A landmark $418 million class action settlement from the National Association of Realtors (NAR) is set to change the way real estate agents are paid and shake up the industry at large.
The agreement, which was finalized on Friday, takes effect in July and began with class-action lawsuits accusing the Realtors of having too much power and a monopoly over Americans trying to sell their homes.
In part, the NAR settlement removes rules on sales commissions for brokers and agents, meaning that the standard 6% starting commission rate no longer exists. The settlement only affects buyer and seller agreements, though, so renters may still have to pay broker fees when looking for a new unit.
In a statement, NAR denied any wrongdoing.
“NAR has worked hard for years to resolve this litigation in a manner that benefits our members and American consumers,” said Nykia Wright, interim CEO of NAR. “It has always been our goal to preserve consumer choice and protect our members to the greatest extent possible. This settlement achieves both of those goals.”
Meanwhile, real estate titan Barbara Corcoran is sounding off on the news and how it could potentially make or break many real estate agents’ careers (and commissions).
Related: ‘Everybody’s Scared’: Barbara Corcoran Says Now Is the ‘Very Best Time to Buy a House’ — Here’s Why
Corcoran explained that the cost of selling homes will likely go down now and that competition between realtors is set to increase, but warned buyers to not expect the prices of homes to go down as a result.
“It’s hogwash to expect the cost of buying a home to come down,” she wrote. “The real driver in today’s market is the shortage of homes and the too many buyers who want them. And if interest rates come down a point by year-end, we’ll see home prices up another 10% as the buyers rush into the market.”
Still, Corcoran admitted that it’s now a “scary time for real estate agents” while remaining optimistic that something positive would come out of the major shakeup.
“Change is nothing new to the real estate industry. What I know for sure is that real estate brokerages and their agents are some of the most resilient people in the world,” she said. “They’re creative and tough, and this opens the door for agents to use that resilience and creativity to come up with new and better ways to service their home sellers and customers.”
Last month, Corcoran appeared on an episode of the “Elvis Duran Show” where she encouraged listeners to not play the waiting game when it comes to purchasing property.
“Interest rates will never come down to two to three percent, that’s history, still people believe they will,” she said. “So let’s say they come down to something with a five in front of it, everyone sitting on the sidelines is going to rush the market, bid the pricing up, there’s not enough inventory to go around … everyone is going to pay more to the tune of 10, 15 maybe 20 percent. So why wait?”
Corcoran’s net worth is an estimated $400 million.
