National Association of Realtors Settles Allegations, Changes Commission Rules
The National Association of Realtors (NAR) has announced significant changes to its commission rules in order to settle nationwide allegations of stifling competition. This move could potentially reduce costs for consumers and mark a major shift in the housing market.
Currently, sellers typically pay a 5% to 6% commission when selling their homes, with half going to the listing agent’s brokerage and half to the buyer agent’s brokerage. Critics argue that this model keeps commission rates artificially high and reduces competition. The settlement, which still requires court approval, could upend this practice.
Stephen Brobeck from the Consumer Federation of America believes that this settlement will benefit both home sellers and buyers by eventually lowering agent commissions and aligning compensation with services rendered.
Under the existing Realtor rule, listing agents must offer compensation to the buyer’s broker to list homes on NAR-affiliated multiple listing services. The settlement will prohibit these offers of compensation on affiliated multiple listing services, potentially injecting more competition into the process and opening up new ways of payment that could lower costs.
While some real estate agents may be concerned about the potential impact on their pay, others like Michael Khorshidi see it as an opportunity to demonstrate their value to clients. The settlement could also lead to a system where buyers pay their agents directly, potentially reducing costs in the long run.
Overall, the changes brought about by this settlement could have a significant impact on the real estate market, potentially leading to lower home prices and increased supply. However, some, like real estate agent Michael Copeland, believe that sellers may still choose to cover both commissions to attract buyers.
The real estate industry is facing a period of transition, and the outcome of this settlement could reshape how commissions are handled in the future.