What The Missouri Commission Ruling Does and Doesn’t Mean – For Now

It’s been tough to miss the headlines and lead news stories out of Missouri.  A federal jury ruled home sellers should not be required to pay commissions to the agent representing the buyer, and that real estate brokerages together with the National Association of Realtors had collaborated to enforce a “cooperative commission rule.”

The case will be appealed, and there isn’t a great deal of clarity anywhere yet about what this will mean for duplex buyers and sellers going forward.

I am absolutely not an attorney, but here are my thoughts.

1. The listing commission has always been negotiable, and the amount the seller and the listing agent choose to allocate from that amount for a buyer’s agent and broker whose buyer purchases the property has always been negotiable. The terms are set forth in the Minnesota Exclusive Right To Sell Listing contract.
2. In Minnesota, the buyer’s representation agreement between an agent and a client states the buyer is responsible for paying their Realtor’s compensation for representing them unless the seller has agreed to offer compensation as part of the sale.
3. Commercial Realtors often ask their buyers to pay them a commission out of pocket. Often, the buyer asks for their agent’s commission to be paid by the seller as part of a successful transaction. So even though it isn’t part of the contract, the practice is ultimately the same.
4. Buyers deserve representation. In essence, the buyer’s agent’s commission is folded into the price the buyer is willing to pay for a property. The buyer is in essence financing that expense rather than paying it out of pocket.
5. This lawsuit was likely brought by people who believed Realtors earn too much money. According to ZipRecruiter, the average income for a Realtor in the state of Minnesota in 2022 was $81,147. Out of that gross, the agent likely paid a split to their brokerage, paid MLS dues, paid all the expenses associated with marketing a house (photos, sign install, etc), took at least 15 hours of continuing education, paid the IRS and the state of Minnesota their share, and paid their own health and car insurance, as well as fuel, maintenance, etc.
6. The case is far from settled. So for now anyway, nothing has changed.

If you’d like to discuss the issue, or check out a copy of the Minnesota contracts, give me a call or shoot me an email. I’d be happy to share them.