NAR’s Settlement Deal Dismantles 6% Realtor Commission Structure
The National Association of Realtors (NAR) has agreed to a $418 million settlement and sweeping reforms that dismantle the longstanding 6% commission structure in home sales. This settlement resolves antitrust lawsuits brought by groups of homesellers who argued that the mandatory commission rules artificially inflated housing costs.
Under the agreement, the NAR will eliminate requirements that forced sellers to pay buyer’s agent commissions when listing a home on Multiple Listing Services (MLS). Agents can no longer publish their compensation details on these listing platforms. Additionally, brokers will no longer be required to subscribe to MLS’s, many of which are NAR-owned subsidiaries.
These changes effectively destroy the traditional homebuying model where sellers covered commissions for both their agent and the buyer’s representative. Industry analysts predict real estate commissions could plummet by 25% to 50% as a result.
For a typical $417,000 home, this translates to potential savings of $6,000 to $12,000 for the buyer, as sellers traditionally passed along these costs. The reforms pave the way for alternative flat-fee and discount brokerage models to gain traction.
The settlement’s impact was immediately felt, with shares of real estate firms like Zillow, Compass, and Redfin experiencing double-digit drops on fears of reduced business. Conversely, homebuilders rallied on the prospect of lower costs for buyers.
NAR leadership acknowledged the substantial $418 million price tag but affirmed the long-term benefits of the agreement. “While the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” stated NAR President Kevin Sears.
The settlement follows a $1.8 billion antitrust verdict against the NAR in November, which the organization had vowed to appeal. Facing potential treble damages of $5.4 billion, the NAR ultimately negotiated this resolution.
Also read: After Losing $1.8-B, National Association of Realtors Faces Potential $1-T Nationwide Case Anew
“For years, anticompetitive rules in the real estate industry have financially harmed millions of Americans,” said Benjamin D. Brown, managing partner of Cohen Milstein Sellers & Toll and co-chair of its antitrust practice, he was also involved in creating the settlement.
“This settlement provides justice for our clients and will require important changes that help future home sellers.”
While most realtors are included, brokerage HomeServices of America continues to fight the case independently. The NAR expressed disappointment at their exclusion but satisfaction with securing reforms for over 1 million members.
Experts are touting this as one of the most significant disruptions in the sector for a really long time. Of course, realtors aren’t very happy about the settlement.
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