Last week, the National Association of Realtors (NAR) reached a nationwide settlement that could change the way real estate agents are compensated.
Almost 9 in 10 home sales are handled by real estate agents affiliated with NAR. The NAR requires home sellers to determine a commission rate, typically 6%, before listing homes on its property database, known as the Multiple Listing Service, or MLS.
On Friday, the NAR agreed to pay $418 million over roughly four years to resolve all claims against the group by home sellers related to broker commissions. The lawsuits against the NAR argued that the structure harms competition and leads to higher prices.
Under the settlement, commissions will be subject to more negotiation, which could lower the cost of buying and selling a home. Fees could be slashed by up to 30%, the New York Times reported, citing economists. It could also drive some real estate agents out of business. Home sellers can still offer a commission to the buyer's agent, but that will no longer be a condition of using an MLS.
According to a press release from the NAR, "The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR® associations, all association-owned MLSs, and all brokerages with a NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below."
The agreement must still be approved by a court. The changes to real estate commissions are set to take effect in mid-July of 2024.
