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How real estate agents get paid at issue in high-stakes Georgia lawsuit

Michael E. Kanell, The Atlanta Journal-Constitution on

Published in Home and Consumer News

A class action lawsuit filed in a Georgia federal court that’s modeled on one that resulted in a huge judgment against brokers in Missouri threatens to shake up the local housing market, mainly by revamping the way that real estate agents for homebuyers are paid.

In the Georgia suit, plaintiffs argue that Realtors groups and brokers have forced “excessive costs” and “inflated commissions” on home sellers in an alleged scheme that is “artificially and anticompetitively maintained.”

They ask the court to declare current real estate practices illegal, violating federal and state law, and award them damages. While not specifying a figure, the suit says plaintiffs have lost “millions of dollars in overcharges and damages.”

Filed Nov. 22 in U.S. District Court for the Northern District of Georgia, the effort is modeled on a suit by home sellers in Missouri that led to a $1.8 billion judgment against the National Association of Realtors and two brokerage firms. The Missouri case already has sent shockwaves through the real estate world where agents say their livelihoods are on the line.

If the Missouri decision stands — and is replicated in Georgia and other states — the long-established system of payments to brokers will be radically reshaped, said John Ryan, chief marketing officer of the Georgia Multiple Listing Services, which manages home listings and tracks sales across the state.

“This could be an industry-changing thing,” he said.


Officials at the National Association of Realtors, which represents 1.5 million agents who have a special certification and a code of ethics, have said they will appeal the Missouri decision. But with Georgia just one of the states in which “copycat” suits have been filed, the issue seems destined to have national repercussions.

Georgia MLS is not a defendant in the suit, but it is integral to process, since it carries the vast majority of listings of for-sale homes and requires home sellers to commit to payment, Ryan said.

“But we just say that there has to be compensation,” he said. “We leave that up to brokerages and selling agents what they are willing to offer.”

The argument revolves around the commissions paid to the brokers who help sellers and those who help buyers, agents who are part of most residential transactions and are typically paid a share of the purchase price.


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