Washington, DC — The 6% commission, a standard in home purchase transactions, is no more.
In a sweeping move expected to reduce the cost of buying and selling a home, the National Association of Realtors announced Friday a settlement with groups of homesellers of landmark antitrust lawsuits by agreeing to pay $418 million in damages and eliminating rules on commissions.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” said Nykia Wright, interim CEO of NAR, in a statement. “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.”
In November, a federal jury in Missouri found the NAR and two brokerages liable for $1.8 billion in damages for conspiring to keep agent commissions artificially high. The NAR had pledged to appeal the case, but other brokerages settled — and, eventually, so did the NAR on Friday.
NAR had required homesellers to pay a set 6% commission that is typically split evenly between the seller’s agent and the buyer’s agent. Although the NAR said the commission was negotiable and helped make housing more affordable for buyers, critics have long argued that the fees were effectively set and made housing more expensive.
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Homesellers bringing lawsuits have argued that in a competitive market, the cost of the buyer’s agent’s commission should be paid by the buyer who received the service, not by the seller. The sellers who brought the lawsuit against the NAR and the brokerages said that buyers should be able to negotiate the fee with their agent, and that the sellers should not be on the hook for paying it.
This settlement, which is subject to a judge’s approval, opens the door to a more competitive housing market. Realtors could now compete on commissions, allowing for prospective buyers to shop around on rates before they commit to buying a home.
Although most realtors are included in the settlement, agents affiliated with the brokerage HomeServices of America continue to fight the case in court and will maintain their 6% commission, the NAR said.
This is a developing story and will be updated.
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