{"id":11070,"date":"2024-03-16T12:58:09","date_gmt":"2024-03-16T12:58:09","guid":{"rendered":"https:\/\/imsfund.com\/?p=11070"},"modified":"2024-03-16T12:58:09","modified_gmt":"2024-03-16T12:58:09","slug":"the-nar-will-eliminate-6-commission-standards-and-pay-418-million-in-damages-after-settling-lawsuit","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2024\/03\/16\/the-nar-will-eliminate-6-commission-standards-and-pay-418-million-in-damages-after-settling-lawsuit\/","title":{"rendered":"The NAR Will Eliminate 6% Commission Standards and Pay $418 Million in Damages After Settling Lawsuit"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div id=\"post-content\" :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n<button x-on:click=\"open = !open\" class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<p class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/p>\n<p><\/button><\/p>\n<\/section>\n<p><span data-preserver-spaces=\"true\">The National Association of Realtors (NAR) announced Friday that it finally reached a settlement with homeowner groups that had been embroiled in lawsuits with the association since 2019. The $418 million settlement effectively ends the current NAR broker commission model, which the homeowners\u2019 claimants alleged forced them to pay excessive commission fees.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If a federal court approves the landmark case\u2019s outcome, as expected, it could give the housing market its biggest shake-up yet. The commission rule changes the NAR has agreed to could restructure the entire process of buying and selling real estate and could also deliver potential home price declines across the country.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Here are the changes at a glance and what they could mean for investors and agents alike.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The End of the 6% Commission-Sharing Structure<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">The most sweeping change introduced by the settlement is the elimination of the current NAR commission-sharing structure.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Here\u2019s how it\u2019s always worked: Real estate agents who are Realtors are required to offer a share of commission with the buyer\u2019s agent in a transaction, if present. Given the NAR\u2019s dominance on agent designations throughout the United States, this effectively created an industry-standard commission, thus violating antitrust laws, as the plaintiffs alleged.\u00a0<\/span><\/p>\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.nar.realtor\/sites\/default\/files\/documents\/how-real-estate-commissions-work-2023-10-18.pdf\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">NAR guidelines<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0clearly state that the commission rate is negotiable and that \u201ccommission rates are set by the market.\u201d But in practice, commission rates are always set by listing agents and almost always at a rate of 5% to 6%. For homes selling for $400,000, this can amount to a commission payout of $24,000.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Because the sellers pay the commissions, the key argument is that it inflates the prices of homes to make up for it. Seemingly, now that the settlement has gone through, we could very well see a reduction in home prices.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Ultimately, listing agents will no longer be required to offer commission to buyer agents, which will bring more competition amongst agents as sellers search for the lowest commission offerings.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">It\u2019s anyone\u2019s guess how much commission real estate agents will now charge, but\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nytimes.com\/2024\/03\/15\/realestate\/national-association-realtors-commission-settlement.html\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">some economists<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0think that we will see a reduction of up to 30%.<\/span><\/p>\n<div class=\"justify-center \" x-data=\"{ IabAdad_block_: popAd(['r720x90'], '1') }\" :class=\"IabAdad_block_.linkURL ? 'flex pt-8' : 'hidden'\">\n<a x-show=\"https:\/\/www.biggerpockets.com\/blog\/IabAdad_block_.linkURL\" x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/national-association-of-realtors-to-pay-418-million-and-remove-commission-standards-as-part-of-settlement', IabAdad_block_.sponsor, IabAdad_block_.title, IabAdad_block_.id, 'blockAdClicked', 'blockAd', 'postContent')\" target=\"_blank\" x-init=\"&#10;      analytics.track('blockAdLoaded', {&#10;        referrer: 'https:\/\/www.biggerpockets.com\/blog\/national-association-of-realtors-to-pay-418-million-and-remove-commission-standards-as-part-of-settlement',&#10;        sponsor: IabAdad_block_.sponsor,&#10;        ad_title: IabAdad_block_.title,&#10;        ad_page_location: 'postContent'&#10;      })&#10;    \" x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/national-association-of-realtors-to-pay-418-million-and-remove-commission-standards-as-part-of-settlement', IabAdad_block_.sponsor, IabAdad_block_.title, IabAdad_block_.id, 'blockAdViewed', 'blockAd', 'postContent')\" rel=\"noopener\"><\/p>\n<div class=\" hidden sm:block\">\n<img class=\"m-0\" :src=\"https:\/\/www.biggerpockets.com\/blog\/IabAdad_block_.r720x90\" :alt=\"IabAdad_block_.r720x90Alt\"\/>\n<\/div>\n<div class=\"block sm:hidden\">\n<img class=\"m-0\" :src=\"https:\/\/www.biggerpockets.com\/blog\/IabAdad_block_.r320x50\" :alt=\"IabAdad_block_.r320x50Alt\"\/>\n<\/div>\n<p><\/a>\n<\/div>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The End of the MLS Subscription Requirement\u00a0<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">This brings us to the second sweeping change introduced by the ruling: Real estate agents will no longer be required to sign up for their regional\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-the-mls\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Multiple Listing Service<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0(MLS). The MLS itself will no longer include any information about the commission offered on a sale. This change would end the practice of \u201csteering,\u201d where buyer agents select properties that are more expensive and pay a higher commission. In addition, the new rules abolish the requirement that Realtors subscribe to an MLS in order to perform their services.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">This doesn\u2019t mean that real estate investors will no longer need to have relationships with local agents. Agents will compile their own databases of homes for sale\u2014which still will be an important resource for investors, and which agents will likely still charge for. But with the element of open competition thrown into the process, it\u2019s also likely that agents will work harder to scout out properties they know buyers and investors will want to buy.\u00a0\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">One question that remains unanswered is how all these new broker-buyer relationships will be regulated, if at all. The NAR settlement will require any MLS-subscribing broker to enter into a written agreement with a buyer so that they \u201cunderstand exactly what services and value will be provided, and for how much.\u201d We can only speculate whether buyer-broker agreements will become the norm where there is no MLS access involved.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Kevin Sears, NAR president, said in a\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nar.realtor\/newsroom\/nar-reaches-agreement-to-resolve-nationwide-claims-brought-by-home-sellers\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">statement<\/span><\/a><span data-preserver-spaces=\"true\">: \u201cNAR exists to serve our members and American consumers, and while the settlement comes at a significant cost, we believe the benefits it will provide to our industry are worth that cost.\u201d\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">These changes, if approved by the federal court, will come into effect in July 2024.<\/span><\/p>\n<div id=\"visibility-group-block_64dd561cede13\" class=\"visibility-group  hidden\">\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n<div class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 lg:w-1\/2 \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find an Agent in Minutes<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Match with an investor-friendly agent who can help you find, analyze, and close your next deal.<\/p>\n<p><\/main>\n<\/div>\n<div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n<img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/bpimg.biggerpockets.com\/https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.png\" alt=\"find an investment-friendly real estate agent\" title=\"The NAR Will Eliminate 6% Commission Standards and Pay $418 Million in Damages After Settling Lawsuit 2\"\/>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-group__inner-container\">\n<div class=\"wp-block-group__inner-container\">\n<div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n<div class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 w-full \">\n<main class=\"py-4\"><\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n<p><\/main>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/national-association-of-realtors-to-pay-418-million-and-remove-commission-standards-as-part-of-settlement\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article The National Association of Realtors (NAR) announced Friday that it finally reached a settlement with homeowner groups that had been embroiled in lawsuits with the association since 2019. The $418 million settlement effectively ends the current NAR broker commission model, which the homeowners\u2019 claimants alleged forced them to pay excessive commission fees.\u00a0 [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":11071,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/for-sale-sign-in-front-of-house-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-11070","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/11070","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=11070"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/11070\/revisions"}],"predecessor-version":[{"id":11072,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/11070\/revisions\/11072"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/11071"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=11070"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=11070"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=11070"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}