The real estate business is being shaken up by a significant legal win for home sellers and buyer. The National Association of Realtors recently settled antitrust litigation, resulting in a $418 million settlement, and here’s what you need to know:
- Commission Rules Overhaul: The settlement calls for NAR to eliminate decades-old rules on commissions. It has been found that the standard practive of Sellers paying commission to Buyers representative is creates an unfavorable environment for both parties. Buyers should have more flexibility to negotiate fees with their agents.
- MLS Compensation Rule: Historically, the NAR’s MLS cooperative compensation rule required listing agents to offer a commission to the agent who brings in the winning buyer. This practice often resulted in a 5% to 6% total commission split between seller’s and buyer’s agents. The settlement prohibits offers to compensate the buyer’s agent on MLS listings, aiming to reduce price competition and inflated commissions.
- Written Agreements: Buyer’s agents will be required to enter written agreements with clients going forward, outlining their fees and services in some detail before proceeding with any work for their clients.
- Impact on the Market: It's hard to predict the timing for these changes to go into effect, but they are ultimately likely to lower overall commissions and alter how homebuyers use their agents and pay for their services.
In addition to the NAR settlement, there have been other notable lawsuits. A Missouri court, for example, found the NAR and two brokerage firstm liable for $1.8 billion in damages related to commission practices. These legal developments could further impact the real estate industry and potentially lead to more reforms in the future.
Buyers Keepers is leading the charge to replace old practices with more equitable ones. Contact us for further updates as the real estate landscape continues to evolve.
