- Written by Mike Wendling
- BBC News Chicago
image source, Getty Images
A settlement in a lawsuit against a U.S. real estate agent could mean lower costs for buying and selling homes.
The National Association of Realtors (NAR) and real estate companies have been accused of artificially inflating sales commissions in a series of lawsuits.
A settlement was announced on Friday, including damages of $418m (£328m).
NAR has agreed to lower fees and make it easier for buyers to negotiate fees, which could ultimately lead to lower buying and selling costs.
The settlement is expected to increase competition in the U.S. housing market, where commissions of 6% of the sales price are considered the norm.
With a median home price in the US of $417,700 (£328,000), the standard fee equates to just over $25,000, and in many cases all or part of the cost is passed on to the buyer. will be done.
In November 2023, a federal jury in Missouri ordered NAR and the brokerage firm to pay $1.78 billion (£1.4 billion). Under U.S. antitrust law, these damages could be tripled by a judge. The lawsuit ultimately led to a settlement announced Friday.
The Chicago-based NAR said its approximately 1 million members are covered by the settlement, which requires final court approval.
The association operates a real estate database called the Multiple Listing Service (MLS) and requires home sellers to offer non-negotiable commission rates before their properties are listed.
Without this requirement, buyers would have more freedom to negotiate lower sales commissions and flat fees. The proposed settlement also includes other provisions that could lower transaction costs.
“NAR has worked for many years to resolve this litigation in the best interest of our members and U.S. consumers,” NAR Interim CEO Nikia Wright said in a statement. “It has always been our goal to preserve consumer choice and protect our members as much as possible, and this settlement accomplishes both of those goals.”
Under the terms of the settlement, which takes effect in July, NAR and the real estate company do not have to admit wrongdoing.
Robert Brown, a Chicago-based attorney who represents homebuyers in two class-action lawsuits against real estate agents, called it “a big change from the old normal.”
“However, it remains to be seen whether this will actually change prices in the housing market,” Brown said in an email.
The settlement did not resolve numerous other lawsuits against real estate companies or a possible federal investigation into NAR. Canadian real estate agents are facing similar lawsuits over sales commissions.
