The U.S. housing market is poised for significant changes this summer as the National Association of Realtors (NAR) settles an antitrust lawsuit that could reshape how real estate agents are compensated.
The NAR, representing over 1.5 million members nationwide, agreed in March to pay hundreds of millions of dollars to settle claims alleging that commissions burdened sellers with excessive costs.
Despite denying wrongdoing, the NAR committed to a $418 million payout over four years to resolve the cases. Final court approval of the settlement is expected by late September, pending potential modifications from the Department of Justice.
The planned reforms by NAR, set to take effect in July, include overhauling how agents charge for home sale transactions, mandating written agreements with buyers for fee transparency, and allowing buyers to negotiate compensation independently.
“This settlement achieves our goal of preserving consumer choice and protecting our members,” stated Nykia Wright, NAR’s interim CEO.
The anticipated changes could eliminate the typical 6% fee agents receive for home sales, marking a potential revolution in the U.S. housing market. However, experts caution that the full impact may unfold gradually.
Norm Miller, a real estate professor at the University of San Diego, predicts most firms will wait until July to adjust their seller agency commission-sharing practices. He believes the settlement’s disruptive effects on the market could be managed.
Steve Brobeck from the Consumer Federation of America anticipates two key changes in mid-August affecting both homebuyers and realtors: requiring buyer agents to obtain pre-showing signatures and ending mandatory compensation to buyer agents for MLS listings.
Brobeck expects average commission rates to decline from 5-6% to 3-4%, reflecting agent competence and workload. Some buyers may have to directly compensate agents, although sellers are likely to cover this expense initially.
In response to lower fees, real estate firms may introduce new service models and pricing structures. However, the shift towards reduced commissions is not expected to immediately impact home prices significantly.
Overall, these impending changes represent a substantial shift in how real estate transactions are conducted, with potential long-term implications for homebuyers, sellers, and industry professionals alike.
