Landmark Settlement Rewriting Real Estate Agent Payment Rules in the US Receives Preliminary Approval

A landmark settlement that will reshape the way real estate agents are paid in the United States has received preliminary approval from a federal judge, marking a significant shift in the industry.

The agreement, signed off by Judge Stephen R. Bough, a United States district judge, between the National Association of Realtors and home sellers who sued the organization over alleged excessive fees, is set to bring about sweeping changes in how real estate transactions are conducted. The settlement is still subject to a final court approval, expected to be granted on Nov. 22, but Judge Bough’s action in U.S. District Court for the Western District of Missouri clears the path for the implementation of the new rules by N.A.R.

The changes mandated by the settlement are anticipated to go into full effect among brokerages nationwide by Sept. 16. N.A.R. spokesperson Mantill Williams expressed the organization’s satisfaction with the preliminary approval, stating, “It has always been N.A.R.’s goal to resolve this litigation in a way that preserves consumer choice and protects our members to the greatest extent possible.”

The lawsuit that led to this settlement was initiated by home sellers in Missouri, who argued that N.A.R.’s rules on agent commissions resulted in inflated fees and stifled competition in the real estate market. By requiring commission splits between agents for the seller and buyer, N.A.R. was accused of violating antitrust laws, ultimately leading to a near 6 percent industrywide standard commission.

Real estate agents are bracing for the impact of these changes, with concerns about the potential decrease in commissions and ambiguity about future payment structures. The settlement also comes at a time when the Justice Department has reopened its investigation into the practices of the real estate trade group, signaling a broader scrutiny of broker commissions and listing marketing strategies.

Overall, the approval of this groundbreaking settlement is seen as a step towards bringing about much-needed change in the real estate industry, potentially resulting in billions of dollars in savings for homeowners. Homeowners who sold their properties in the last seven years may be eligible for compensation as part of the class-action payout, with the deadline for filing claims set for May 9, 2025. The implications of this settlement are far-reaching and are poised to significantly impact the way homes are bought and sold in the country.