Rewriting real estate

Jurors in Missouri on Oct. 31 awarded $1.8 billion to home sellers in one of three class-action suits that turn on whether real estate agent commissions are artificially inflated.

Plaintiffs in multiple suits allege that nonnegotiable commission rates, ­typically 6 percent of a home’s ­selling price, are anti-­competitive. The defendants, the powerful National Association of Realtors (NAR) along with major brokerages, argue that the fixed-rate system funds professional advisers, ensures a wider homebuyer pool, and prevents buyers from paying agent commissions.

In the NAR-driven home market, licensed listing agents and sellers set commission rates (typically split between the listing and buyer agents) before placing a property for sale. A Consumer Federation of America report on practices in 35 cities noted more than half of agents charged the same rate, a practice that would be unusual in a price-competitive market. The organization predicts price competition would save U.S. homebuyers $20 billion to $30 billion annually.

The industry has taken steps to address the criticism. Re/Max and Anywhere Real Estate settled out of court, agreeing to pay $55 million and $83.5 million, respectively. Days before the Missouri trial began, the NAR announced it would allow buyers’ agents to work for zero commission.

But the move was too little, too late. Kansas City jurors found that NAR’s listing-agent rates were not only anti-competitive, but amounted to a conspiracy. Worse for defendants, the judge could ­triple the damages. The verdict and ongoing class-action lawsuits in Illinois and Massachusetts could rewrite the rules for real estate nationwide. 

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Health insurance premiums grow faster than inflation

Annual premiums for employer-sponsored health insurance rose 7 percent this year, reaching $23,968 for family coverage and $8,435 for single coverage, after ­virtually no growth last year. The increase exceeded the United States’ 5.2 percent wage growth and 5.8 percent rate of inflation during the same time. Workers now contribute $6,575 on average toward the annual cost of a family premium (or $1,401 for single coverage) while employers pay the rest, according to a survey of private and nonfederal public employers released Oct. 18 by researchers at KFF.

Family healthcare premiums have risen 22 percent during the last five years—and for single-coverage plans, deductibles rose by 10 percent. Nearly a quarter of the roughly 2,100 employers surveyed plan to increase workers’ healthcare contributions in the next two years. —T.V.