The National Association of Realtors (NAR) said it has settled a lawsuit after being accused by homebuyers and the Justice Department of conducting anti-competitive practices involving real estate commissions.
As part of the settlement, the NAR is changing its policies involving commissions, which could eliminate the standard 5%-6% fee typically tacked onto a housing transaction. That fee is generally paid by the seller.
These commissions can be quite costly for sellers. A person selling a $500,000 home would expect to pay at least $25,000 toward commissions.
The Justice Department said multiple listing services have been prohibited by NAR rules from disclosing to prospective buyers the commission an agent will earn if the buyer purchases a home listed on the MLS.
The NAR has contended that agent commissions are negotiable and competitive, a claim the Justice Department has disputed inlegal filings.
As part of the settlement, the NAR does not admit to any wrongdoing but will have to pay $418 million over approximately four years.
The NAR is also agreeing to enact a new rule requiring Realtors to enter into written agreements with their buyers. These agreements will provide upfront pricing and services for buyers, the NAR said.
These new rules are expected to be in place in July.
“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,” said Nykia Wright, interim CEO of the NAR.
The NAR said the new rules will preserve consumer choice.
The settlement still needs approval in federal court. It comes after years of legal battles between Realtors and the federal government.
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