A federal judge has granted preliminary approval to a $418 million antitrust settlement by the National Association of Realtors, with a final approval hearing set for November 26. The settlement is expected to overhaul the current real estate business model in the United States, where home sellers typically pay a 5% or 6% commission shared between the seller’s agent and the buyer’s agent. Critics argue that this practice inflates housing prices and limits consumer choice.
The settlement comes following lawsuits brought by groups of home sellers against the NAR for its standard commission structure, which they claimed violated antitrust laws. Under the terms of the settlement announced in March, sellers’ agents will no longer be required to offer commissions to buyers’ agents. While the traditional 6% commission may not explicitly end, commissions are expected to become more competitive and negotiable, potentially resulting in lower costs for sellers.
Housing experts believe that the changes introduced by the settlement could lead to increased costs for homebuyers, who may now have to pay their broker directly if sellers are no longer covering buyers’ agent commissions. The NAR argues that the settlement is in the best interests of all parties and class members, emphasizing that it aims to preserve consumer choice and protect its members while moving forward to advance the right to real property for all. The changes are scheduled to take effect in late July, but the anticipation of the rule change has already influenced how some Americans are approaching buying and selling homes.
One example is a home seller in Minnesota, Matt Hanley, who plans to list his home this spring offering a 0% commission to the buyer’s agent. This strategic move is intended to force potential buyers to negotiate their agents’ commission independently, reflecting a shift in the industry spurred by the impending changes brought about by the settlement. The NAR spokesperson expressed satisfaction at the preliminary approval of the settlement, stating that it achieves the goals of resolving the litigation in a way that preserves consumer choice and protects their members to the greatest extent possible.
Despite concerns that the settlement may disrupt the traditional real estate business model and lead to increased costs for homebuyers, the NAR is confident that the proposed changes will benefit all parties involved. As the real estate industry prepares for the implementation of the settlement in late July, the landscape of buying and selling homes in the United States is likely to undergo significant transformation. With the final approval hearing scheduled for November, the full impact of the settlement on the housing market and consumer behavior remains to be seen.
