Eastern U.P. real estate remains stable despite shifting national trends
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Sault Ste. Marie News
SAULT STE. MARIE — For those interested in real estate, one of the biggest national headlines for October was the jury verdict in the $2 billion class-action lawsuit, Sitzer v. the National Association of Realtors (NAR).
The lawsuit alleged that NAR, Keller Williams Realty, Anywhere Real Estate, RE/MAX, and HomeServices of America colluded to artificially inflate agent commissions.
In what legal commentators are calling a classic case of antitrust, the jury ultimately agreed that there was a conspiracy among certain groups of realtors to keep their fees artificially high. However, while a jury verdict was reached, the case is being appealed, and it is still being determined what types of regulations, if any, may be created to prevent future antitrust.
“We think there may be a development of regulations on a state-by-state basis,” said Jess Johnston, a Century 21 Advantage Plus real estate agent in Sault Ste. Marie. “But it’s still too early to tell.”
Some experts have speculated that the commission-sharing model used in real estate for years — a model in which the seller’s agent and the buyer’s agent split a commission for the sale of a home — may be replaced by a referral fee system in which the seller’s agent pays the buyer’s agent a referral fee for introducing a buyer to the property. Other experts have speculated that the costs will be shifted to consumers through a service-based fee structure.
“There may be a variable buyers’ agent fee that is determined when a buyer goes under contract,” said Steve Nicastro, a real estate agent. “This could better align pay with the work required from buyer’s agents. Imagine a scenario where a homebuyer pays an agent $50 to $100 per house showing, and then another fixed rate for specific services related to completing the transaction, finding/hiring inspectors, appraisers, attorneys, etc.”
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However, shifts in the real estate landscape following the lawsuit could harm consumers, especially if new costs are passed on to buyers.
“We may see buyers being asked to pay a fee to retain a buyer’s agent,” said Johnston. “Unfortunately, that would make barriers to entry higher for buyers, which would then reduce the number of buyers, thus reducing demand for sellers’ homes, thus making it more difficult for sellers to sell their homes.”
Johnston mentioned that now more than ever, real estate agents will have to reinforce their commitment to client service, leaning heavily on negotiation skills and the ability to write up fair and amicable contracts that benefit both buyers and sellers.
Then there’s the question of whether or not national lawsuits levied against multi-billion dollar real estate conglomerates in faraway places will even affect a rural community like the eastern Upper Peninsula. Johnston believes the region will likely be insulated from some of the more dramatic…
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