Area real estate agents await impact of $418 million settlement over structuring commission fees

The proposed settlement of a nationwide class-action lawsuit over the commissions that sellers pay in a real estate transaction could lead to more confusion for some when it comes time to sell property, said a veteran Westmoreland County real estate agent.

“It will cause more problems for the public who may not understand it,” said Scott Ludwick, an agent with Berkshire Hathaway’s office in Unity.

Ludwick, who has been helping people in the county buy and sell homes for 42 years, said it is too early to speculate on how a settlement, yet to have final approval, will impact the real estate industry.

Several real estate agents said they were not familiar with the details of the National Association of Realtors’ proposed $418 million settlement of four antitrust lawsuits brought by home sellers over the commissions paid to brokers, who then shared part of that money paid at closing, with the buyer’s agent.

The tentative settlement reached March 15 would cover the association’s one million members and affiliated state organizations. It would prohibit the publication of the compensation offered to brokers handling the sale of properties by the multiple listing services, the association said. Any compensation the seller offers to a broker or real estate agent could be open to negotiations.

A federal judge still must approve the settlement resolving lawsuits filed four years ago, which would take effect July 1.

Brenda Landis, a Natrona Heights real estate agent with Realty One Group Horizon, said she hopes to learn the details of the settlement in a meeting next week with fellow agents and their broker.

The national law firm that represented the home buyers in the class-action lawsuit, Cohen Milstein Sellers & Toll, claimed that NAR and several of the nation’s largest residential real estate firms had rules set in place that required the buyer’s broker fees at an inflated rate, in addition to their own agent. The law firm said in a statement that the real estate industry’s “anti-competitive rules” have financially harmed millions of Americans.

Cohen Milstein claimed that sellers felt powerless to negotiate a better deal for themselves for fear that agents would steer potential buyers to other properties where the seller is offering them a higher commission

It is premature to speculate on the potential impact of the settlement that has yet to be approved, said Chris Murphy of Cranberry, president of the West Penn Multilist, an agency that has listings of available properties in the region. Murphy, an agent with ReMax Select Realty, declined to comment on the details of the tentative settlement.

Commission transparency

West Penn Multilist, which is independent from the National Association of Realtors, has not yet been advised on how the proposed settlement might impact the agency and its operations, said Barbara Kohl, chief operating officer for West Penn Multilist. The form it provides brokers and real estate agents does not specify a particular amount of the commission for the seller’s representative, Kohl said.

“Our (West Penn) multilist is very transparent in regards to the commission. We have been in compliance,” Ludwick said.

The standard form of the sales agreement provided by the Pennsylvania Association of Realtors leaves blank the space for the agent’s commission, nor does it require the seller’s agent to split their commission with the buyer’s agent, said Hank Lerner, chief legal officer for the state Realtors association.

The average commission that a seller typically pays for selling a house in Pennsylvania is about 5.48%, according to a December 2023 survey of local agents by Clever Real Estate, a St. Louis-based real estate and research firm.

While not being permitted to publicize the broker’s fee on a multiple listing service, the broker still could list their rates on their own website and could be involved in direct negotiations with a seller, Lerner said.

For those using an multiple listing service that is a member of the national Realtors association, the NAR members would have to reach a written agreement with prospective buyers that outlines fees to be charged. The NAR said that stipulation would take effect July 1.

The state Realtors association is not making a prediction of the impact on the industry and its agents, said Kim Shindle, a spokeswoman for the 39,000-member state association.

The settlement does not contain any admission of wrongdoing by the national association in its multiple listing service cooperative compensation model which the national association said was in response to consumer protection advocates for buyer representation.

The association also will have to pay $3 million toward settlement notices, according to Cohen Milstein Sellers & Toll, a law firm representing the class of home sellers. Cohen Milstein said it previously reached a $208 million settlement with real estate agencies Anywhere Real Estate, Keller Williams and ReMax .

A spokesperson for Cohen Milstein, Washington, D.C.-based firm, could not be reached for comment on whether any members of the class action lawsuit are in Pennsylvania.

To learn more about whether a seller is eligible for part of the settlement and file a claim, Cohen Milstein has referred people to a website: realestatecommissionlitigation.com.