with a real estate agent affiliated with a real estate brokerage, the “seller’s agent.” The seller’s agent would enter the listing on MLS, making the property more readily known to buyers and their agents, the “buyer’s agent.” Without MLS, many properties may not have been located by potential buyers. The seller would pay a commission in the range of 5%-6% of the sales price at the closing. When a buyer’s agent was also part of the transaction, the commission would be divided between the seller’s and buyer’s agents.
Sellers in the lawsuits challenged the requirement to also compensate the buyer’s agent, when the seller engaged its own agent, and resented the requirement to pay the buyer’s agent as a condition to having their property listed on MLS. They suggested that commissions were inflated to allow for the buyer’s agent to also be compensated.