Judge Approves $418M NAR Settlement—Buyer Commissions to be Eliminated?

In a major change to the industry, home sellers in the United States will no longer be required to offer a commission to a buyer’s agent when they sell their property, according to a settlement agreement submitted by the National Association of Realtors (NAR).

In exchange for ending a drawn-out lawsuit that has left the industry in limbo, the NAR settlement deal, worth $418 million, was approved by a federal judge this week—with a final decision set to be made in October.

At a shade under half a billion dollars, the settlement could conceivably upend the real estate industry in the United States for good, essentially eliminating all buyer commissions forever.

In the United States, a home seller pays the full commission when selling their house, typically between 5-6% of the selling price, with half of the money going to the buyer's agent.

Now, after a slew of lawsuits worth billions of dollars—not to mention significant public pressure—NAR has drawn up a deal it says "is in the best interests of all parties and class members."

Legislative changes are set to go live in July.

A spokesperson said:

"It has always been NAR’s goal to resolve this litigation in a way that preserves consumer choice and protects our members to the greatest extent possible.

"This proposed settlement achieves both of those goals and provides a path for us to move forward and continue our work to preserve, protect, and advance the right to real property for all."

Groups of home sellers brought several lawsuits against the NAR for its commission structure, saying it violates antitrust laws. Now, sellers' agents will no longer be required to offer a commission to the buyer's agent.

One potential consequence is that, with the buyer agent no longer involved, commissions will fall to reflect the fact that fewer parties are taking a cut.

However, some will argue that homebuyers will lose out because they will take on the cost of paying their broker for enabling a transaction, on top of the (already significant) outlay on the property itself.