In late 2023, an antitrust ruling was handed down in a case filed against the National Association of Realtors (NAR). In the aftermath of that ruling, a settlement was recently reached that concerns much more than monetary damages alone. If a judge approves the settlement as expected, a number of the NAR’s rules and guidelines will be altered.
What could changes in the NAR’s procedures mean for you, you may be wondering. They could mean quite a lot if you plan to buy or sell a home in the future.
The practical effects of the settlement
It is believed that the NAR’s current approach keeps home prices artificially inflated. After the changes go into effect, agent commissions will likely drop dramatically, as they will be both more competitive and no longer set at a 6% set rate. They’ll be negotiable.
On the flip side, buyer financing may become more complicated if they’re newly expected to pay their brokers directly. At present, many broker fees are factored into mortgage financing, and that may no longer be the case. Additionally, it may be harder to find a broker at all, given that commission rate drops are likely to inspire many brokers to leave the real estate industry.
With that said buyers who are able to successfully navigate the homebuying process will likely benefit from a significant reduction in home prices, as far less of their hard-earned income will be sacrificed to pay for real estate commission fees.
As other countries average a commission rate of between 1-2%, this shift in policy and circumstances will help the U.S. to “get with the times” overall. Yet, things are bound to be a little rocky as this transition from a traditional to a contemporary model unfolds. As such, homebuyers and sellers alike may benefit from personalized legal guidance before they commit to any particular approach.
