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No Nosedive Ahead for Canadian Real Estate Prices: RE/MAX – RE/MAX News

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Canadian real estate kicked off 2020 with a bang, but there are conflicting opinions as to how we’ll finish out the year. Canada’s federal housing agency has warned that average house prices could fall by up to 18 per cent over the next 12 months – a dismal prediction that’s being challenged by RE/MAX based on market activity from coast to coast.

Basic economics has taught us that supply and demand dictates housing prices, and according to what RE/MAX brokers are reporting at ground level, housing inventory is down in many markets, demand is still high, and multiple offers are a common scenario. Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst – which is a far cry from CMHC’s dire decline of up to -18 per cent.

“CMHC doesn’t seem to understand the sheer number of sellers that would have to accept this kind of price reduction, in order for average housing prices to plummet to this degree in such a short time span,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario Atlantic Canada. “Sellers simply won’t accept that kind of discount on their listings. A statement of this nature is panic-inducing and irresponsible.”

Is Canadian Real Estate In Trouble?

Late last year, RE/MAX expected Canadian real estate prices to rise by 3.7 per cent in 2020. A few short months later, COVID-19 threw everyone for a loop. This week, Canada Mortgage and Housing Corp. (CMHC) has predicted that average home prices could decline anywhere between nine and 18 per cent in the coming year, due to the economic impacts of COVID-19. In addition, CMHC warns that mortgage deferrals could rise from 12 to 20 per cent by September, with up to one-fifth of all mortgages ending up in arrears, if the Canadian economy does not recover sufficiently.

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“The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s longer-term financial stability,” CMHC CEO Evan Siddall told the House of Commons Standing Committee on Finance earlier this week.

However, the Big Banks, economists and many Realtors aren’t aligned with CMHC’s expectation.

What the Big Banks are Saying About Canadian Real Estate

According to this recent article published by The Globe And Mail, CIBC said Canadian real estate prices could fall between five and 10 per cent this year compared to 2019. Similarly, RBC forecasts a decline of seven per cent, while BMO expects a five-per-cent decline.

“[Mr. Siddall] said that all these things will happen if the economy ‘does not recover sufficiently.’ That’s a very broad statement,” CIBC deputy chief economist Benjamin Tal told The Globe And Mail. “Without looking at the assumption behind that statement regarding GDP growth, unemployment rate and so on, it is very difficult to assess the likelihood of such a prediction. Is it a worst-case scenario, or the base case? I think he was highlighting a worst-case scenario,” he said.

A single-digit decrease in house prices can be classified as a correction, and is a far cry from CMHC’s trough of -18 per cent.

RE/MAX Brokers Report Low Housing Inventory, Multiple Offer Scenarios

RE/MAX brokers in some of the biggest Canadian real estate markets say a dramatic price drop is unlikely under current conditions, barring any major unforeseen circumstances – and as we’ve all come to learn recently, anything is possible. But assuming current market conditions remain stable, the current inventory of homes for sale continues to fall short of demand – even amidst this pandemic, social distancing measures and the economic fallout.

“The recovery of the real estate market will be market and region specific,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “We are seeing a strong return to real estate inquiries, with our Realtors becoming very busy again.”

Here’s what RE/MAX brokers are reporting on Canadian real estate in some of our biggest cities and key housing markets.

ATLANTIC CANADA

Newfoundland real estate has been a consistent “down market” since 2014, thanks to weakening oil prices and a shaky local economy. COVID-19 dealt another blow, but even so, the economy was already slow in the region. Interestingly, RE/MAX reports a spike in multiple offers in the region recently.

Multiple offers have been virtually non-existent in Newfoundland since the peak in market activity in 2014. Since the pandemic, there have been a dozen. There has even a home for sale that received four offers, when previously even one offer may have been uncommon.

Housing prices in Newfoundland remain consistent right now, and the market is better positioned than originally anticipated. The pulse is good, and this is unlikely to change in the near future.

Halifax real estate was riding high before the pandemic, with a lot of good foundational activity happening across the region. Simply put, the Halifax real estate market was hot, with low housing inventory common across the marketplace. Specific to the Halifax housing market, multiple-offer scenarios continue to be common, with brokers and agents reporting sequential multiple offer scenarios on their last three, four, five deals. That’s certainly the making of stable house prices, or even increasing slightly.

About one-third of Halifax listings in recent weeks have sold over asking price, which bodes well for house prices in the near future. Showings are up, and new listings that are coming online are up slightly as well. There’s consumer confidence, but buying activity is heavily dependent on how people have been affected financially. If current trends continue, an 18-per-cent drop in home prices is highly unlikely.

ONTARIO

Ottawa real estate has experienced an increase in home prices and a decrease in days on market – both good indicators that the housing market is stable, at least for the time being. The current seller’s market is characterized by low housing supply and high demand, which continues to drive up prices. In fact, within the last two weeks, Ottawa’s list-to-sales-price ratio has a median of 100 per cent. Most properties are still holding offers, with multiple-offer scenarios a common occurrence and homes selling for over asking price.

Within the last two weeks, compared to the previous two weeks, RE/MAX has experienced an influx of inquiries regarding properties for sale, with questions about the process of buying/selling homes. Consumers in the region want to be informed again about the housing market.

Toronto real estate is experiencing a proportionate decline in new listings and buyers, leading RE/MAX to conclude that prices should remain stable. Toronto homes are currently selling for asking price, or slightly above or below that price point, but the region has not experienced any decline in price and if current conditions continue, there’s nothing to indicate that prices will fall between nine and 18 per cent, as CMHC has predicted.

Toronto continues to experience multiple-offer scenarios, with RE/MAX reporting a consistent two or three offers on every listing. These conditions were prevalent prior to the lockdown on March 13, and continue to be the case, even with social distancing measures in place and the economic fallout. Toronto’s housing supply shortage continues, and demand remains high, as evidenced by the many multiple offers RE/MAX is seeing across the board.

The pandemic has negatively impacted listings, because many homeowners who were planning to sell are now opting to hold on to their listings, unwilling to host traditional open houses at this time. When government financial aid runs out and the six-month mortgage deferral period expires, people may then start listing their homes if they can’t afford to keep them. However, right now this is not the case. If a flood of listings does occur in Toronto this fall, it will be a short cycle.

London real estate experienced a large downturn in the number of sales in April and May compared to April/May 2019, but the region has also seen a large decrease in the number of listings compared to last year, which is causing multiple-offer scenarios.

The London housing market is holding strong, homes for sale are being scooped up and prices remain relatively stable. Within the past 14 days, RE/MAX reports 180 firm sales, 83 of which went for over asking, and 20 sold at full price. In April 2020 the average sale price in London was up slightly by a couple of thousand dollars compared to April 2019, however May’s month-to-date average price in London is about $29,000 higher compared to all of May 2019.

WESTERN CANADA

Edmonton real estate continues to experience a significant hit to its local economy due to oil prices, and the biggest factor going forward will be employment, or lack thereof. The impacts of COVID-19 may result in a double-digit unemployment rate, which is expected to impact housing demand.

When it comes to selling prices, RE/MAX reported some lowball offers at $40,000, $60,000 and $80,000 below asking, however none of those deals went through. Since then, those properties have gone pending close to the asking price.

Moving forward, RE/MAX expects an average five-per-cent price decrease in Edmonton throughout the rest of the year. Edmonton saw prices fall two to three per cent in 2019, based on buyer demand. Edmonton has more millennials than baby boomers, which makes it a unique marketplace. Buyers wants new homes, which means many dated homes in older neighbourhoods aren’t moving, while infill and new construction in those neighbourhoods are in high demand. Furthermore, RE/MAX is reporting an influx in downsizers who are using COVID-19 as the catalyst to sell the big house and move into a condo or smaller home.

Multiple offers are common in Edmonton’s housing market, with houses selling for $20,000 to $30,000 over asking price. This is due to buyers shifting and adjusting needs. This could present a good opportunity for investors and house flippers to tackle some of those older, larger homes.

Lenders tightening up their lending policies is a concern for the Canadian real estate economy, and how they assess and react to buyers’ employment status will affect the buyer pool. This will dictate the market in the next year post COVID-19.

Calgary real estate is experiencing a double-edged sword, due to COVID-19 and the oil industry, and the greater concern is oil. It is still too early to accurately predict where prices will trend in the coming year. Housing supply has come down, which has kept prices relatively steady. RE/MAX reports some multiple offers on properties that are priced appropriately in the right neighbourhoods. Meanwhile, some properties have seen large price drops, but it’s unclear if that is related directly to the pandemic or if it is related to the overall economy.

Some regions in Calgary are experiencing drops, but others are doing well. A five-per-cent price correction is a more likely scenario. Some price adjustments are happening already, but an 18-per-cent price drop across the board isn’t realistic. But if by chance it did happen, prices would bounce back again. Higher-priced properties will be most affected, while properties at lower price points are expected to remain fairly stable.

Vancouver real estate is fluctuating from week to week, not just on seller side but also on agent side as well. People are re-emerging, with RE/MAX reporting lots of new inventory and many multiple offers, not just on $500,000 condos but those priced in the $2-3 million range as well. and. Perception is that now with easing of restrictions, people are more confident that things are moving in the right direction.

It’s possible to have high unemployment, yet a very strong real estate market. Unemployment appears to be having a greater impact on lower earners, and with the region’s high real estate prices, homebuyers are typically those in the higher income bracket.

Vancouver Realtors who were initially fearful are back in business, and an 18-per-cent decline in Vancouver housing values – or anything close to that – is highly unlikely. A five-per-cent price correction is more likely.

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NAR settlement explained: Why Realtors like me are scrambling

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One of my favorite “Modern Family” episodes depicts the hilarity and nonsense of a real estate agent’s daily life as Phil Dunphy rattles off deed restrictions and the proper pronunciation of the word “Realtor” (real-TOR).

A registered trademark of its originator, Realtor is a title only real estate agents who pay membership to the National Association of Realtors (NAR) are allowed to boast.

Today, after more than 10 years as one myself, the “Realtor” prestige has lost its allure.

Just when it felt like NAR was bouncing back after a sexual harassment scandal in 2023, we real estate agents and brokers now find ourselves in the aftermath of this month’s multimillion dollar NAR settlement.

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While I am nervous about what these NAR settlement changes mean for my residential real estate business and community, I am pleased that we’re all turning our eyes and ears to a company whose pockets have gotten too big and too dark for too long.

But enough about NAR.

Brokers, their agents and our local associations are scrambling to decide how to restructure serving residential buyers fairly without undervaluing our work. It feels a bit like a bomb just went off, and we’re running up to each other screaming, “Can you hear me talking? Are you talking? What are we going to do about this?!”

We have only until mid-July to figure it out.

Here’s what we know now: Buyer broker compensation is no longer allowed to be included on the Multiple Listing Service (MLS). And buyers are now required to sign a Buyer Representation Agreement, which includes the buyer broker’s compensation.

Real estate agents are worth it. So how do we get paid?

Buyer services are harder and more unpredictable, I think, than seller services (even in a buyer’s market!). Some buyer clients take years to find a property, while others take only a few weeks.

The stories we agents could tell would make anyone roll with laughter or cry – probably both. Being a real estate agent is like a reality TV show. How will we divide our whole job into billable hours? Billable tasks?

As an agent, I’m not only giving advice about market data and negotiating terms for sale. I’m also an on-call therapist, a babysitter, an interior designer, a cleaner, an exterminator … agents gladly do an endless list of tasks for our clients. Just ask your favorite agent what she keeps in her car for emergencies!

One thing I can predict with much certainty: Buyers will have to do more work to buy a property in the future. Private tours will be less common and replaced by 3D tours, video tours and open houses. Buyers might also have to meet with their inspectors, contractors and others without their agent.

Maybe buyers really will do it all themselves without losing money.

Buying a house?Don’t go it alone. A real estate agent can make all the difference.

If you’re hoping to buy in the next three months, my recommendation would be to close by July 1. Most first-time homebuyers have no idea what has happened or how it will affect their ability to negotiate.

In the past week, I’ve had to explain the NAR settlement to every friend, neighbor and client outside the industry. I can only tell you that we’re all racing to get it figured out by the time it does affect everyone.

NAR settlement explained: How will this impact home sellers and real estate prices?

Seller-paid buyer broker commissions were created with equitable rights to good representation in mind. Specifically, so that first-time buyers could afford to have a fair negotiation, instead of being swept under the rug by a seller’s agent signed to protect the seller (a law in most states).

My heart breaks for those sellers who were swindled into commissions. As much as I’d like to blame NAR, this error is also on agents, brokers and local boards who clearly violated our ethical code. It’s maddening to watch agents and brokers feed right into the stereotype that real estate agents are lazy and just in it for the biggest paychecks.

So, who will pay the buyer’s agent now, and how will this affect home prices?

Real estate prices:Will home prices fall after Realtor lawsuit settlement? You shouldn’t count on it.

It’s commonly acknowledged that the 5-6% sales commission was “baked into” the sales price. Investor agents and builders have been using low-to-zero percent buyer broker commissions as leverage for years.

While I do think that 5-6% sales commissions will be a thing of the past, there is a chance that sellers will find a way to simply advertise buyer broker commissions through a different medium. This compromise walks a fine line with the new restriction.

Seller-paid “buyer credits” is my favorite idea bumping around. Buyer credits would be offered on the listing, and could be distributed as the buyer sees fit at the closing table. The buyer could use the funds for themselves, their broker or both.

If buyers are responsible for the buyer broker commission on top of other purchasing costs, the sales prices will have to come down. Lower sales prices should not affect the sellers’ net proceeds in this instance, since the sales price deficit should roughly mirror the now absent buyer broker’s commission.

In short, even though most sellers think they should be celebrating now, these new rules probably won’t affect sellers much, if at all, once the dust settles.

What does the NAR settlement mean for buyers?

Gone are the “Let’s go tour this house for fun!” days.

A signed Buyer Representation Agreement is now required before a property showing. This has always been best practice. For some states this will be a big change.

For example, I usually complete a buyer consultation and one or two property tours before requiring a buyer’s agreement. I do this to be sure we’re a good match for each other. A successful client-agent squad requires a lot of trust and a common communication style.

Take the tours off the table, and I think things will get awkward. Now I spend one hour with a potential buyer and then prompt, “So do you trust me to guide you through your biggest life purchase? Sign here.” I’m sure thankful many of my clients are referrals.

How will the commission change impact real estate agents in 2024?

The part-time agents and small brokerages will likely diminish over time, which will either be great or horrible for the industry. Agents will have to do more with less, and our 60 to 70 hour work week will feel impossible without high sales volume.

Once in escrow, the brunt of the work usually lands on the buyer’s agent, too. If there are more transactions without buyer’s agents, then the seller’s agent will have to pick up the slack.

Emily Ross

I often joke that as a 1099 real estate agent, I’m either overpaid or underpaid on each property. Still, my annual income mashes up into a worthwhile sum despite the work-life balance.

Without that 2-3% buyer’s commission propping up half my income, I am not sure the 11:30 p.m. phone calls, 6 a.m. texts, missing my daughter’s basketball game for an impromptu showing, and never having paid time off or maternity leave will be worth it.

Maybe I ought to go back to copywriting.

It feels like most brokers and Realtor associations are strategizing how to make the buyer agent obsolete with new technologies. I think they’re focusing on the wrong solution, but that’s a story for another day.

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A settlement in a U.S. lawsuit could upend the cornerstone of real estate industry: commissions

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The cost of selling a home in the United States may be about to change dramatically.

A real estate trade group has agreed to a landmark deal to drop what was once a cornerstone of the industry: the six per cent sales commission paid to agents.

In Canada, two lawsuits filed against various real estate bodies want the courts to come to the same conclusion and force wholesale change in the way Realtors charge their fees when a home is sold.

“We got here by a cartel of brokerages and real estate associations that control the rules, and they’ve done it for a very long time,” said Garth Myers, a litigator with Toronto law firm Kalloghlian Myers.

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He filed the proposed class-action lawsuits in Federal Court on behalf of plaintiffs who allege that the Canadian Real Estate Association, the Toronto Regional Real Estate Board and several local brokerages and franchisors conspired to set fees and illegally drive up the price of real estate commissions.

At the heart of both the U.S. and Canadian cases is the opaque way in which real estate agents charge their fees.

Lawsuits revolve around Competition Act

In Canada, there are different fee structures in different jurisdictions. In Ontario, for example, a commission of five per cent of a home’s sale price is split between the buyer’s and seller’s agents.

With the average price of a Toronto home at $1,225,000 last month, Realtor fees would amount to $61,250.

In Vancouver, Realtors charge seven per cent on the first $100,000 of the sale price, and between 2.5 and three per cent on the balance. So agents would split between $29,500 and $34,000 in fees on a $1-million home.

A real estate 'For Sale' sign outside a single-family home.
In Canada, there are different fee structures for real estate agents in different jurisdictions. In Vancouver, Realtors charge seven per cent on the first $100,000 of the sale price, and between 2.5 and three per cent on the balance. (Ben Nelms/CBC)

In the U.S., agents generally charge a commission of five or six per cent.

But what is common among those different jurisdictions is that the fee paid to the buyer’s agent is baked into the price of the home, while a seller can negotiate with their agent and get a better fee.

A potential buyer can look up the details of a home on something called the Multiple Listing Service (MLS). The listing includes everything they would want to know about a property — from size and taxes to upgrades and amenities — but it doesn’t disclose the amount a buyer will pay in Realtor fees.

Myers said the existing system enables agents to steer clients away from homes that aren’t paying the full commission.

“It’s clear to us that consumers are being ripped off, it’s clear to us that the rules elevate the cost of buyer brokerage commissions,” he said. “Now the open question that the court is going to have to resolve is whether this is criminal conduct under the Competition Act. And that’s what we’re fighting about in court.”

It will likely take years before the cases are resolved.

WATCH | How sweeping U.S. real estate changes could impact Canada:

How sweeping U.S real estate changes could impact Canada

15 hours ago

Duration 6:22

A landmark legal settlement is upending the U.S. real estate market. CBC’s Peter Armstrong breaks down the possible ripple effects for home buyers and sellers in Canada.

U.S. industry pushes back

In the U.S., there is already fierce disagreement over what the court settlement — which ends legal claims from home sellers over real estate commissions — actually means.

On March 15, the day the $418-million US settlement was announced, the National Association of Realtors said fees have always been set by the market, not by collusion among agents. Besides, the group said, those fees have always been negotiable.

“Offers of compensation help make professional representation more accessible, decrease costs for home buyers to secure these services, increase fair housing opportunities, and increase the potential buyer pool for sellers,” the association said in a statement outlining the broad points of the agreement.

Rows of houses are shown in a subdivision.
A housing subdivision is shown in Middlesex Township, Pa., in April 2023. In the U.S., there is disagreement over what the $418-million US court settlement — which ends legal claims from home sellers over real estate commissions — actually means. (Gene J. Puskar/The Associated Press)

Since then, high-profile brokerages have pushed back against the notion that the industry will be forced to change as a result.

“Since the settlement announcement, there have been numerous articles and stories in the media on what this means for buyers and sellers,” Budge Huskey, president and CEO of Premier Sotheby’s International Realty in Naples, Fla., said in a statement released on Tuesday.

“Regrettably, most reflect a profound lack of understanding of the real estate business as well as mistaken claims.”

Huskey said the notion that sellers will no longer pay a fee to the buyer’s agent is simply false.

“There has never been any obligation for a seller to pay buyer agent compensation at any time, yet it has been a historical practice that’s worked exceedingly well since the advent of modern residential real estate,” he said.

Realtors in Canada, such as ReMax, aren’t saying much publicly while the cases work their way through the courts. A spokesperson for the organization would only say that “we do not comment on ongoing litigation.”

U.S. reaction watched closely here

“It’s important to note the litigations in Canada and the U.S. occur in different legal and factual contexts, and the litigations are at a much earlier stage here in Canada,” the Canadian Real Estate Association said in a statement to CBC News, adding that “we’ll continue to review U.S. developments.”

The statement goes on to say that buyers and sellers in Canada “have always been able to negotiate commissions with their agent…. On the buyer side, buyer representation agreements are required in at least seven provinces in Canada. These agreements set out terms like services and fees between an agent and their buyer. This represents more than 80 per cent of homes sold in Canada.”

Real estate experts on this side of the border have been watching the U.S. reaction very closely.

A man with grey hair and a grey beard, wearing a blue overcoat and tie, stands outside a building.
Murtaza Haider, a professor of real estate management at Toronto Metropolitan University, says he thinks the lawsuits in Canada will lead to the same outcome as those in the U.S. because the two real estate systems are so similar. (Pelin Sidiki/CBC)

Murtaza Haider, a professor of real estate management at Toronto Metropolitan University, said the two systems are so similar that he believes the court cases here will lead to the same outcome as those in the U.S.

But, he said, people should temper their expectations.

“We won’t have a system blow up. It’s basically giving the buyer the rights to negotiate with the agent, a commission for the services they may or may not use,” Haider said.

Down the road, he imagines a system where some buyers pay an agent a full commission to help them find a home, figure out a price and close the sale, while others will simply need someone to help them file the paperwork.

Haider warned that there may be some unintended consequences to changing the system. Currently, he said, the fee paid to both the buyer’s and seller’s agents is essentially included in the price of the home. Fees are not an extra closing cost outside the home price.

“Right now it’s baked into the mortgage amount, so you don’t have an out-of-pocket policy. But [if you] have the flexibility and freedom to negotiate, that amount [may be] coming out of your own pocket right away,” Haider said.

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The Homeowners Who Beat the National Association of Realtors – The New York Times

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When Rhonda Burnett went to sell a home in 2016, she knew she would have to pay a commission to her real estate agent.

The house was a second home — she and her husband, Scott Burnett, had purchased the three-bedroom house in Kansas City’s Hyde Park neighborhood as a place for their oldest son to live after he was accepted to law school in Kansas City in 2008.

Her real estate agent presented her with a form that detailed how much commission they would pay, with choices in four boxes: 6 percent, 7 percent, 8 percent or 9 percent.

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Ms. Burnett was instructed to select one, and she picked 6 percent.

The rest of the form, which stipulated that the commission would be evenly split among the buyer and seller agents, was already filled out; Ms. Burnett asked if she could lower the commission paid to the buyer’s agent, but her agent told her doing so would discourage agents from showing her home. “I shop sales,” Ms. Burnett, 70, said with a laugh. She spent three decades as a stay-at-home mother while her husband, Scott Burnett, 72, worked for a waste management company and spent 20 years working as a local legislator. “I’m always looking for a break. But when I asked her if I could negotiate, she said, ‘No, you really can’t.’”

Three years later in 2019, Ms. Burnett became the lead plaintiff in a landmark legal case about home sale commissions against the National Association of Realtors that led to a settlement earlier this month that real estate experts say will rewrite the housing industry in the United States.

The settlement followed a federal jury verdict in October in favor of the Burnetts and four other plaintiffs, on behalf of 500,000 Missouri home sellers, that ordered N.A.R. to pay $1.8 billion in damages. Under the agreement, sellers’ agents will no longer be able to make offers of commission to buyers’ agents on most of the databases where homes are listed for sale, a shift that will, experts say, lower commissions across the board. For decades, most agents in the United States have charged an industry standard of between 5 and 6 percent, which is higher than in nearly any other developed country.

The plaintiffs argued that N.A.R. and several large real estate brokerages had conspired to inflate real estate commissions, pointing to several N.A.R. rules that required a seller’s agent make an offer of commission to a buyer’s agent. Those commissions, the home sellers argued, were negotiable in name only, and unnecessarily high, forcing home sellers to pay unnecessary fees to close a sale.

Ms. Burnett spoke for both herself and her husband. She told the jury how she felt that the rules of the real estate industry had seemed fixed, and she believed she was forced to pay a commission that was never truly negotiable.

In an interview, Ms. Burnett stressed that she didn’t blame her real estate agent, whom she believes was just doing her job. Ms. Burnett spent several years as an advocate for the Kansas City public schools, meeting with educators and parents that helped her district. Her real estate agent was also a school advocate, and they often saw each other at district meetings. She blamed the industry, and the powerful National Association of Realtors, which had set the rules.

“It’s not the Realtors. But the Realtors are controlled by a huge spider web,” she said. “After I joined the lawsuit, I learned so much about how the industry is run. It goes all the way to the brokerages and up to N.A.R.”

Despite the settlement, which is pending a federal judge’s approval, N.A.R. continues to deny any wrongdoing in terms of its rules for agent compensation.

“N.A.R. does not set commissions, and commissions were negotiable long before this settlement. They are and will remain entirely negotiable between brokers and their clients,” the organization said in a recent statement.

Before the lawsuit went to court, N.A.R. — a powerful trade organization with 1.5 million members, more than $1 billion in assets and a cash-flush lobbying arm — seemed impregnable. It had fended off a Justice Department inquiry into anticompetitive behavior for more than a decade, and successfully sued upstart real estate companies that challenged its stance. The Justice Department inquiry is ongoing.

But in U.S. District Court for the Western District of Missouri, the home sellers were speaking directly to a jury of their peers. It offered them an opening.

Michael Ketchmark, 58, a plain-spoken personal injury lawyer who became lead lawyer on the case, sensed his advantage on the first day of the trial.

Stepping to the front of the courtroom on Oct. 17, he gestured to his mother and father, who are in their 80s and attend all of his trials. On that day, Margaret and Eugene Ketchmark were seated in the front row.

“I told the jury that everything I needed to know about this lawsuit, I learned from my mom and dad when I was in kindergarten,” Mr. Ketchmark said in an interview. “If you take something that doesn’t belong to you, you have to give it back. And that’s what this case was. It was a refund case. It was about giving the money back.”

Mr. Ketchmark was referred to the case by a friend and fellow attorney who knew the Burnetts. He then began looking for other plaintiffs across Missouri who might have similar grievances.

Mr. Ketchmark had never tried a housing case before, but he was no stranger to big wins — in 2002, he won a $2.2 billion civil judgment against Eli Lilly and other drugmakers, claiming that they failed to uncover the scheme of a Kansas City pharmacist who was diluting chemotherapy drugs. The drugmakers, who never admitted any wrongdoing, later settled for $72.1 million.

Mr. Ketchmark had a similar upbringing to the plaintiffs in the case against N.A.R., with parents who didn’t make a lot of money and who saw a house as their biggest investment. He grew up in West Des Moines, Iowa, as one of four children, and his father worked at a bank. His mother didn’t finish college until he himself was in law school — she put herself through night school.

He had a strategy: Talk to as many average Americans as he could about the case, and find out what resonated. His team began running and filming mock trials.

“We would watch the tape, and start developing out the themes of the case,” he said. By the time they got to trial, Mr. Ketchmark estimates he had watched 2,000 hours of video of mock jurors discussing the case.

“I intuitively knew when the trial started that if we could win this, that if the jury followed the law and reached the right result, that it would change the industry. And it has,” he said.

He pressed Ms. Burnett, who grew up in Georgia and met her husband when they were both working in President Jimmy Carter’s White House — Scott did field organization, Rhonda worked as an administrative aide — to describe her childhood with a stay-at-home mother who sold Tupperware and a father who worked at the federal penitentiary and took on shifts selling sporting goods at the local Sears for extra cash.

Ms. Burnett’s agent listed the house for $275,000 but it sold for $250,000. Ms. Burnett paid $15,298 in commission.

Mr. Ketchmark guided Jerod Breit, 42, another plaintiff in the case, to share stories of working as a police officer in St. Louis before saving up enough to buy his first home in South St. Louis. And he encouraged Hollee Ellis, 53, to tell the jury about her mother, who worked as a real estate agent.

Ms. Ellis, a former high school English teacher who now works in nonprofits, talked about joining her mother at real estate showings as a child, and later even working as an assistant at her brokerage at one point. She joined the lawsuit, she told the jury, not in spite of her mother but because of her.

If real estate agents were actually able to negotiate commissions, she said, she believed her mother could have made more money, rather than less.

“She operated under that assumption and that practice and that standard for so many years,” Ms. Ellis said of the split 6 percent commission. She shared with the jury that her mother is now suffering from Alzheimer’s and has advanced dementia. “Whereas I know she worked very, very hard for some of her buyers and possibly could have negotiated a different rate.”

Ms. Ellis described selling a modest three-bedroom, single-level brick house in 2016 and feeling that she could not negotiate the 6 percent commission she paid that was split between her agent and her buyer’s agent. “It’s not about money at all,” she said of the case. “It’s about reversing a practice that I feel is unfair.”

Ms. Ellis and her husband, Jerry Ellis, a forklift driver, were looking to sell their house in Ash Grove, Mo., because Ms. Ellis had a new job opportunity at a nonprofit in South Carolina.

They owed $107,000 on their mortgage. They hired a real estate agent who sold the house for $126,000, netting them just over $18,000. Forty percent of that ended up going to real estate commissions for both their agent and the buyer’s agent.

“It was a hard pill to swallow that we were walking away with so little,” she said.

Mr. Breit, 42, also said he felt he had money taken from him.

He spent more than a decade as a police officer. He bought his first home, a two-bedroom brick Tudor in south St. Louis he described as a “gingerbread house,” with the help of a fellow officer’s father — a retired paramedic who worked as a real estate agent on the side.

When it came time to sell that home, Mr. Breit said, that same retired paramedic offered to help again, he said, and promised he would only take the “law enforcement special” of 5.5 percent commission.

Mr. Breit took issue with the commission to his buyer’s agent, and had already joined the class-action lawsuit when lawyers began reviewing the contracts of his home sale. It was only then, one day before he was scheduled to take the stand, that he learned he hadn’t been offered a law enforcement special anyway.

He sold the home for $149,900 in 2017. He was charged $4,946.70 in commission to his seller, and $4,047.30 in commission to his buyer, totaling $8,994. When the numbers were brought to his attention, he did the math in his head several times, disbelieving. His agent, using forms that were preprinted, had gone ahead and charged him the full 6 percent.

“I know people say it’s negotiable,” he said. “But it’s really hard for me to believe that it’s negotiable when the documents are pre-filled and we don’t question it.”

Mr. Breit left the police force in 2017 and now serves as a regional executive director for Mothers Against Drunk Driving, or MADD.

“I’m just a person who sold a house,” he said. “I don’t go to Jiffy Lube to pay for an oil change next week, and I don’t pay for someone else’s Hulu account because we live on the same block. People should only have to pay for what they use.”

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