A recent change in real estate rules has sparked a new wave of legal questions, particularly for homebuyers in Texas. Prior to July, Multiple Listing Services (MLS) in places like Texas automatically included a 3% buyer's agent commission. This practice has since changed following a lawsuit alleging anti-competitive practices. Now, Realtors are no longer able to list an offer of buyer's agent compensation directly in the MLS. Instead, sellers may state they are willing to pay a certain amount of expenses for a buyer's agent commission. This has led some to question whether their Realtor acted improperly by not disclosing this rule change, and if they have a case to sue for overcharged commissions.
Understanding Fiduciary Duty and Professional Negligence
When a client hires a realtor, the realtor owes them a fiduciary duty. A breach of this duty is one potential argument for a lawsuit. However, simply paying a buyer's agent commission as was the standard practice is likely not enough to prove a breach of fiduciary duty. The Realtor did not have an affirmative duty to disclose the rule change, as this information is public record.
A stronger argument might be a claim of professional negligence. This would require proving that a competent real estate agent in a similar situation would have known that in a hot market, a 3% buyer's agent fee was not necessary and could have been offered at a lower rate, such as 1%. To make this case, you would need other Realtors to testify that they would have offered a lower commission in a similar market.
The Challenge of Proving Your Case
The main challenge in pursuing these cases is that many Realtors are still offering the standard 3% commission, even with the rule change. This makes it difficult to establish that a realtor's actions were negligent or a breach of their professional duty. While the new rules were designed to address anti-competitive practices, the market's response has been slow to change, which may make these lawsuits difficult to win.
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