Here’s What the National Association of Realtors Settlement Means for Homeowners
The industry shift is expected to fuel competition among realtors, resulting in reduced commission fees for sellers.
The industry shift is expected to fuel competition among realtors, resulting in reduced commission fees for sellers.
Since 2019, the National Association of Realtors (NAR) has been under fire after nearly half a million Missouri homeowners filed a class action lawsuit alleging the real estate organization had been engaging in price-fixing practices. Homeowners complained that NAR’s policies, which standardize a five-to-six percent commission fee, allow brokers to boost their commissions and suppress competition.
Now, the NAR has agreed to settle the lawsuits and is expected to pay $418 million in damages on top of a previous $1.8 billion ruling in October of last year. According to the New York Times, the settlement indicates that the NAR has given up their fight, meaning that the organization will likely no longer control the terms for buying and selling a home.
They include the six percent commission rate, rules that encourage buyer’s agents to direct clients toward pricier homes to boost commissions, and posting agent commission fees on the MLS website, the database that lists homes for sale.
The National Association of Realtors has agreed to settle a class action lawsuit involving a group of Missouri homeowners that claim the organization was price-fixing.
Photo by Joe Raedle
The settlement must first be approved by the federal court, but experts told the Times that, if approved, the result will be shocking. "Housing experts said the deal, and the expected savings for homeowners, could trigger one of the most significant jolts in the U.S. housing market in 100 years," reads the Times report.
Currently, a home sold for the country’s $400,000 median price would normally see a $24,000 commission fee. By requiring agents to compete for business, these fees could be cut by up to 30 percent, the Times reports.For those homeowners looking to sell, who are often on the hook to pay the commission fee (though it can be split between buyer and seller), the deal could significantly lower the cost of selling their home.
According to residential brokerage analyst Steve Murray, for the buyer, the settlement likely won’t lower home prices, he tells CBS News: sellers don’t set prices based on closing costs—the market does. While interest rates remain high and saving for down payments continues to be challenging for most Americans, the majority of whom are rent burdened, the deal’s immediate impact remains in question.
Top photo by Joe Raedle
Related Reading:
What You Need to Know About the Ruling Against the National Association of Realtors
