Settlement in US Estate Agents Case Could Reduce Buying and Selling Costs

US Estate Agents Settle Lawsuits, Resulting in Potential Reduction in House Buying Costs

In a landmark settlement that could lead to a decrease in the cost of buying and selling houses in the United States, the National Association of Realtors (NAR) and property companies have agreed to lower commissions and make it easier for buyers to negotiate fees.

The $418 million settlement was announced on Friday, following accusations that the NAR and property companies had artificially inflated sales commissions. This move is expected to increase competition in the US housing market, where a 6% commission on the sale price is considered standard.

At the median US house price of $417,700, the standard commission works out to just over $25,000, a cost that is often passed on to the buyer. The settlement aims to provide more freedom for buyers to negotiate lower commission rates or flat-price fees on sales.

The NAR, headquartered in Chicago, says around 1 million of its members are covered by the settlement, which is subject to final court approval. The association’s property database, the multiple listing service (MLS), required home sellers to offer a non-negotiable commission rate before listing their properties. Without this requirement, buyers will have more flexibility to negotiate fees.

NAR interim chief executive Nykia Wright stated, “NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers.” The settlement, set to take effect in July, does not require the NAR and property companies to admit wrongdoing.

Despite this significant change in the real estate industry, attorney Robert Braun, representing homebuyers in class-action cases against estate agents, cautioned that the settlement’s impact on housing prices remains to be seen. The settlement also did not resolve other lawsuits against property companies or a potential federal investigation into the NAR.

Similar legal action is being taken against estate agents in Canada over buying and selling fees, highlighting the broader implications of this settlement on the real estate market.