The issue of buyer broker commission rates has been a point of contention in the real estate industry for some time. In a report by KBW, the issue of legal challenges to these commissions and their potential impacts are discussed. Specifically, should these lawsuits be successful, the following outcomes are a possibility:

• Up to 80% of real estate agents could be forced to leave the industry: The majority of compensation in the real estate agent industry is derived from commission fees. Should these be removed, it is unlikely that many new or existing agents would be able to make a living from their profession.

• Commission rates could fall: A legal challenge to commission fees could also lead to a reduction in the fees that agents are able to charge. This would have a vast impact on agents’ earnings and could potentially cause an industry wide shift away from commission-based compensation.

Further, should these legal challenges be successful, traditional real estate brokerages may be the most affected. Without agents and reduced commission fees, these brokerages may lose out on significant profits. It can be seen then that should these lawsuits be successful, the fallout for the real estate industry would be far reaching.

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