A landmark $418 million class action settlement by the National Association of Realtors (NAR) is poised to change how real estate agents get paid and shake up the industry overall.
The agreement, which was finalized Friday, will take effect in July and began with class-action lawsuits accusing real estate agents of having too much power and a monopoly on Americans trying to sell their homes.
In part, the NAR agreement removes sales commission rules for brokers and agents, meaning the standard 6% initial commission rate no longer exists. However, the agreement only covers buyer-seller agreements, so renters may still have to pay brokerage 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 way that benefits our members and American consumers,” said Nykia Wright, NAR interim CEO. “Our goal has always been to preserve consumer choice and protect our members to the greatest extent possible. This agreement accomplishes both goals.”
Meanwhile, real estate titan Barbara Corcoran is speaking out about the news and how it could potentially make or break the careers (and commissions) of many real estate agents.
Related: ‘Everyone’s Afraid’: Barbara Corcoran Says Now is the ‘Best Time to Buy a Home’ — Here’s Why
Corcoran explained that the cost of selling homes will likely fall now and that competition among real estate agents is likely to increase, but he warned buyers not to expect home prices to drop as a result.
“It is nonsense to expect the cost of buying a home to go down,” he wrote. “The real driver of today’s market is the shortage of homes and too many buyers who want them. And if interest rates drop one point by the end of the year, we will see home prices rise another 10% as buyers they rush into the market. market.”
However, Corcoran admitted that now is a “scary time for real estate agents,” while remaining optimistic that something positive can come out of the big change.
“Change is nothing new to the real estate industry. What I know for sure is that real estate brokers and their agents are some of the most resilient people in the world,” he said. “They are creative and tenacious, and this opens the door for agents who can use that resilience and creativity to find new and better ways to serve their sellers and home customers.”
Last month, Corcoran appeared on an episode of the “Elvis Duran Show” where she encouraged listeners not to play the waiting game when it comes to purchasing property.
Related: ‘All hell will break loose’: Barbara Corcoran issues warnings about housing market and interest rates
“Interest rates will never go down to 2-3%, that’s history, and yet people believe they will,” he said. “So let’s say they get down to something with a five in front of it, everyone sitting on the sidelines is going to rush the market, raise prices, there’s not enough inventory for everyone… everyone is going to pay more at the rate of 10, 15, maybe the 20%. So why wait?”
Corcoran’s net worth is estimated at $400 million.