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IPFS News Link • Housing

Realtor Group Settles Lawsuits By Slashing Commissions, Risks Mass Exodus Of Agents

•, by Tyler Durden

For those bartenders who became realtors over the past decade, attracted to the fast and easy money during multiple real estate booms fueled by historically low mortgage rates, there's concerning news out on Friday: Commissions are expected to drop following the National Association of Realtors' decision to settle a lawsuit regarding its commission rules

On Friday, the National Association of Realtors announced an agreement to end litigation of claims brought on behalf of home sellers related to broker commissions. This means the group would pay $418 million in damages and amend the rules that housing experts say will drive down the cost of homeownership. In other words, the standard 6 percent sales commission is gone.

"The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the Multiple Listing Service (MLS) cooperative compensation model rule (MLS Model Rule) that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation. Under the terms of the agreement, NAR would pay $418 million over approximately four years," NAR wrote in a press release. 

"NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers. It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals," said Nykia Wright, Interim CEO of NAR.

NAR, the trade group that represents real estate agents and has more than 1.5 million members, agreed to introduce a new MLS rule that will prohibit offers of broker compensation on MLS. Another new rule would require MLS users to enter into written agreements with their buyers. 

"We believe the potential changes would likely accelerate commission pressure on buyer agents and could support overall commission rates around a home transaction trending lower in the near term," William Blair analyst Stephen Sheldon wrote in a note. 

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