Update: NAR reaches settlement in lawsuits, commissions set to change

The National Association of Realtors (NAR) has agreed to a landmark settlement in a series of lawsuits alleging conspiracy to inflate agents’ commissions, affecting the way homes are sold in the US. If approved by a federal court, NAR will pay $418mn in damages to home sellers and implement rule changes likely to slash commission fees for its 1.6mn members.

The lawsuits challenged the longstanding practice of maintaining 6% commissions on residential property sales, costing sellers thousands of dollars. The new rules will remove commission disclosure requirements on listing services, allowing buyers and sellers to negotiate reduced services or skip agents altogether, potentially cutting real estate fees by 30%.

The settlement comes after a jury awarded Missouri home sellers nearly $1.8bn in damages last year, prompting fears of a crisis in the brokerage industry. Publicly traded brokerages saw stock prices drop following the announcement, with Berkshire Hathaway’s HomeServices the remaining major player yet to reach an agreement.

Lawyers allege HomeServices’ price-fixing tactics have cost clients billions, targeting the company due to its financial strength under Warren Buffett’s leadership. With the real estate landscape set for significant changes, the industry is bracing for a new era of transparency and consumer choice.