Are You Owed Any of the $418 Million Settlement With Realtors as a Home Seller?

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In October, a federal jury found that the National Association of Realtors (NAR) and some big real estate brokerages were guilty of using practices that amounted to price-fixing. The jury ordered the NAR to pay damages to home sellers who were affected. Additionally, going forward, the standard sales commission no longer applies.

The penalty was originally set at $1.8 billion, but the NAR recently negotiated a lower settlement of $418 million. If you sold a home in the last four years, you might be able to get a share of this settlement. Plus, find out what big changes are in store for the industry.

Are You Eligible?

The settlement covers any homeowner who sold a property listed in a multiple listing service (MLS) after October 31, 2019. That’s a pretty wide net, which includes over 21 million home sales nationwide.

$418 million may sound like a lot, but once legal fees are accounted for, the average payout will be just over $13 each. 

If you meet the criteria, you should receive notification that you’re entitled to a payment from the settlement funds. Keep an eye out for updates from the case’s legal team, as they will provide instructions on the claims process. 

But the real significance here may lie in the changes the settlement will force on the real estate industry.

Shaking Up Commissions

The case revolved around allegations that the NAR had conspired to artificially inflate the commissions paid to real estate agents, forcing home sellers to pay excessive fees. 

Now, that’s all changing. Going forward, buyer’s agents will have to enter into written contracts with their clients, specifying the exact rate or amount of compensation. Sellers can no longer make open-ended offers through the MLS — it has to be a concrete figure.

Without the standard commission rate of 5%-6% being guaranteed, agents will have to compete more aggressively for business. This may mean commissions could fall drastically, as much as 30%.

What About Homebuyers?

Of course, commissions involve both buyers and sellers. It’s possible that the changes could place an added burden on homebuyers, especially first-time and low-income consumers. If buyers have to directly pay their agent’s fees, on top of saving for a down payment, it could make homeownership even more out of reach for some. 

The real estate industry is hoping federal rules will evolve to accommodate the new commission landscape. But in the meantime, the transition period could be a tricky one for home shoppers.

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