The National Association of Realtors (N.A.R.) has agreed to a legal settlement involving a payment of $418 million in damages and significant changes to its commission structure rules. This agreement comes after a series of lawsuits challenged the traditional 6% sales commission in the real estate industry, which plaintiffs argued inflated the cost of selling homes due to anticompetitive practices.
Under the terms of the settlement, which awaits federal court approval, the N.A.R. will eliminate certain rules that have been deemed to contribute to high commission rates in the United States. This change is expected to lower the expenses for homeowners selling their properties by potentially reducing the standard commission rates, which have historically been among the highest globally.
Economic analysts predict that this adjustment could decrease commission rates by approximately 30%, thereby impacting overall housing costs, reported NYT. The settlement is anticipated to introduce more competitive practices in the real estate sector, similar to the shifts observed in the travel industry with the emergence of online booking platforms.
The legal actions against the N.A.R. were initiated by a group of home sellers in Missouri in 2019, leading to a verdict of $1.8 billion in October. The settlement reduces potential damages, while also marking a significant shift in the N.A.R.'s stance, which has long been influential in setting industry standards.
As part of the settlement, the N.A.R. will also implement changes to its operational rules, including the removal of requirements that could lead to commission steering and the elimination of mandatory multiple listing service subscriptions for agents. These adjustments are expected to have a broad impact on the real estate market, fostering a more competitive environment and potentially leading to cost savings for homeowners.
