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- Proposed commission lawsuit settlement: NAR to implement changes and pay $418M
Proposed commission lawsuit settlement: NAR to implement changes and pay $418M
A few real estate stocks took a hit following the news. Zillow's stock fell 13%
Lance Lambert
March 15, 2024
On Friday, The National Association of REALTORS (NAR) reached an agreed settlement in the commission lawsuit. The proposed settlement, which is still subject to court approval, involves a payment of $418 million in damages and amendments to several rules.
The lawsuit, which centered on complaints alleging that the trade group had violated antitrust laws by requiring sellers to pay a buyer’s agent, has the potential to significantly impact the landscape of real estate transactions. In particular, it threatens the "standard" 6% commission typically charged on home sales, a figure that has faced scrutiny for its perceived lack of flexibility and fairness (note: even before this lawsuit, not every deal had a 6% commission).
According to NAR, as part of the agreement, “NAR has agreed to put in place a new MLS rule prohibiting offers of broker compensation on the MLS. This would mean that offers of broker compensation could not be communicated via the MLS, but they could continue to be an option consumers can pursue off-MLS through negotiation and consultation with real estate professionals.”
On a net basis, it's anticipated that this proposed agreement, along with other suits still navigating through the legal system, could result in a net decrease in commissions. While it may benefit some home sellers by reducing the number who pay the buyers' agent, it could also pose challenges for homebuyers who may need to navigate paying for their agent or opt for no representation.
AI generated image by ResiClub
A few real estate stocks took a hit following the news. On the day, Compass stock fell -14.3%, Zillow fell -13.5%, Anywhere Real Estate fell -11.7%, eXp fell -9.9%, and Redfin fell -4.9%.
Big picture: It will take time to see exactly how these NAR settlements, along with outstanding lawsuits, will reshape the industry.
Due to the breaking NAR news, ResiClub PRO members will get the updated Lance Lambert House Price Tracker tomorrow instead of today.
Below is some commentary on the NAR news shared on X.com (formerly Twitter) by real estate professionals.
Sharing this doesn't mean ResiClub endorses the commentary below, instead we’re just showing you how the industry is reacting online today.
Buyers are about to get fleeced.
Sellers can opt to pay nothing to the buyer agent - making the buyer foot the bill.
Buyers will forgo representation and get hosed by the listing agent.
In the end, it’s just shuffling line items.
— Daniel Morris (@dpmorris84)
5:11 PM • Mar 15, 2024
My hot take on the NAR settlement is that we will see a lot of mortgage brokers jumping in to offer buyer "agent" services.
They still have a clear path to getting paid if a buyer performs and are hungry & hurting.
I also expect a lot more litigation.
— Ski Town Broker (@SkiTownRE)
6:46 PM • Mar 15, 2024
@nardotrealtor It’s a hot mess out there with guesses. Firms will start giving guidance to agents, lenders will give guidance to buyers, and there is no way to know right now exactly how it will shake out.
— Connie ☮️ (@msconniegrace)
6:36 PM • Mar 15, 2024
What is changing is simply this: sellers and their agents can no longer say ahead of time via the MLS that they are willing to pay X percent toward a buyer’s agent commission.
— Lilly Rockwell (@LillyRockwell)
4:41 PM • Mar 15, 2024
Opendoor CEO Carrie Wheeler’s statement on the NAR settlement today $OPEN
— Datadoor.io (@DatadoorIO)
8:26 PM • Mar 15, 2024
This should cut the agent counts. That is not a bad thing. Most of the Brokerages are in the Real Estate Agent business, instead of the Real Estate business. Expect those Brokerages and many of the trade associations to suffer.
— Jeff Tumbarello (@Jeff_Tumbarello)
5:22 PM • Mar 15, 2024
“As a brokerage that was founded to offer consumers a better deal, Redfin believes any change that gives customers more clarity and lower fees will benefit not only those customers but also our business,” says our CEO @glennkelman in the wake of the $418-million NAR settlement.
— Redfin (@Redfin)
9:44 PM • Mar 15, 2024
@nardotrealtor@DiMartinoBooth Real estate is sold, not bought. Houses listed with Realtors receive higher prices. The notion that people will save money is a joke. People have always had the option to sell their own homes without help of a RE agent. Why do they use realtors?
— John Green (@Greener300)
9:38 PM • Mar 15, 2024
Bringing this one back given news on NAR settlement and what looks to be a coming shift in commission structure for buyer agents. Big implications for home builders.
— Rick Palacios Jr. (@RickPalaciosJr)
3:24 PM • Mar 15, 2024