Some Boise-area Realtors say they can save homebuyers money under lawsuit settlement

Max Coursey says he wanted to find a way to save his real estate clients money.

Coursey, the founder of Boise’s Tiger Prop real estate, which is a part of Homes of Idaho, spent years looking for workarounds to the unofficial standard 5% to 6% sales commission that had permeated the realty industry.

For his first 10 years in real estate, Coursey worked for a brokerage where the company standard was a 6% commission and employees couldn’t advertise under that rate, he said. He’d cut his commission anyway.

This kind of brokerage policy is common, Coursey said, even though the powerful National Association of Realtors states that commissions have always been negotiable.

In October, a federal jury in Kansas City challenged this stance and found that the association and several brokerages had purposefully inflated real estate commissions and ordered them to pay $1.8 billion.

A flood of copycat lawsuits quickly followed, leading the organization to announce a $418 million settlement in March to stem the tide.

The settlement would scrap the 6% standard, ban negotiations on the private housing databases known as multiple listing services, and require agents to sign agreements with buyers they represent.

And despite the organization’s stated policy on commissions, Coursey’s attempts to cut them down through his 23-year career have, at times, been controversial. When he first started offering rebates to buyers Tiger Prop represented, Coursey said, several agents reached out to say he couldn’t do so and pressured him to stop.

A post-settlement real estate offer gone awry

Less than a week after the settlement was announced, Coursey saw another opportunity to get ahead of the shifting landscape.

Tiger Prop already charged sellers a 2% broker fee, according to a business flyer, vs. 3% charged in a traditional deal in which the seller’s agent and the buyer’s agent split the 6% fee. He offered to cut the buyer’s agent out of that agent’s 3% for whoever bought a 1,200-square foot, three-bedroom, two-bath house in Southwest Boise that Tiger Prop represented and listed for $388,888.

Instead, the buyer could either take the buyer’s agent’s 3% off the agreed-upon sales price or have the seller pay 3% toward closing costs, brokerage fees or prepaid costs such as homeowners insurance or property taxes. Tiger Prop would still charge its usual 2% seller’s fee.

“Buyers will now have a choice if they want to pay their agent a commission or not,” Coursey said in an email to the Idaho Statesman.

“I wanted my seller to be at a competitive advantage and for the buyer to have a choice,” Coursey said in another email.

The offer landed him in trouble with the local Intermountain Multiple Listing Service, or IMLS, and Boise Regional Realtors, the local association that owns the IMLS.

Max Coursey said that the National Association of Realtor’s $418 million settlement could help buyers negotiate agent commission and lower the cost of homeownership.

The IMLS asked Coursey to remove the details of the deal from his listing and, when he refused, slapped him with a $250 fine. The service removed information about the offer from his listing anyway, which he says violates federal and state law.

That deal could have taken nearly $12,000 off the purchase price or closing costs of the home, Coursey said. By removing the details, he said the organization effectively raised the price of the home, removed the buyer’s ability to negotiate, violated his seller’s rights and interfered with his contract with the seller.

His listing violated a rule that “only information pertinent to the description of the property listed will be permitted to be displayed in any field of the MLS,” according to an IMLS email.

The National Association of Realtors’ settlement would ban commission negotiations on listing services, which Coursey said is common, but that rule change wouldn’t take effect until July once it’s approved by a court. Coursey said the IMLS and Boise Regional Realtors targeted him for trying to work around the usual 6% commission.

The IMLS and Boise Regional Realtors declined to comment.

Coursey said the IMLS violated his rights after removing details of his seller’s offer on this Southwest Boise home.

Other agents try to cut commissions

Jeff Jones of Boise’s 208 Premier Real Estate has also focused on ways to lower home prices for buyers — most notably by cutting out buyers agents.

Jones charges 3% as a seller’s agent, but he doesn’t charge for the buyer’s agent as is traditionally done, he said, and he recently sold a home without a commission for the buyer’s agent. His business also offers up to a $3,000 rebate home buyers for anything from closing costs to escrow.

“It really helps my sellers,” Jones said by phone. “It makes it very attractive”

Jones said there’s a lot of confusion around who pays for the buyer’s agent. Many homebuyers — whether they were told by agents or others — mistakenly believe that buyer’s agents are free or that there’s no financial incentive to skip having one, but that’s not quite true, he said.

Homebuyers generally pay the buyer’s agent in a roundabout process. Normally, the homebuyer will pay the seller the agreed-upon price for the house. The seller will pay 6% to the listing agent, who will then pay 3% to the buyer’s agent.

“The buyer is actually paying everyone’s commissions,” Jones said.

Part of the National Association of Realtors settlement bans buyer’s agents from telling homebuyers that their services are free, Jones said.

Jones, who specializes in off-market properties and building homes on vacant lots for buyers, said it’s not really in sellers’ interest to offer compensation to buyer’s agents.

“It always bothered me the fact that the sellers pay the buyers,” Jones said. “I know you don’t really need them… The buyers are going to come anyway.”

Homes dot Harris Ranch in Boise’s Barber Valley, which has swelled with new home construction.

With easy access to home listings on websites like Zillow and Redfin, buyers checking out multiple houses may not always need an agent these days unless they want an off-market property, Jones said. In many countries like Australia, there is no such thing as a buyers agent, he said.

“I totally agree with the lawsuit,” Jones said. “There’s a reason that job doesn’t exist in other countries.”

Jones said he expected the numbers of buyer’s agents to decrease in the coming years and that someday they could be more like rental agents that a buyer would pay for one day to let the buyer into the house.

Differences of opinion

Some real estate agents think the settlement may have little effect on the homebuying process and on the wider industry.

Mike Pennington, an agent with John L. Scott Real Estate in Boise, previously told the Statesman that agents are supposed to sit down with buyers to explain how representation works, negotiate commissions and obtain a signed buyer-broker agreement.

But he didn’t see how the settlement would changes things agents who already following the steps they are supposed to do.

“From my perspective, I don’t see it affecting me too much,” Pennington said.

According to the National Association of Realtors, the way real estate commissions are set up has led to greater access and equity.

“Listing brokers paying the compensation of buyer brokers underpins local broker marketplaces ... and serve as the driving force behind America’s efficient and accessible real estate market,” according to the association.

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