A legal settlement addressing realtor commissions is expected to have a dramatic impact on how real estate in the U.S. is sold and purchased, according to analysts.
The Chicago-based National Association of Realtors has announced that it has reached a $418 million settlement with litigants regarding agent commission rules.
Those rules mandating a 6% commission for agents on the sale of a home have been in place for decades. But an anti-trust suit brought by a group of Missouri home sellers some five years ago seemed to show a way forward when a federal jury decided that the NAR was working to inflate commissions.
The grand jury also ordered the NAR to pay up damages of up to $1.8 billion.
Now, after weeks of legal skirmishing, the organization has agreed to pay a separate $418 million settlement, while also doing away with what have become standard 6% commissions.
In a statement, the NAR said it agreed to the settlement in order to “end litigation of claims brought on behalf of home sellers related to broker commissions.”
But the statement added that in agreeing to the settlement, the NAR “continues to deny any wrongdoing.” Nykia Wright, interim chief executive officer of the organization, said the NAR has worked hard for years to “resolve this litigation in a manner that benefits our members and American consumers.”
Continued Wright: “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible.”
“Under the terms of the settlement, listing agents will no longer be able to advertise commission rates to buyers’ agents on most of the databases where homes are listed for sale,” reports the New York Times.
“This,” adds the paper, “will allow for more negotiation.”
Notes the Wall Street Journal: “Most sellers will no longer need to advertise up front how much they will pay buyers’ agents.”
The site Curbed says that for buyers the settlement may see a move toward “pared-down services,” before adding: “There is widespread hope that a reduction in commissions, which are baked into sales prices, may cause home prices to fall, but that remains to be seen.”
The statement by the NAR’s Wright added: “Continuing to litigate would have hurt members and their small businesses. While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances.”
By Garry Boulard
