NAR settlement may mean commission rebates if you recently sold your home

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Published Date 3/25/2024

NPR’s Scott Horsley reports that within the new National Association of Realtors settlement is an agreement for them to pay $418 million over the next four years in addition to the $210 million various brokerage firms had already agreed to pay.

While lawyers will get a windfall from that, the rest will go to people who sold their homes in recent years and paid what critics argue were inflated real estate commissions.

“Eligibility depends on where you live,” says Horsley. “But in some parts of the country the settlement covers people who sold homes as much as a decade ago.” He goes on to quote one of the attorneys involved in the settlement, who says that while they don’t yet know the exact number, they estimate it to be in the neighborhood of 40 or 50 million people. Sellers can check on their status by going to the lawyers’ website at www.realestatecommissionlitigation.com.

Beginning in July, a home priced at the national average of $400k, whose commission might have paid out at $20-24k in the past, is now up for negotiation. Advocates say this big change should lead to more bargaining, more competition, and ultimately lower costs. Horsley likens it to what now exists in other markets like stock brokers and travel agents. Instead of the automatic 5-6% a seller would shell out to compensate both seller and buyer agents, they can now try to negotiate a flat fee to market their house that is not connected to the selling price.

Buyers can opt to purchase a la carte services — perhaps paying less if they do their own online house hunts but offering a fee to an agent to represent them and/or chauffeur them around to see homes for sale. But you can, however, bet that real estate companies will begin selling the value of representation by emphasizing the legal aspects of going it alone when it comes to negotiating, contracts, and disclosures, all of which can come back to bite an uninformed buyer in a place no one likes to talk about.

While agents are still sorting out what all this means for their business, the most effective agents (those who have illustrious track records) feel they can prove their services superior to others.

Horsley quotes a Nashville-based agent who says, “Do I think that Realtors have to learn to do business in a different way? Absolutely. But I also think this is a wrinkle in the landscape. Not a landmine.” Horsley says that while the commission pie is likely to shrink, it may simply be cut into fewer slices, with the remaining agents making the same amount of money.

What will happen to the many real estate storefronts that exist all over the country? No one yet knows if they can survive. As for the era of celebrity real estate agents, according to The Hollywood Reporter, many remain confident that their services will continue to be highly valued, especially by high-net-worth individuals when selling luxury properties.

Austin, TX-based agent Douglas Elliman told The Washington Post, “It does put the emphasis on what we always felt was most important: You have to be showing value to your clients, and you have to be providing exceptional service and communication constantly. And nobody should be paying for a service if they don’t feel that there’s value there.”

NPR, TheHollywoodReporter, TheWashingtonPost, TBWS

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