A landmark $418 million class motion settlement from the National Association of Realtors (NAR) is about to vary the way in which real estate agents are paid and shake up the industry at large.
The agreement, which was finalized on Friday, takes effect in July and started with class-action lawsuits accusing the Realtors of getting an excessive amount of power and a monopoly over Americans attempting to sell their homes.
Partially, the NAR settlement removes rules on sales commissions for brokers and agents, meaning that the usual 6% starting commission rate not exists. The settlement only affects buyer and seller agreements, though, so renters should must pay broker fees when on the lookout for a recent unit.
In a press release, NAR denied any wrongdoing.
“NAR has worked hard for years to resolve this litigation in a way that advantages our members and American consumers,” said Nykia Wright, interim CEO of NAR. “It has at all times been our goal to preserve consumer selection and protect our members to the best extent possible. This settlement achieves each of those goals.”
Meanwhile, real estate titan Barbara Corcoran is sounding off on the news and the way 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 associated fee of selling homes will likely go down now and that competition between realtors is about to extend, but warned buyers to not expect the costs of homes to go down in consequence.
“It’s hogwash to expect the associated fee of shopping for a house to come back down,” she wrote. “The true driver in today’s market is the shortage of homes and the too many buyers who want them. And if rates of interest come down some extent by year-end, we’ll see home prices up one other 10% because 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 most important shakeup.
“Change is nothing recent to the actual estate industry. What I do know of course is that real estate brokerages and their agents are a number of the most resilient people on this planet,” she said. “They’re creative and difficult, and this opens the door for agents to make use of that resilience and creativity to provide you with recent and higher 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 on the subject of purchasing property.
Related: ‘All Hell Is Going to Break Loose’: Barbara Corcoran Issues Warning About Real Estate Market, Interest Rates
“Rates of interest won’t ever come all the way down to two to 3 percent, that is history, still people consider they may,” she said. “So for example they arrive all the way down to something with a five in front of it, everyone sitting on the sidelines goes to rush the market, bid the pricing up, there’s not enough inventory to go around … everyone seems to be going to pay more to the tune of 10, 15 perhaps 20 percent. So why wait?”
Corcoran’s net value is an estimated $400 million.