The National Association of Realtors (NAR) has reached a significant settlement to address antitrust litigation accusing brokerages of inflating sales commissions, potentially bringing about substantial changes and cost reductions for homebuyers and sellers. 

The $418 million settlement announced on Friday mandates the NAR to abolish long-standing rules governing commissions, facilitating buyers to negotiate fees with their agents or opt for agent-free transactions, Reuters reported.

Following a federal jury's verdict in Kansas City, Missouri, ordering the NAR and several brokerages to pay $1.78 billion in an antitrust case, which a judge could have tripled, there was this settlement. 

Similar lawsuits have been filed across the country, involving major brokerages like HomeServices of America, Compass, Douglas Elliman, Keller Williams, and Re/Max.

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How Will It Impact The Real Estate Industry?

The settlement, subject to court approval, is seen as a game-changer for the real estate industry, potentially fostering increased price competition. 

These modifications are expected to lower typical commissions significantly, potentially saving homebuyers thousands of dollars. The move particularly benefits individuals and families facing inflationary pressures or struggling to afford homes in their desired neighborhoods.  

Stephen Brobek, a senior fellow at the Consumer Federation of America, views the elimination of sellers paying fees to both their and the buyers' agents as a significant development. 

This landmark settlement could slash the standard 6% sales commission fee for realtors, leading to substantial savings for homeowners. 

Analysts suggest that the earnings of the 1.6 million real estate agents in the U.S. could be significantly impacted, with the annual commission pool potentially shrinking by about one-third, per CBS News. Estate agents were accused of encouraging customers to choose residences with larger commissions. 

Additionally, as part of the settlement, the NAR will pay $418 million over approximately four years. Another notable provision is a new NAR rule requiring MLS participants working with buyers to enter into written agreements with them, emphasizing transparency regarding services and fees. 

NAR President Kevin Sears acknowledged that there will be an adjustment period, "but the fundamentals will remain: buyers and sellers will continue to have many choices when deciding to buy or sell a home, and NAR members will continue to use their skill, care, and diligence to protect the interests of their clients," per USA Today. 

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