The battle over broker commissions is just getting started

On Tuesday, a jury in Kansas City found the National Association of Realtors, Keller Williams and HomeServices of America guilty of colluding over commission rates. The jury also ordered the defendants to pay $1.78 billion in damages.

The jury’s decision still needs to be finalized by the judge presiding over the landmark Sitzer/Burnett trial. But that didn’t stop the verdict from sending shockwaves through the real estate industry, raising questions about the future of buyer's agents and the traditional broker compensation model.

The ruling caused a free fall in the stock prices for a handful of public firms, including Compass, Elliman, Redfin and Zillow, though the latter two recovered most of their losses.

One analyst summed up investors’ fears: “There could be an instance … where there’s a lot of transactions that have no buyer agent at all.” That could mean fewer agents and lower revenues for firms.

But the implications of the verdict reach far beyond immediate financial consequences. The future of buyers’ agents, instrumental in guiding clients through complex transactions, hangs in the balance. If the verdict stands, it could lead to significant changes in the industry, potentially transitioning toward a "pay-to-play" model, akin to international real estate markets.

Minutes after the ruling, the plaintiff’s attorneys filed another class-action lawsuit, again related to buyers’ agent commissions. The complaint names NAR, Compass, Douglas Elliman, eXp, Redfin, Weichert Realtors, United Real Estate and Howard Hanna Real Estate Services as defendants.

Amidst the turmoil, Anywhere Real Estate and RE/MAX emerged relatively unscathed, having settled before the trial. Meanwhile, NAR responded by shaking up its leadership team, with Nykia Wright becoming interim CEO starting Nov. 20 while the trade group looks for a permanent replacement for Bob Goldberg.

Meanwhile, the defendants are expected to appeal the decision, setting the stage for prolonged legal battles. The judge still has to render a final verdict, which could include triple damages of up to $5 billion, and several similar lawsuits loom on the horizon, with one set to go to trial in Chicago early next year.

But the industry is on the brink of such a disruption, and the decision could pave the way for a new era in residential real estate.

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Inside billionaire heir Soloviev's empire

Stefan Soloviev isn’t a typical real estate scion. But, that reputation goes beyond the tattoo sleeves and tattered T-shirts he sports, extending into his business interests. The industry heir’s obsession with U.S. agriculture has been well documented. He’s also the owner of Manhattan’s undeveloped site, which, Soloviev hopes, could host a massive complex (including, hopefully, a casino).

However interesting Soloviev might be, his right-hand man, Michael Hershman, could be even more so. The 78-year-old executive might look like a man who was born and raised in the boardroom. But, his life story is more fitting of a Tom Clancy novel.

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Meanwhile, in Chicago, the city’s top broker is a familiar name to those in the industry.

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