The National Association of Realtors announced it reached an agreement to conclude litigation over home seller claims and brokerage fees earlier this month, laying the groundwork for changes in the industry.
NAR agreed to resolve antitrust litigation that accused real estate brokers of inflating sales commissions. As part of the $418 million settlement, NAR will amend old commission rules, paving the way for buyers to negotiate lower costs or not use agents at all.
Speaking with U.S. News, Steve Nicastro, a real estate agent and content lead at Clever Real Estate in Charleston, South Carolina, said he believes the ban will result in “lower commissions overall, and a change in how homebuyers use and pay their agent.”
Roger Healy, owner and CEO of Rogers Healy and Associates Real Estate, said he believes the settlement will result in a more “professional” residential real estate environment. He also expects some agents to exit the industry.
“I’ve have [sic] a hard time thinking it’s going to completely turn the industry upside down. I think that we’ll see a lot of realtors leave the industry, people who are just either stubborn or not interested in learning something new,” said Healy, per D Magazine.
Russ Anderson, president of Briggs Freeman, said he thinks the settlement will help distinguish the “professional agents from hobby agents.”
“I think the real professionals stay, and the real professionals figure out how to work with it. And I think they’re the ones that create the competition, from broker to broker,” said Anderson, according to D Magazine.
Specifically, NAR consented to prohibiting the practice of offering compensation to the buyer’s agent through multiple listing services (MLS). The group must also enter into written agreements with all clients. These agreements must disclose all fees and services before any work can commence.
The initial issue stemmed from a tactic known as “steering.” As previously reported by The Dallas Express, steering occurs when real estate agents influence buyers to purchase homes that deliver higher commissions, regardless of whether the property is best suited to the client.
In other words, steering is when agents promote a particular property, motivated by a higher payout rather than what is best for the buyer. While NAR has agreed to the settlement, the group maintains that no wrongdoing was ever committed.
“The settlement, which is subject to court approval, makes clear that NAR continues to deny any wrongdoing in connection with the [MLS] cooperative compensation model rule … that was introduced in the 1990s in response to calls from consumer protection advocates for buyer representation,” read a March 15 announcement from the Chicago-based real estate group.