Cost to buy homes could fall as big US real estate group settles litigation (updated)

Compass

15/03/2024 16:12

(Recasts; adds settlement details, background, industry's
commission practices, impact on housing market, byline)
    By Jonathan Stempel
       March 15 (Reuters) - 
    The National Association of Realtors agreed to resolve
antitrust litigation accusing brokerages of inflating sales
commissions, a settlement likely to bring major changes and
lower costs when people buy and sell homes.
  
        Friday's $418 million settlement calls for the NAR to
eliminate decades-old rules governing the commissions, and make
it easier for buyers to negotiate fees with their own agents or
use no agents at all.
  
        These changes could spur more home sales by lowering
typical commissions by thousands of dollars, a benefit to
less-wealthy individuals and families struggling with
inflationary pressures or being priced out of their
neighborhoods.
  
        The settlement was announced 4-1/2 months after a
federal jury in Kansas City, Missouri 
    ordered the NAR and several brokerages to pay $1.78 billion,
which a judge could have tripled, in an antitrust case covering
agents in that state.
        Several similar lawsuits have been filed around the
country.
        Defendants in the litigation have included HomeServices
of America, which is part of Warren Buffett's Berkshire Hathaway
 BRKa.N , and other brokerages including Compass  COMP.N ,
Douglas Elliman  DOUG.N , Keller Williams and Re/Max  RMAX.N .
        Share prices for several brokerages fell after the
settlement was announced. The accord requires court approval.
  
        Home sellers objected to the longstanding practice of
paying the combined 5% to 6% commissions for their own agents
and for buyers' agents, with their own agents setting fees for
buyers' agents.
  
        Critics believed sellers should be allowed to list homes
on various databases without paying buyers' agents, with both
sides shopping around for the best price.
  
        In connection with the settlement, home listings on the
NAR's Multiple Listing Service would no longer tell buyers'
agents how much they could expect to be paid.
  
        Critics have said that practice encouraged agents to
steer clients toward homes carrying higher commissions. Buyers'
agents will now have to enter written agreements with their
clients.
  
        The changes are expected to start in mid-July, and will
likely boost competition for business.
  
        Friday's settlement resolves claims against more than 1
million NAR members, state and local realtor associations, and
most smaller brokerages.

 (Reporting by Jonathan Stempel in New York and Mike Scarcella
in Washington, D.C.; Editing by Matthew Lewis and Chizu
Nomiyama)
 ((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))