It may have escaped your notice but across the pond, agents are bracing themselves for the fallout from a a huge $1.8bn legal case over the amount of commission they’ve been charging vendors for years.
It all hinged on a complex case that alleged that agents in the States had colluded in fee price fixing, a claim denied, and has now resulted in multi-million dollar settlements being paid by the National Association of Realtors (NAR), along with a number of the country’s largest real estate brokers – some of whom have UK operations.
Among those hit hardest are Keller Williams, who’ve agreed to pay a hefty $70m, while Anywhere Real Estates – whose brands in the U.K. include Century 21 and Sotheby’s International Realty – settled before the case for an eye-watering $83.5m.
eXp Realty and eXp World said in March they were still litigating but eXp World Holdings, in its Q1 2024 earnings call, stated they had provisionally set aside $16m for their anti-trust litigation but this could change as the case evolves.
Surely these sorts of settlements will have a serious knock-on effect on their UK businesses? How will they absorb these costs? Will they still seek to invest in the UK?
It’s a case worthy of a Hollywood blockbuster, and it’s not over yet. There are other ‘copycat’ court cases being lined up across different States and it’s caused mass confusion amongst buyers and sellers, who’re keen to understand whether the fees they pay, or the ways that property transactions are handled, will be changing in any way soon.
In the UK we have always charged one of the lowest fees in the world and we have always been envious of American agents who have charged 6%. This fee has never been challenged until now; the average American seller expects agents to charge around 6% and the NAR, with its multilisting service, has encouraged this as the norm.
Having spoken to my contacts in the States, they have varying views from “nothing is going to change” to “the model will now change radically”. Buyers’ agents may disappear and the blocking of the digital agents to some portals will have to stop.
In American political circles, I’m told the NAR was viewed by some as a strong Trade Union with excellent lobbying credentials. This fine has smashed their dominance in the Agency sector.
New regulations are to be introduced in the next couple of months. We will all be watching closely to see how it affects those with UK interests.
I’ve seen reports that some realtors fear their earnings will plummet by between a quarter and a half as a result of this case, and that hundreds of thousands of realtors could be put out of business. They’re certainly going to have to do far more to explain why they’re worth what they’re charging.
This case has left me thinking about the way that we operate here in the UK, what we charge sellers and how we need to better explain our value to our customers. This race to the bottom to charge nothing has been so damaging to our profession and has resulted in a serious decline in customer service.
Maybe it’s time for a concerted campaign among traditional agents to demonstrate the true value we offer?
I also wonder how many agents in towns here, or even self-employed agents within franchise models, could be accused of colluding over commission – as has happened in the past. I daresay the Competition and Markets Authority (CMA) keeps a close eye on what agents are charging. Any breaches in the UK could attract seriously high fines.
The unfolding events in the U.S. serve as a stark reminder that being transparent and justifying your worth as estate agents are not just issues overseas but critical considerations here at home as well.
Paul Smith is executive chairman of Spicerhaart
