Could a $475 Compass fee spark the next wave of real estate lawsuits?

Last month, Florida homebuyers Jeff and Melissa Efron filed a lawsuit challenging a $475 transaction fee they were charged by their broker Compass upon the close of their August 2024 home purchase. 

While it may seem surprising that consumers are willing to risk tens of thousands of dollars in legal fees over a fee totaling less than $500, attorneys in the real estate space do not find this litigation all that surprising, given the lawsuits facing the real estate industry over the past few years. 

“Pre-commission lawsuit settlement, these agents didn’t have to sit down and explain their fees, so if any consumers are looking at past transaction history they can see these fees and they have no idea what it even applies to and now it may be coming back up for them,” Wendy Gilch, the founder of Selling Later and a fellow at the Consumer Policy Center, told HousingWire. 

Since the terms of the National Association of Realtors’ (NAR) commission lawsuit settlement agreement went into effect in mid-August 2024, buyers’ agents have been required to obtain a signed buyer broker agreement prior to touring a home with a buyer outlining the agent’s compensation and the terms of the relationship. Prior to this, buyer broker agreements were only required in some states, meaning that some agents most likely never took the time to explain to their buyers how they were compensated and what different fees or charges went towards. 

Post-settlement scrutiny 

However, it is this post-settlement environment with its increased scrutiny on agent compensation that attorneys feel is potentially fueling lawsuits like this one, as well as those concerning referral fees. While Compass called their fee a “transaction fee,” attorneys said other firms call similar fees “administrative fees” or “regulatory compliance fees,” claiming that the fee is necessary to pay for things like properly executed paperwork. 

“I hate that there are so many lawsuits, but in a way it’s good that these conversations are coming up so the public can understand that fees like this are not mandatory, and they should try to negotiate them along with their agent’s commission,” Gilch said. 

For Doug Miller, an attorney at Miller Law PLLC and one of the attorneys who filed the Moehrl suit, one of the original commission lawsuits, these fees have no place in an already costly real estate transaction.

“There is no logical reason for them and they never should have started charging them,” Miller said. “Consumers have been paying the price with them for a long time.” 

Both Miller and Gilch said they have seen and heard agents refer to these fees as junk fees. Gilch said many of these agents have sought the Transparent Agent Certification launched by her platform Housing Rebel by Selling Later. 

“The fact that they are putting these fees in a purchase agreement is ridiculous, it needs to be disclosed early on and if you are charging it, you need to be clear as to what it is paying for and why you need the additional money,” Miller said of agents and brokerages charging consumers some type of transaction fee.

Appetite for more 

According to Miller, if this lawsuit succeeds in obtaining class action status, he would not be surprised if other copycat lawsuits began to proliferate.

“Anytime a class action like this is filed, if it looks like it has legs, there will be copycat lawsuits,” he said. 

He added that based on the wager these consumers are making by spending thousands in legal fees over a $475 transaction fee, they must be fairly confident the suit will obtain class action status. 

“I can’t imagine how this wouldn’t have all the elements of a good class action lawsuit,” Miller said. “I think there are going to be too many issues in the plaintiffs’ favor, and I think it will be a fairly easy case.” 

Industry impact

If these lawsuits do proliferate and there is an increased public awareness of these fees, Gilch sees the potential for an increased appetite for alternative homebuying methods. 

“If people really start to question the fees and how much things cost, I think they are going to begin looking into other avenues of how things work,” Gilch said. “I think more consumers are going to look at opportunities for buyer models that are different from what has always been done.” 

For Gilch this could mean an increase in popularity for things like á la carte buyer broker services or even more consumers using AI agent programs to assist in their homebuying journeys. 

Time will tell if other consumers are willing to risk a mountain of legal fees over a less than $1,000 transaction and if these Florida homebuyer plaintiffs will ultimately be the catalyst for the next wave of real estate agent compensation reform.