1. The National Association of Realtors settled antitrust lawsuits with home-selling groups for $418 million.
2. The NAR agreed to new rules that will reset long-held standards on commissions in the real estate industry.
3. Real estate stocks like Zillow and Redfin fell on Friday following the announcement of the settlement.
The National Association of Realtors announced a $418 million settlement to end antitrust lawsuits, which includes implementing new rules that will reset long-held standards on commissions in the real estate industry. This has caused real estate stocks, such as Zillow and Redfin, to fall following the announcement. The settlement resolves a lawsuit with home-selling groups and eliminates the standard 6% commission for home purchases.
Shares of real estate companies dropped after the NAR agreed to pay $418 million over four years to settle with home sellers and rewrite certain business rules for brokers and agents. The settlement comes after a jury found the NAR liable for $1.8 billion in damages for conspiring to keep commissions artificially high for agents. Critics of the commission model argue that it makes property prices more expensive.
As part of the settlement, the NAR has agreed to prevent sellers’ brokers from determining the compensation for buyers’ agents, end requirements for brokers to use multiple listing services, and require written agreements with buyers for multiple listing services participants. These changes will rewrite the longstanding real estate business model where sellers pay both their broker and the buyer’s broker. The NAR believes the benefits of these changes to the industry outweigh the significant cost of the settlement.