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The National Association of Realtors has agreed to pay $418 million over about four years to settle a series of collusion lawsuits within the real estate industry aimed at keeping agent commissions artificially high, it said Friday.
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In addition to paying $418 million in damages, the NAR will review multiple regulations in a move that is expected to result in a substantial drop in the cost of selling a home. As part of the settlement, which is subject to court approval, the real estate trade group agreed to abandon any rules that would allow the seller's agent to set compensation for the buyer's agent.
In essence, the deal, if approved by a federal court, means listings of homes for sale in much of the U.S. would no longer include initial offers to buyers' agents starting in mid-July, which which would allow buyers the opportunity to negotiate compensation directly with their agents beforehand.
HousingWire reported late last year that NAR, HomeServices of America and Keller Williams were found guilty of conspiring to inflate commission rates in a verdict reached by a jury in Kansas City, Missouri.
“Compensation offers help make professional representation more accessible, reduce costs for home buyers to obtain these services, increase fair housing opportunities, and increase the pool of potential buyers for sellers,” the NAR said, which has more than 1.5 million members, in a statement.
In a note to clients, Stephens analyst John Campbell believes real estate services company CoStar Group (CSGP) will benefit the most from the NAR deal, as will Zillow (ZG) going forward.
“The deal would likely separate agent commissions, forcing potential buyers to have to pay their own agents out of pocket,” he wrote.
