Real estate industry explodes after proposed NAR settlement
The agreement changes transparency for homebuyers; local experts see little change coming, say bigger issues remain with supply, cost of construction
NORTH COUNTY — A thunderbolt struck the real estate industry on Friday after news broke of the National Association of Realtors settling a long-running legal dispute over commission disclosures.
According to the Associated Press, NAR settled for $418 million to resolve several federal lawsuits claiming NAR’s rule forced people to pay inflated costs to sell their homes. The basis of the lawsuits claimed the NAR’s rules governing home sales on the Multiple Listing Services (MLS) increased agent commissions and incentivized agents representing buyers to avoid showing their clients listings where a seller’s broker was offering a lower commission to the buyer’s agent, the AP reported.
The settlement is subject to court approval, the NAR said in a statement, and the new rules are set to go into effect in mid-July.
The tentative agreement also resolves claims against NAR, over one million NAR members, all state and territorial and local Realtor associations, all association-owned MLSs, and all brokerages with an NAR member as principal that had a residential transaction volume in 2022 of $2 billion or below, according to NAR.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” Nykia Wright, interim chief executive officer of NAR, said in the 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.”
Typically, agents split between 5% to 6% for the commission, which is paid by the seller. However, California law allows for a “dual agent” where a Realtor can represent both the buyer and seller.
The $418 million will help compensate home sellers across the country, and the settlement saw the NAR agreeing to no longer require a broker advertising a home for sale on MLS to offer any upfront compensation to a buyer’s agent.
It also allows for home sellers to negotiate offers with a buyer’s agent outside of the MLS, although a seller’s broker has to disclose any compensation agreements, the AP reported. Also, the NAR agreed to require agents or others working with a buyer to enter into a written contract so the buyer knows what an agent will charge.
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