WCPO: Settlement could lead to lower home prices

Lawsuits accused the trade group of unfairly propping up agent commissions. The association has agreed to pay $418 million to help compensate home sellers and will allow home buyers and sellers to negotiate lower agent commissions.

Gary Painter, PhD, the academic director of the Carl H. Lindner College of Business real estate program and a professor of real estate, thinks the changes to commission structure could lead to reduced home prices.

“I think initially we would expect to see a small reduction in home prices because the seller is not going to be required in some sense to pay a total of 6% commission for the house that they’re selling with the real estate agent, but in the long term it’s hard to predict,” he said.

There's already been some changes to commissions in areas including California, New York City and Washington, D.C. where prices are particularly high, Painter said.

“That 6%, you know, when a house was $20,000, $40,000, $80,000, you know, was representing a set of services that was probably worth that value,” Painter said. “Now, we’re looking at a situation where house prices have gone up. It might be more difficult to justify that full value of that bundle of services.”

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