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A home available for sale is shown on October 16, 2023 in Austin, Texas.<\/p>\n
Brandon Bell | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
The National Association of Realtors has agreed to a landmark settlement that would eliminate real estate brokers’ long-standing automatic commissions, commonly of up to 6% of the purchase price.<\/p>\n
Instead, home buyers and sellers would be able to negotiate fees with their agents upfront. If the $418 million legal agreement is approved by a federal court, consumer advocates predict the ranks of real estate agents will thin, further driving down commission prices.<\/p>\n
“For years, anti-competitive rules in the real estate industry have financially harmed millions,” said Benjamin Brown, managing partner at the Cohen Milstein law firm and one of the settlement’s negotiators. “This settlement bring sweeping reforms that will help countless American families.”<\/p>\n
The NAR acknowledged the pending settlement in a\u00a0statement<\/a>\u00a0Friday and denied any wrongdoing.<\/p>\n “NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” said\u00a0Nykia Wright, interim CEO of NAR,\u00a0<\/strong>whose previous chief\u00a0stepped down late last year<\/a>\u00a0amid fallout from a federal lawsuit.<\/p>\n “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals,” Wright said in the statement.<\/p>\n Currently, a home seller is essentially locked into paying a brokerage fee for listing their property on a multiple listing service, or MLS \u2014 usually 5% or 6% depending on their geographic area. Upon selling, half of the fee goes to a listing agent representing the seller, while the buyer’s agent gets the other half.<\/p>\n The practice \u2014 which has become standard in the real estate industry in recent decades \u2014 led to accusations that some buyers’ agents were steering prospects toward more expensive homes.\u00a0<\/strong>In October, a federal jury found the NAR and some major brokerages liable for colluding to inflate commission fees,\u00a0ordering the trade group to pay a historic $1.78 billion in damages<\/a>.<\/p>\n “It’s a bribe,” Doug Miller, an attorney and longtime consumer advocate in the real estate industry, said of the commission-splitting arrangements. “You’re paying someone to negotiate against you. There’s no good reason for sellers to pay buyer-brokers.”<\/p>\n If the settlement is approved, brokerage commissions would be stripped from MLS sites and opened up to negotiation with sellers, among a series of other changes. Homebuyers, too, would be able to negotiate fees more easily if they choose to sign up with a broker \u2014 though experts say the new arrangement may incentivize more buyers to forgo brokers entirely.<\/p>\n The new brokerage-fee changes would begin to take effect within months of the settlement’s approval. A preliminary hearing to approve the deal is slated to take place in the coming weeks.<\/p>\n<\/div>\n<\/div>\n