The news that the Nationals Association of Realtors has reached an astronomical settlement in the class-action commission lawsuits to the tune of $418 million has shaken the real estate industry. But what does it mean for home sellers and buyers? The bottom line for consumers: NAR has agreed to amend several rules that many experts say will drive down housing costs.
We’re breaking down the latest facts, as well as sharing official word for NAR itself:
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” said Nykia Wright, Interim CEO of NAR.
While NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule, under the terms of the settlement, NAR will pay $418 million over four years. The agreement would release most NAR members and many industry stakeholders from liability in these matters. Additionally, cooperative compensation remains a choice for consumers when buying or selling a home—not a requirement.
Home buyers and sellers will be able to negotiate commission fees up front. That means the often standard 5-6 percent commission could become a thing of the past. Furthermore, NAR has agreed to enact a new rule that would require MLS participants working with buyers to enter into written agreements with their buyers. And, NAR would agree not to create rules that allow listing agents to set compensation for buyer brokers. These changes will go into effect in mid-July.
According to NAR, and despite its reported efforts, agents affiliated with HomeServices of America and its related companies—the last corporate defendant still litigating the Sitzer-Burnett case—are not released under the settlement, nor are employees of the remaining corporate defendants named in the cases covered by this settlement.
“Ultimately, continuing to litigate would have hurt members and their small businesses,” Wright said. “While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one fifth of the American economy, and NAR. For over a century, NAR has protected and advanced the right to real property ownership in this country, and we remain focused on delivering on that core mission.”