March 15 (UPI) — The National Association of Realtors on Friday agreed to settle a series of lawsuits by paying $418 million in damages and eliminating its rules on commissions.
The deal, which still needs to be approved in federal court, would mark and end to all litigation claims against NAR from home sellers who argued the rules forced them to pay excessive commissions.
March 15 (UPI) — The National Association of Realtors on Friday agreed to settle a series of lawsuits by paying $418 million in damages and eliminating its rules on commissions.
The deal, which still needs to be approved in federal court, would mark and end to all litigation claims against NAR from home sellers who argued the rules forced them to pay excessive commissions.
Home sellers typically pay their agents a commission of 5% to 6%. If the buyer has an agent, the two agents split the commission among themselves. For a $400,000 home, that means an extra $24,000 tacked on to the final sales price of that home.
NAR praised the settlement in a statement Friday and continued to deny any wrongdoing regarding the rule.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” Nykia Wright, Interim CEO of NAR, said in a release. “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goal.”
Without a guaranteed commission rate, agents could have to lower their commissions as they compete for business. Jaret Seiberg of TD Cowen Washington Research Group, in a note per Politico, speculated the agreement could bring down commissions by 25% to 50% later this year.
NAR said commissions will not fall significantly as they are set by the market.
“This will be a really fundamental shift in how Americans buy, search for, and purchase and sell their housing. It will absolutely transform the real estate industry,” Max Besbris, an associate professor of sociology at the University of Wisconsin-Madison, told the New York Times. “It will prompt one of the biggest transformations to the housing market since New Deal-era regulations were put in place.”
Michael Ketchmark, lead attorney for the plaintiffs, said their victory “will bring about tremendous benefits to anyone who owns a home or dreams of owning one.”
