The National Association of Realtors (NAR), a powerful organization, that has set the guidelines for home sales for decades has agreed to make several changes to its policies to settle class-action lawsuits brought by home sellers who say they were forced to pay inflated commissions to real estate agents.
The National Association of Realtors, which has roughly 1.5 million members, has agreed to pay $418 million over about four years and eliminate its rules on commissions to settle a series of lawsuits.
NAR, along with several of the nation’s largest brokerages, had been found guilty of conspiring to inflate commissions in a $1.78 billion Missouri antitrust case late last year.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. 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,” Nykia Wright, the interim CEO of NAR, said in a statement.
“Ultimately, continuing to litigate would have hurt members and their small businesses. While there could be no perfect outcome, this agreement is the best outcome we could achieve in the circumstances. It provides a path forward for our industry, which makes up nearly one-fifth of the American economy, and NAR. For over a century, NAR has protected and advanced the right to real property ownership in this country, and we remain focused on delivering on that core mission,” he added.
“The agreement would resolve claims against NAR, over one million NAR members, all state/territorial and local REALTOR associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below,” NAR said in a statement.
In addition to the damages payment, the proposed settlement also bans NAR from establishing any sort of rules that would allow a seller’s agent to set compensation for a buyer’s agent. Additionally, all fields displaying broker compensation on MLSs must be eliminated and there is a blanket ban on the requirement that agents subscribe to MLSs in the first place to offer or accept compensation for their work.
“This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals,” the release said.
Home prices will drop as commissions range from 5% to 6%
The settlement will bring significant changes to the way brokers are paid. It could dramatically lower the commission fees currently paid to realtors, which range from 5% to 6% on most homes sold in the U.S.