What the National Association of Realtors' settlement means
A settlement from the National Association of Realtors is set to usher in the most sweeping reforms the U.S. real estate market has seen in a century.
A groundbreaking $418 million settlement announced Friday by the powerful National Association of Realtors is set to usher in the most sweeping reforms the American real estate market has seen in a century. It could dramatically drive down homebuyers’ costs — and push some real estate brokers out of business.
Here’s a look at how we got here and what to expect in the months ahead.
For decades, the NAR has required home sale listing brokers to provide an offer of compensation to a buyer’s agent up front. That usually comes out to about 6%, split between a seller’s broker and a buyer’s agent.
But that model has come under intensifying scrutiny from critics who have likened it to a cartel. Late last year, a jury in a Kansas City federal court found the longstanding practice to be a form of collusion that artificially inflated real estate fees, awarding a massive $1.78 billion judgment against NAR.
If the settlement announced Friday is approved by a federal court, the standard 6% commission goes away. Sellers would no longer have to make a compensation proposal to prospective buyers and their agents. Critics have said the encouraged brokers to push their clients toward more expensive properties.
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