Missouri antitrust lawsuit has Minnesota's real estate industry on guard
MINNEAPOLIS — Minnesota home sales may look different in the future.
A recent antitrust lawsuit in Missouri could potentially impact real estate here.
"The entire real estate industry is talking about it," said Ryan O'Neill of ReMax Advantage Plus.
Homeowners in Missouri filed a lawsuit against some brokers and realtors. They argued that home sellers shouldn't have to pay commission to a buyer's agent since that agent doesn't represent them. Ultimately, the home sellers won the case.
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"I think all the various brokers and the agents in town are keeping their ear to the ground so we're aware of how it may impact things for us," O'Neill said.
He says in Minnesota, it's typical for a seller to pay 2.5% to 3% commission to the buyer's agent. But if what happened in Missouri happens here, sellers may be able to avoid that.
O'Neill says that could mean the buyer might be stuck paying that commission, making it harder for them to afford their own realtor.
"If they're not able to hire some type of representation, that's a negative for them," he said.
Anticipating what happened in Missouri, one Twin Cities real estate company has done away with traditional commissions altogether. Joey Torkildson runs Voila Real Estate in Roseville.
"It's the same amount, it's $5,000 for example, no matter what the price of the home is," Torkildson said.
Torkildson thought commissions were getting too high in the metro, so he opened his own business. Instead of a traditional commission, he charges a $5,000 flat rate, and the seller has the option of giving some of that to the buyer's agent — but they don't have to.
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"We basically just gave them full autonomy and said, 'Hey, if you want to offer something to a buyer's broker, and if you do, what is that amount?'" Torkildson said.
Like O'Neill, he's not yet sure what the Missouri lawsuit means for Minnesota. But that's one reason he's offering a different option.
"Sellers are finally asking, and in Missouri they asked it at an extremely high level, they're asking, 'Why are we paying both agents?'" Torkildson said.
Torkildson and O'Neill both agreed that the lawsuit could be troubling for buyers at a time when housing inventory is low and rates have been high.
Appeals are expected in the Missouri ruling.
