The National Association of Realtors on Friday agreed to a landmark settlement over claims that it conspired to inflate agent commissions – a deal that will likely lower costs and upend how Americans buy and sell homes.
The powerful lobbying group will pay $418 million in the nationwide antitrust suit, which also calls for the NAR to eliminate decades-old rules on commissions and make it easier for buyers to negotiate fees with their own agents or use no agents at all.
The NAR also agreed to do away with longstanding practice that required home-sale listings to include an upfront offer which set agent fees.
The changes could spur more home sales by lowering commissions – typically between 5% and 6% – that could save buyers thousands of dollars, a needed relief for less-wealthy individuals and families struggling with inflationary pressures or being priced out of their neighborhoods.
But it may also reduce revenue for traditional real estate brokerages, and make employment less lucrative and appealing to the more than 1 million members the NAR represents.
“What needs to change is education standards to get rid of second-rate bottom feeder agents who muck everything up for the good ones who have a real passion for what they do and provide a real service,” Jarrod Randolph, CEO of real estate investment firm Vestre Partners, told The Post.
Real estate brokers earned an average $90,000 a year as of May 2022, about 50% above the national average for all jobs, according to the federal Bureau of Labor Statistics.
TD Cowen analysts expect the settlement could reduce commissions by 25% to 50%. For a typical American home, the median price of which was $417,700 in last year’s fourth quarter, that could mean a potential $12,500 of savings.
The settlement was announced 4-1/2 months after a federal jury in Kansas City, Missouri ordered the NAR and several brokerages to pay $1.78 billion in an antitrust case covering agents in that state. A judge there may triple the damages.
Several similar lawsuits have been filed around the country.
Defendants in the litigation have included HomeServices of America, part of Warren Buffett’s Berkshire Hathaway.
Anywhere Real Estate, Compass, Douglas Elliman, Keller Williams and Re/Max are among other brokerages that have been sued.
Share prices for several brokerages fell, including some by double-digit percentages, after the settlement was announced. Some homebuilders’ shares, including Lennar and Toll Brothers gained on the news.
The accord requires court approval.
With Post Wires