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The real estate industry sees a milestone settlement

On Behalf of | Apr 24, 2024 | REAL ESTATE LAW

The National Association of Realtors (NAR) recently settled a national lawsuit that arose from claims that the industry has been conspiring to maintain high commission rates for agents. The $418 million settlement aims to give home buyers more leverage to negotiate with their agents. It could encourage them to navigate the process without agents, potentially reducing commission rates and impacting the number of working agents. Generally speaking, it promises to substantially change how Americans buy and sell homes.

The Heart of the settlement

The changes include:

  • Buyers will have a better chance to negotiate fees directly with their agents.
  • NAR will stop enforcing rules that require listing offers to state the commission for buyers’ agents.
  • With the potential for buyers to skip using agents or to negotiate lower fees, some agents could be driven out of the industry.

Potential Effects on home sales

The implications of this settlement are vast:

  • Shift in control: Sellers used to set the commission for buyers’ agents, but that’s changing.
  • Consumer savings: Buyers may now save on commissions, which have been higher in the U.S. than in most countries.
  • Class action payout: The settlement funds will go to recent home sellers, potentially affecting around 50 million people.

New challenges and opportunities

The real estate industry must navigate through this new landscape. Industry experts anticipate that the industry will be more open to technological disruptions, which have previously reduced fees in other sectors. Moreover, real estate agents will need to establish clear agreements with clients regarding their services and fees. There could also be fewer buyers using agents.

A new era for home buying

This landmark agreement marks a pivotal moment in real estate. It offers a fresh set of challenges and opportunities, not just for agents and the NAR but also for home buyers and sellers. As the industry adapts to these changes, the traditional ways of buying and selling homes will evolve, leading to more cost-effective and transparent transactions. Because of these changes and others to come, it will be crucial to work with a real estate law attorney to better understand the new transaction process and related costs.