Washington D.C., United States – The National Association of Realtors has reached a groundbreaking settlement in a move that is set to revolutionize the homebuying and selling market. In a bid to reduce costs for consumers, NAR has agreed to pay $418 million in damages as well as eliminate rules on commissions.
More than 1 million Realtors represented by NAR will now operate under a new set of rules, effectively ending the traditional model where sellers pay both their broker and the buyer’s broker. This change is expected to lower real estate commissions by 25% to 50%, creating opportunities for alternative selling models like flat-fee and discount brokerages to gain market share.
The agreement also includes measures to prevent agents’ compensation from being disclosed on listings on multiple listing services, a practice criticized for driving up housing prices. With the removal of these rules, buyers’ brokers will now be required to enter into written agreements with their clients, marking a significant shift in the industry’s landscape.
This settlement follows a federal jury ruling in Missouri that found the NAR and brokerage firms liable for $1.8 billion in damages for maintaining artificially high agent commissions. The NAR, facing potential damages triple that amount, ultimately decided to settle the case to avoid further litigation.
The overhaul of the real estate industry’s compensation model is expected to democratize the market, allowing prospective buyers to compare commission rates and choose lower-cost agents. This move towards transparency could lead to a more competitive housing market, benefiting millions of Americans in the process.
Critics have long argued that the NAR’s rules on commissions were unfair to sellers, who often had to cover the costs of both brokers involved in a transaction. This settlement is seen as a step towards addressing these concerns and bringing about much-needed reforms in the industry.
As NAR continues to face scrutiny over antitrust practices and leadership changes, the settlement marks a significant turning point for the real estate sector. With more than 1 million members agreeing to the terms, the agreement is set to reshape the way real estate transactions are conducted in the United States.