Major Shake-Up in US Real Estate Industry: NAR Settlement Ends Rules on Commissions
In a groundbreaking development that is set to reshape the landscape of the US home buying and selling industry, the National Association of Realtors (NAR) has reached a historic settlement with home sellers, marking the end of landmark antitrust lawsuits and ushering in major changes to the traditional commission-based model.
The $418 million settlement, which was announced late on Friday, will eliminate rules on commissions that have long been criticized for artificially inflating housing prices. The agreement is expected to significantly impact the $100 billion a year in fees, commissions, and charges involved in buying and selling houses across America.
With early estimates suggesting that US home buyers and sellers could save upwards of $30 billion annually in commissions as the market adjusts to new fee structures, the ripple effects of this seismic shift are expected to be felt far and wide. This reduction in selling costs by 25% to 50% is likely to attract more buyers and sellers into the market, potentially rejuvenating a sector that experienced a slowdown in 2023.
The NAR, representing over 1 million real estate agents in the US, has agreed to implement new rules that will prohibit agents’ compensation from being included on listings and end requirements for brokers to subscribe to multiple listing services. This move could lead to a stratification of agents into different tiers, similar to online discount brokers in the share markets.
As a result of these changes, shares of online real estate companies have plummeted, while leading US home builders have seen modest gains as analysts anticipate a resurgence in demand for their properties. However, the restructuring will also put pressure on real estate agents, companies, banks, and other funding groups as they adjust to lower commissions and revenue.
Overall, this transformation signifies a significant shift in the US real estate industry, with far-reaching implications for various stakeholders. The future of home buying and selling in America will undoubtedly be shaped by this landmark settlement, as the industry adapts to a new era of reduced costs and increased competition.
