- SUMMARY
The National Association of Realtors (NAR) has recently settled class-action lawsuits that will significantly impact real estate transactions in the future.
The changes stem from the practice of requiring sellers to pay commissions to both the seller’s and buyer’s agents, a rule enforced by NAR.
According to Attorney Marissa Katz, this practice has created a lack of competition in the industry.
The commission rates, despite being claimed to be negotiable, have not been in practice, resulting in higher commission rates compared to other countries.
The settlement aims to address this issue by allowing buyers to pay their own agents.
While this move may initially burden homebuyers, experts believe it will lead to a more competitive marketplace and reduced commissions.
Economist project that consumers could save around $30 billion annually in commissions as a result.
However, some believe the changes could hurt homebuyers by requiring them to pay additional funds upfront for representation.
Others, like Katz, argue that buyers will have more options, such as negotiating commissions or hiring attorneys at lower costs.
The changes are significant and will have a profound impact on real estate transactions.
If you have sold a home since 2015 in certain markets, you may be entitled to a refund as part of the settlement.
The courts are expected to approve the settlement in July.
- Key Takeaways
Challenging the Established Commission Structure
The practice of requiring sellers to pay commissions to both agents, enforced by NAR, has hindered competition in the industry and resulted in higher commission rates.
Potential Benefits for Homebuyers
Allowing buyers to pay their own agents is likely to introduce more competition and reduce commissions, potentially saving consumers around $30 billion annually.
Assessing Potential Concerns
While some argue that the changes could burden homebuyers with additional upfront costs, others believe buyers may benefit from increased options and lower negotiation commissions.