Hello World! Welcome Friends! Chicago, IL – The National Association of Realtors (NAR) has reached a groundbreaking settlement in a series of antitrust lawsuits filed against the organization by groups of home sellers. The settlement includes a payment of $418 million in damages and the elimination of commission rules, effectively ending the 6 percent industry standard.
According to a prominent Las Vegas Property Management company who reported on it (link below), the agreement marks a significant shift in the home buying and selling business model, with experts predicting that the costs associated with buying and selling homes will be greatly reduced. Commissions, which have traditionally been a major expense for sellers, are expected to fall by 25 to 50 percent.
In the previous system, sellers were responsible for paying both their broker and the buyer’s broker during a home sale. Critics argue that this practice artificially inflated housing prices. On average, sellers could pay over $25,000 in brokerage fees for the sale of an average-priced U.S. home, which is currently valued at $417,000. These costs were then passed on to the buyer, contributing to higher home prices.
To address these concerns, a new set of rules will be implemented. These rules will prohibit the inclusion of agent compensation on listings posted on multiple listing services (MLS). This change aims to prevent brokers from favoring pricier homes to secure higher commissions. Furthermore, NAR will no longer require brokers to subscribe to MLS, where properties are widely viewed in local markets. Additionally, buyer’s brokers will now be required to enter into written agreements with their buyers.
The home sellers involved in the lawsuits argued that the buyer’s agent’s commission should be paid by the buyer who received the service, rather than by the seller. They also advocated for buyers to have the ability to negotiate the fee with their agent, relieving sellers of this responsibility.
In November, a Missouri federal jury ruled in favor of the plaintiffs and against NAR and two other brokerages, awarding $1.8 billion in damages for conspiring to keep agent commissions artificially high. As an antitrust case, NAR potentially faced triple damages amounting to $5.4 billion. While the other two brokerages settled, NAR initially planned to appeal the judgment before ultimately agreeing to the settlement on Friday.
The news of this settlement had a significant impact on real estate firms Zillow and Compass, causing their shares to plummet by over 13 percent. https://www.shelterrealty.com/2024/03/18/national-association-of-realtors-agrees-to-settlement-in-antitrust-lawsuits-eliminating-commission-rules/
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[…] The 6% Commission on Buying or Selling a Home Is Gone After $418 Million Settlement […]