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NAR Reaches Settlement on Agent Fees in Home Sales
The National Association of Realtors (NAR) has reached a nationwide settlement of claims that the industry conspired to keep agent commissions high, the Wall Street Journal reported Friday. The deal, which is set to usher in the biggest changes to how Americans buy and sell homes in decades, resolves months of uncertainty and mounting legal threats to the residential real estate industry.
The $418-million agreement will make it easier for home buyers to negotiate fees with their own agents and could lead more buyers to forgo using agents altogether. That has the potential to drive down commission rates and force hundreds of thousands of agents out of the industry.
If the settlement is approved by a federal court, listings of homes for sale in most parts of the country would no longer include upfront offers to buyers’ agents, and buyers would be able to negotiate compensation upfront with their agents.
NAR agreed to abandon longstanding industry rules requiring most home-sale listings to include an upfront offer telling buyers’ agents how much they will get paid. Sellers have typically set buyers’ agents fees.
Consumer advocates say the arrangement has prevented buyers from negotiating to save money and kept commissions in the U.S. higher than in most of the world. Conversely, NAR has said the current model helps buyers benefit from an agent’s advice even if they can’t afford to pay an agent out of pocket.
The WSJ reported that NAR has faced crippling antitrust liability since a Kansas City, MO jury delivered a $1.8-billion verdict against the organization and two national brokerages last October. The jury found that industry rules for how buyers’ agents are paid were keeping commission rates artificially high.
- ◦Economy
