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- By Mike Wendling
- BBC News in Chicago
Image source, fake images
A settlement in a case against US real estate agents could mean a reduction in the cost of buying and selling homes.
The National Association of Realtors (NAR) and real estate companies were accused of artificially inflating sales commissions in a series of lawsuits.
A settlement including $418m (£328m) in damages was announced on Friday.
The NAR agreed to reduce commissions and make it easier for buyers to negotiate rates, measures that could eventually result in lower buying and selling costs.
The deal is expected to increase competition in the US real estate market, where a 6% commission on the sales price is considered standard.
At the average US home price of $417,700 (£328,000), the standard fee is just over $25,000, a cost that is often passed on in whole or in part to the buyer.
In November 2023, a federal jury in Missouri ordered the NAR and the brokerage firms to pay $1.78 billion (£1.4 billion). Under U.S. antitrust law, a judge could have tripled those damages. That case ultimately led to the settlement announced Friday.
The Chicago-based NAR says about one million of its members are covered by the agreement, which is subject to final court approval.
The association manages a property database called the multiple listing service, or MLS, and requires home sellers to offer a non-negotiable commission rate before listing their properties.
Without that requirement, buyers will have more freedom to negotiate lower commission rates or flat fees on sales. The agreement also includes other provisions that have the potential to reduce transaction costs.
“NAR has worked hard for years to resolve this litigation in a way that benefits our members and American consumers,” NAR Acting Executive Director Nykia Wright said in a statement. “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This agreement achieves both goals.”
Under the terms of the agreement, which will take effect in July, the NAR and real estate companies are not required to admit wrongdoing.
Robert Braun, a Chicago-based attorney who represents home buyers in two class-action cases against real estate agents, called this “a big change from the old rules.”
“But whether this will actually change prices in the real estate market remains to be seen,” Braun said in an email.
The settlement did not resolve other lawsuits against real estate companies or a possible federal investigation into the NAR. Real estate agents in Canada also face similar legal action over buying and selling fees.