“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” said Nykia Wright, interim CEO of NAR, in a statement. The NAR had pledged to appeal the case, but other brokerages settled - and, eventually, so did the NAR, on Friday. Because it was an antitrust case, the NAR was potentially on the hook for triple those damages - $5.4 billion. In November, a federal jury in Missouri found the NAR and two brokerages liable for $1.8 billion in damages for conspiring to keep agent commissions artificially high. “While the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost,” said Kevin Sears, president of the NAR, in a statement. That fee could fall by between $6,000 and $12,000, according to TD Cowen Insights’ analysis. Those costs are passed on to the buyer, boosting the price of homes in America. Homebuilder stocks rose Friday midday on the news: Lennar shares gained 2.6%, PulteGroup shares added 1.1% and Toll Brothers shares added 1%.įor the average-priced American home for sale - $417,000 - sellers are paying more than $25,000 in brokerage fees. This will open up opportunities for alternative models of selling real estate that already exist but don’t have much market share, including flat-fee and discount brokerages. The agreement effectively will destroy the current homebuying and selling business model, in which sellers pay both their broker and a buyer’s broker, which critics say have driven housing prices artificially higher.īy some estimates, real estate commissions are expected to fall 25% to 50%, according to TD Cowen Insights. Another new rule will require buyers’ brokers to enter into written agreements with their buyers. Another ends requirements that brokers subscribe to multiple listing services - many of which are owned by NAR subsidiaries - where homes are given a wide viewing in a local market. One prohibits agents’ compensation from being included on listings placed on local centralized listing portals known as multiple listing services, which critics say led brokers to push more expensive properties on customers. The NAR, which represents more than 1 million Realtors, also agreed to put in place a set of new rules. In a sweeping move expected to dramatically reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers, agreeing to end landmark antitrust lawsuits by paying $418 million in damages and eliminating rules on commissions. The 6% commission, a standard in home purchase transactions, is no more.
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