National Association of Realtors settlement of the class action lawsuit
Real Estate agents must be licensed by the state after passing the licensing examination. They must work for at least 3 years at a firm under a broker before they are eligible to work independently. Sellers of residential real estate must be members of local, state, and national Realtors organizations. These organizations create and enforce ethical guidelines for their members. They have been instrumental in helping the government create fair housing laws. Laws for selling residential real estate have varied between the states. In Michigan real estate agents are required to work on commission.Realtors in the past would tell buyers/sellers that their commissions were fixed and non-negotiable. If a Realtor sold a house where the seller didn't have an agent, they would make double the commission. In reality seller's agents would publish the commission they were willing to pay the buyer's agent. Buyer's agents would show the houses where they would make the highest commission.
Because of these practices, a class action lawsuit was filed alleging anti-trust violations, unethical behavior, and price fixing.
The Settlement
The National Association of Realtors settled with a $418 Million payment and an agreement to change the rules under which residential real estate is sold.
Every agreement must be in writing for it to be valid. The seller negotiates a fee when engaging an agent; it can be a flat fee or a percentage of the transaction. The buyer must also engage an agent with a written contract before looking at any real estate. If the buyer looks at houses without contracting an agent, they cannot later hire an agent. It is no longer legal for Multiple Listing Services (MLS) to list commission rates for brokers.