The National Association of Realtors (NAR) agreed on Friday to settle a few cases that said it artificially raised commissions by $418 million and changed the way commissions are calculated.
But sellers in New York City probably won’t notice a big difference in their deals because the Real Estate Board of New York (REBNY) changed the rules ahead of time in January.
The Washington Post reported that home sellers in Illinois and Missouri sued NAR because its rules required a seller’s agent to pay a buyer’s broker to show a house on the Multiple Listing Service (MLS). The sellers said these rules unfairly raised commissions.
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CNN reported that as part of the settlement, NAR will put in place new rules that say a seller’s broker can’t decide how much a buyer’s agent gets paid. They will also stop requiring brokers to register to the MLS. The Missouri case named the real estate brokerage Keller Williams, but the company settled on its own in February, according to Reuters.
Politico said that the settlement still needs to be accepted by a federal court. A company statement released on Friday said that NAR is still denying any wrongdoing. The group refused to say anything.
A spokesperson for REBNY said that the company will look over the suggested settlement to see what effects it might have on the industry and REBNY’s Residential Listing Service.
NYC has already changed the fees for brokers
REBNY changed its universal co-brokerage deal this year, which means that buyers in NYC can now pay their brokers.
In the past, when someone sold something, they would pay a fee of 5 to 6 percent, which would then be split between the buyers’ and sellers’ agents. But REBNY’s rule change let a buyer’s broker turn down a seller’s offer of a commission and try to get that fee from the buyer instead. Research by REBNY says that if a seller doesn’t offer to pay the buyer’s broker, that broker can also get payment from the buyer.
As of now, REBNY’s change hasn’t had a big effect on commissions in New York City, but real estate deal lawyer Sharon Yehoshua Darouvar says it’s probably too early to tell. The new universal co-brokerage deal between REBNY and its clients didn’t start until January 1, 2024.
Deanna Kory, a broker at the Corcoran Group, agrees that commissions haven’t changed much in New York City either. However, she thinks that after the NAR decision, agents will get more questions about fees.
“The main difference is that we are now talking,” says Kory. “There is value in both the buyer’s agent and the seller’s agent, and there is a reason to reward both.”